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CIHM/ICMH 

Microfiche 

Series. 


CIHIVI/ICMH 
Collection  de 
microfiches. 


Canadian  Institute  for  Historical  Microreproductions  /  Institut  Canadian  de  microreproductions  historiques 


Technical  and  Bibliographic  Notes/Notes  techniques  et  bibiiographiques 


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to  th 


The  Institute  has  attempted  to  obtain  the  best 
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L'Institut  a  microfilm^  le  meilleur  exemplaire 
qu'il  lui  a  6t6  possible  de  se  procurer.  Les  ddtails 
de  cet  exemplaire  qui  sont  peutdtre  uniques  du 
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une  image  reproduite,  ou  qui  peuvent  exiger  une 
modification  dans  la  methods  normale  de  filmage 
sont  indiqu6s  ci-dessous. 


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D 
D 
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Coloured  covers/ 
Couverture  de  couleur 

Covers  damaged/ 
Couverture  endommag6e 

Covers  restored  and/or  laminated/ 
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Cover  title  missing/ 

Le  titre  de  couverture  manque 


I      I    Coloured  maps/ 


Cartes  gdographiques  en  couleur 


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Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 

□    Coloured  plates  and/or  illustrations/ 
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D 
D 


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Bound  with  other  material/ 
Reli6  avec  d'autres  documents 

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mais,  lorsque  cela  dtait  possible,  ces  pages  n'ont 
pas  6t6  filmdes. 


D 
D 
D 


D 

D 
D 
D 


Coloured  pages/ 
Pages  de  couleur 

Pages  damaged/ 
Pages  endommagdes 

Pages  restored  and/or  laminated/ 
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obtenir  la  meilleure  image  possible. 


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Additional  comments:/ 
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Ce  document  est  film*  au  taux  de  rMuction  indiquA  ci-dessous. 


lOX 

14X 

18X 

22X 

* 

26X 

30X 

v/ 

12X 

16X 

20X 

24X 

28X 

32X 

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L'exemplaira  filmA  fut  reproduit  grAce  d  la 
ginArositi  de: 

Cour  MjprAme  du  Canada 
Bibliothdque 

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plus  grand  soin,  compte  tenu  de  la  condition  et 
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conformity  avec  les  conditions  du  contrat  de 
filmage. 


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sion.  and  ending  on  the  last  page  with  a  printed 
or  Illustrated  impression. 


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TINUED"), or  the  symbol  ▼  (meaning  "END"), 
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method: 


Les  exemplaires  originaux  dont  la  couverture  en 
pepier  est  imprimte  sont  fiimAs  an  commenpant 
par  le  premier  plat  et  en  terminant  soit  par  la 
derniAre  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration,  soit  par  la  second 
plat,  salon  le  cas.  Tous  les  autres  exemplaires 
originaux  sont  filmis  en  commenpant  par  la 
pramiAre  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration  et  an  terminant  par 
la  derniire  page  qui  comporte  une  telle 
empreinte. 

Un  dee  symboles  suivants  apparaitra  sur  la 
derniAre  image  de  cheque  microfiche,  selon  le 
cas:  le  symbole  —*>  signifie  "A  SUIVRE ',  le 
symbols  V  signifie  "FIN  ". 

Les  cartes,  planches,  tableaux,  etc..  peuvent  etre 
filmte  6  des  taux  de  reduction  diffirents. 
Lorsque  le  document  est  trop  grand  pour  dtre 
reproduit  en  un  seul  clichi,  il  est  film«  d  partir 
de  Tangle  supArieur  gauche,  de  gauche  6  droite, 
et  de  haut  en  bas.  en  prenant  le  nombre 
d'images  nAcessaire.  Les  diagrammes  suivants 
illustrent  la  mAthode. 


1  2  3 


1 

2 

3 

4 

5 

6 

rig: 


EIGHTS,  EEMEDIE8,  AND  PEACTICE. 


AT 


xm 


^    f    ^  L^  J 


EIGHTS,  REMEDIES, 


AND 


PRACTICE, 

AT  LAW,  IN  EQUITY,  AND  UNDER  THE  CODES. 


A  TREATISE  OX 

AMEEICAN   LAW 

IX  CIVIL  CAUSES; 


J- 


^ 


■WITH 


A  DIGEST  OF  ILLUSTRATIVE  CASES. 


BY 


JOHN  D.  LAWSON, 

AxrrnoK  ov  wotiks  on  i-ntauMFrivE  evidence,  expert 


D8A0Ka  AND  CUSTOMS,  DEFENSES  TO  CRIME,  ETC 


EVIDENCE,  CAEBIERa, 


IN    SEVEN    VOLUMES. 


Vol.  L 


SAN  FRANCISCO: 
BANCROFT-WHITNEY    COMPANY. 

Law  Pobusuebs  and  Law  Booksellers. 
1889. 


Eatered  acctmling  to  Act  of  Congress  in  the  year  1889, 

By  JOHN  D.  LAWSON, 

In  the  Oflioe  of  thp  Libiajiaa  of  Congreua,  at  Washington. 


Stereotyped  by 

filmer-eollins  electrotype  company, 

San  Francisco. 


PREFACE. 


TiTE  work  which  I  now  oficr  to  tho  consideration  and 
judgment  of  tho  profession  is  a  somowlmt  pmbitious  at- 
tempt to  present  a  complete  view  of  American  case  law  on 
every  species  of  right  and  remedy,  of  action  and  defense, 
both  at  law  and  in  equity,  witliin  tho  compass  of  a  single 
work,  and  under  tho  direction  of  ono  hand.  It  aims  to 
cover  the  entire  field  of  jurisprudence,  except  criminal  law, 
logically,  methodically,  thoroughly,  and  yet  without  such 
diffusencss  as  to  unduly  extend  the  work.  It  is  not  only  a 
digest  of  points  decided,  but  a  treatise  showing  all  tho 
various  branches  of  the  civil  law  as  a  whole,  and  their 
bearing  on  and  relations  to  each  other;  and  it  includes 
also  all  the  practical  features  of  a  digest.  Preserving  tho 
scientific  arrangement  of  a  text-book,  it  adds  to  this  a  full 
collection  of  tho  actual  results  of  decided  cases  on  their 
facts,  as  illustrations  of  the  principles  of  the  text.  » 

What,  it  may  bo  asked  here  by  tho  reader, — what  of  tho 
law-books  already  on  our  shelves?  Do  they  not  sufii- 
ciently  cover  tho  field?  Tho  answer  to  this  very  per- 
tinent query  is,  that  tho  development  of  our  American 
law,  with  its  thousands  of  volumes  of  reported  cases,  has 
rendered  the  commentaries  of  its  early  days  insufficient 
for  the  present  needs  of  the  profession,  while  the  hun- 
dreds of  text-books  and  digests  upon  distinct  titles  and 


vl 


PUEFACE. 


subdivisions  of  titles  have  failed  to  fill  the  place  which 
the  commentary  then  occupied.  The  statement  of  gen- 
eral principles  in  the  commentary  is  now  too  meager,  and 
requires  too  much  of  historical  explanation,  while  tho 
treatise  upon  a  special  topic  is  too  detailed. 

In  tho  firm  belief  that  there  is  abundant  room  for 
an  intermediate  work,  which  shall  state  full  enough  for 
all  practical  purposes  tho  principles  of  the  law  as  estab- 
lished by  tho  judicial  decisions  and  tho  statutes,  and  shall 
at  the  same  time  give  ample  illustrations  of  the  applica- 
tions of  those  principles  to  the  facts  of  the  particular 
cases,  this  work,  the  labor  of  many  years,  is  submitted  to 
tho  judgment  of  the  profession.  I  ask  the  critic  not  to 
lose  sight  of  this  idea,  viz.:  that  it  is  first  of  all  a  work 
for  the  practitioner,  prepared  on  the  theory  that  tho  law- 
yer of  tho  present  day  needs  in  his  daily  practice  some 
work  which  treats  all  the  important  titles  of  the  law.  Its 
endeavor  is  to  present  a  substitute  for  a  complete  collec- 
tion of  text-books ;  to  be  in  itself  a  working  library. 

No  space  is  wasted  in  showing  the  development  of  our 
common  law,  its  history,  or  what  it  has  been,  but  the 
law  is  given  as  it  exists  to-day  in  the  American  reports 
and  statutes,  with  the  important  advantage  of  bringing 
all  of  its  topics  down  to  tho  present  time,  to  the  last  judi- 
cial decision  and  the  latest  legislative  law.  The  work 
covers  the  field  of  law,  equity,  and  American  code  law. 

Whatever  difference  of  opinion  there  may  be  as  to  the 
propriety  or  utility  of  citing  all  the  decided  cases  on  a 
given  point  in  a  text-book  on  a  single  subject,  it  is  clear 
that  in  a  woi'k  so  extensive  as  this,  such  a  thing  is  out  of 
the  question.     Nevertheless,  the  citation  of   authorities 


PUEFACE. 


VI 1 


is  very  full,  anfl  none  of  tho  lending  or  best  consi(loio<l 
cases  have  been  omitted, — none  of  such  cases  as  Imvo 
been  and  are  being  })rcserved  in  the  American  Decisions, 
the  American  lieports,  and  American  State  lleports. 

The  work  is  arranged  in  four  divisions,  viz.: — 

Division  I.  Pkusonh  and  Pkrsonal  IvKniTs.  —  Un- 
der this  division  are  tho  subjects  of  principal  and  agent; 
attorney  and  client;  auctioneers,  brokers,  and  factors; 
master  and  servant;  cor[)orati()ns  in  general;  diil'ereiit 
classes  of  corporations;  banks;  railroads:  gas  companies; 
building  and  loan  associations;  voluntary  associations; 
clubs  and  societies;  religious  societies  and  corporations; 
charitable  associations;  partnership;  husband  and  wife; 
parent  and  child;  guardian  and  ward;  executors  and  ad- 
ministrators. 

Division  II.  Peiisonal  Rights  and  Re^iedies.  —  Un- 
der tliis  division  are  personal  wrongs  and  torts;  conspir- 
acy; assault  and  battery;  false  arrest  and  imprisonment; 
malicious  prosecution;  torts  in  domestic  relations;  seduc- 
tion; crim.  con.;  negligence;  slander  and  libel. 

Division  III.  Property  Rigiits  and  Remedies.  — 
Under  this  dinsion  are  personal  property;  gifts;  ani- 
mals; coi)yright;  trade-marks;  patents;  negotiable  instru- 
ments; ships  and  shipping;  bailments;  pledges;  innkeep- 
ers; carriers;  railroads;  telegraph  companies;  physicians 
and  surgeons;  contracts;  lions;  mortgages;  insurance;  rvid 
property;  waters  and  watercourses;  easements;  licenses; 
landlord  and  tenant;  fixtures;  trusts  and  trustees;  nui- 
sances. 

Division  IV.  Public  Rights  and  Rem:edies. — Un- 
der this  division  are  constitutional  law;  taxation;  cmi- 


▼Hi 


rnEFACE. 


nont  domain;  municipnl  corporation'^;  public  offices  and 
officers;  scliools;  elections;  conflict  of  laws. 

And  each  division  contains  a  statement  of  thoromcdics 
for  the  breach  of  each  particular  right,  and  the  forms  of 
procedure  and  practice  in  obtaining  the  relief  or  in  re- 
sisting the  action. 

The  American  text-books  on  the  difTercnt  branches  of 
the  law  arc  very  numerous.  Yet  it  will  bo  found  that 
while  on  some  of  these  branches  the  writers  have  been 
very  diligent,  others  have  been  all  but  neglected.  There 
are  what  I  may  term  favorite  topics  upon  which  nearly 
every  writer  has  tried  his  hand;  there  arc  others,  again, 
on  which  none  has  cared  to  venture,  or  if  ho  has  essayed 
them  at  all,  he  has  by  no  means  attempted  to  exhaust 
them.  In  preparing  the  different  titles  of  my  work,  where 
I  have  discovered  that  the  text-books  could  give  me  very 
little  assistance  or  none  at  all,  I  have  gone  into  the  re- 
ports more  fully  than  in  other  cases,  and  as  a  result,  these 
titles  in  my  book  will  bo  found,  I  think,  of  peculiar  value. 
A  sufficient  index  for  the  purpose  of  reference  is  at  tho 
end  of  each  volume.  But  at  tho  completion  of  tho  work 
there  will  be  issued  a  comprehensive  index  to  every  point 
contained  in  any  of  tho  volumes. 

J.  D.  L. 

San  Francisco,  October,  1889. 


TABLE  OF  DITTSTOiYS. 


DinsiON  I. -PERSONS  AND  PERSOXAL  RELATIOXS. 
II.-PERSOXAL   RIGHTS   AXD   REMEDIES. 
ni-PROPERTY  RIGHTS  AXD   REMEDIES. 
IV.-PUBLIC   RIGHTS  AXD  REMEDIES 


TABLE  OF  COXim^TS  OF  VOLmiE  I. 


Title  I.  -  PRIXCIP.VL   AKD  AGEXT. 

PifiT    I.  _ Lmv  of  Aoen-cv  in   Genkual 

1.  The  contract  of  agency 1-1125 

2.  The  authority  cDiiierrcil  '"^^ 

ni.  _  At7CTI0NE£KS..  .  .  ^-''-1  '  1 

IV.  _  BKOKKJt.S    A^u    FACTOlis  ....'.' 21l.'--J2l 

V.  — •ilAaxEu  A.VI)  &iMiv^\,r -'-'l.'-'j;)0 

231-331 

Part  I.-LAW  OF  AGENCY  IN  GEXEEAL. 

CILiPTER  I. 
DEFINITIONS  AND    DIVISIONS. 
§  1.     Agency  <lefined  and  din.knds. 
§2.    Differect  classes  of  agents. 


CHAPTER  II. 
PARTIES  TO  THE  CONTRACT. 

All  person  sni  jurk  may  ho  prinoipaJs. 
Idiots,  lunatic.,  infants,  ntarrica  womcu. 
Alien  enemies,  convicts. 
All  persons  mr.y  be  agenta. 
Persons  having  adverse  interests. 
Doiug  of  uidawful  acta-Persond  acta. 


§3. 

§4. 

§0. 

§6. 
§7. 
§8. 


CHAPTER   III. 
THE  APPOINTMJEJ-r    OF  AGENTS. 

§   9.    Authointy  essential  to  agency. 
Si«.     May  bo  conferred  by  p    oL 


Xll 


TABLE    OF   CONTENTS. 


§11.  Or  imidiod  from  acts. 

§  1*2.  Dochi  rations  of  agent. 

§  IH.  Autliority  tooxoouto  instrumeut  under  seal. 

S  14.  Saiiio    -  Frini'ipiil  yruauiit. 

§  lij.  Un.soak'il  wi'itin^.s. 

§  1(>.  Statuto  tif  frau«!.^. 

§  17.  Aguiits  of  corporatiaiLS. 

CHAPTER  IV. 

JOrNTT  PRIXCir.NXS   AND  AGENTS. 

§  18,  Joint  principals  not  agents  for  cadi  other. 

§  I'J.  Unless  tlicy  bu  pai-tuers. 

§-0.  Kiglits  and  lialiilities  of  joint  priucipala. 

§  'Jl.  Joint  agents  nuist  aet  togc'tlu.'r. 

S  -■'.  Agency  for  jiulilic  purp-osc. 

§  -3.  Liiibllity  of  joint  agents. 

CILUn^ER   V. 

DELEGATION   OF    AUTnOIlITT. 

§  24.  Delogatio;i  of  original  and  delegated  authority. 

§  '2.">.  Delegation  of  origiiuil  aulliority. 

i  26.  Delegation  of  delegated  autliority. 

§  27.  Same  —  When  not  purmitted. 

§  2^  Hmuc  —  When  permitted. 


CHAPTER   VI. 

RECTIFICATION. 

§  29.  Unauthorizetl  act  of  agent  may  Iw  i-atided. 

§  .SO.  But  cannot  divest  vested  rights. 

§  SI.  Act  must  not  ho  illegal  or  void. 

§  !12.  Must  have  been  done  on  hehalf  of  principal, 

§  3n.  Principal  must  he  iii  existence. 

§  34.  Ratilieation  must  he  made  witli  full  luwwlo^lgo  of  facts. 

§  ;'j.  And  is  then  irrevocable. 

§  30.  Ratifieaiiou  absolvi's  agent  and  shifts  liability. 

§  37.  Appointment  of  sul)agent. 

§  38.  Ratitieaiion  nmst  he  id  toto. 

§  3!>.  Acts  incapable  of  ratiUcation. 

§  40.  Form  of  ratitieatiou. 

§  41.  Acts  aud  coiiduct. 


TABLE   OF   CONTENTS. 


Xlll 


CIIAPTKTt  \1T. 

DKTEIUriNATIOX  OR  DLSSOLDTION  OF  AUTUORITY. 

§  42.  Mo<lea  of  tlissolviiijj  agency. 

§43.  Pcrfdriiiiiiict!  of  (il)ject—  Lapse  of  tims. 

§  '14.  KovocaLiou  by  ;ift  cf  i)riiiciiiaJ 

§  4.').  Revocation  hy  act  of  agcut. 

§  40.  I'cvocation  by  death  of  principaL 

§  47.  lievocatiou  by  death  of  agent. 

§  48.  Ilc^vocation  by  liankruptey  of  priucipaL 

§  41).  llcvocation  by  l)aiikriiptuy  of  agent. 

§  r)0.  Revocation  by  marriage  of  principj. 

§  5L  Revocatimi  by  insanity  of  princi{>aL 

§  r)'J.  Revocation  by  insanity  of  agent. 

§  53.  Revocation  ]>y  destructiou  of  »ubjcct-iuattcr. 

§  r)4.  Revocatisn  by  war. 

§  55.  When  rcvocatiou  takea  effect. 


CHAPTER   Vni. 
THE  naturt:  and  extent  of  the  authority, 

?  5tV     (reneral  and  special  agency. 

*;  ."i".     Authority  may  bo  implied. 

S  ."iS.     Authority  is  restricted  to  character  in  which  it  is  gr\-cn. 

S  .")0.     Acts  must  be  for  principal's  beuelit. 

<i  (H).     Construction  of  agent's  authority  in  general. 

S  01.  Wliat  acts  are  or  are  not  within  particular  phrasea —  "Accountable  "  — 
"All  matters  "— "'Attend  to  business^'— "Rorrow" — "Business 
and  financial  agent" — "Buy  and  sell"  —  "Canvasa" — '-font" — • 
"  Cite  and  appear  " —  "  Claims  and  eflects." 

§  02.  R^rricular  powers  (continued)  —  "  Collect  "  —  "  lieliver  "—  "Deposit " 
—  "Draw,  indorse,  and  accept  bilk" — "Ejcccute" — "(rive  dis- 
charges "—  "  Hire  "—  "  ludoRse." 

§  63.  Pra-ticular  powers  (coatinued)  — "  Invest " —  "  Lands  "  — "  Lay  out"  — 
"  Loan  "  —  "  Make  dee<la  and  sales  " —  "  Manage  " — •"  Mortgigc;"  — 
"  Obtiiin  securities  "  —  "  I'lace  "  —  "  IVocuro  a  purcha'^  r." 

§  01.  IVcrticular  powers  (continued)  —  "  PurcL"-4C  " — "  Rent  and  care  for  "  — 
"  Receive  checks  " —  "  Release." 

§05.     Particular  lowers  (continued)  — "Sell"— "Sell  and  com-ey  "— "Sell 

at  retail." 
§  00.  l^rticular  powers  (continued)  — "  Settle  "  — "  Ship  "  — "  Sign  name  " — 
"  Solicit  "  —  " Subscribe  "  — "  Sue  "  — "  Take  care  of  "  — "  Transact." 
§  07.  Vf[\nt  powers  implied  under  particular  circumstances  —  Advertising 
—  Ailmissions  —  Arlritrate  —  Assign  —  Auction  —  lioard  at  hot<:l  — 
Borrow  —  Cancel  — Compromiac  —  Collect  —  Coi^feas  judgment. 


XIV 


TABLE   OP  eOSTKSTB. 


§  G8.     ^^^l»t   powers  implied  (continued)  —  Employing  agents — Employing 

counsel  —  Exchaiigo  or  barter  —  Dclirwr —  Foreclose  mortgage, 
fi  00.     Wliiit  power.s  iiiipliod  (L'outi;i»«4)  —  fiive  credit  —  (iu.iianty  —  Hiring 

horse  i  —  Indorsing  —  Lcaai)  —  Legacy  —  License  —  Loan. 
S  70.     What  powers  implied  (continued)  —  Making  accommodation  notes  —  Or 

deoil  —  Negoti.-iblc  paper  —  Aiortgagc  —  Pledge  —  Purchiise. 
S  71,     M'hat  powers  implied  (continued)  —  Receiver  payment. 
S  7-.     What  powers  implied  (continued)  —  Renting  store  —  Rescind  contr>ict. 
S  73.     Wiiat  powers  implied   (continued)  —  To  sell  —  Settle  —  Suretyebip  — 

Tender  —  Transfer  —  Voluntary  conveyance. 
§  74,     Wliat  powers  implied  ^contiuucd)  —  Waiver  —  Warranty. 
§  75.     Carrier's  agents. 
§  70.     Railroad  scrvaatd. 


CIL^PTER  IX. 

DUTtES  AND  LIABILITIES  OF  AGENT  TO  PEINC:J'.\L. 

§  77.  Duties  of  agent. 

§  78.  To  act  as  agent. 

§  79.  To  perform  duties  in  per!50U. 

§  80.  To  give  notice  to  i)rincipal. 

§  81.  To  obey  instructions  and  orders. 

§  82.  To  act  in  good  faitli  and  in  principal's  inierest. 

§  83.  To  use  reasonable  skill  au>d  <liligeuco. 

§  8-t.  Deputies. 

§  85.  Profits  belong  to  principal. 

§  80.  Losses  must  bo  borne  by  principal. 

§  87.  Keeping  and  deposit  of  money  —  ^lodd. 

§  88.  Remittiinco  by  agent  —  Mode. 

§  89.  To  keep  accounts  —  Account  for  money. 

§  00.  Cannot  dispute  principal's  title. 

§91.  Mixing  property. 

§  92.  Agent  making  i)rofit3. 

§  93.  Purchasing  and  selling  property. 

§  94.  Agent  of  both  parties. 


CHAPTER  X. 


DUTIES  AND  LIABILITIES  OF  PRINCIPAL  TO  AOENT. 


§  95.  Right  of  agent  to  compensation  from  principal. 

§  90.  When  agent  cannot  recover  compensation. 

§  97.  Right  of  agent  to  reimbursement  from  principal. 

§  98.  When  agent  cannot  ask  reimbursement. 


Employing 
tgage. 
ty  —  Hiring 


'-\L. 


TABLE   OF  CONTENTS. 
CHAPTER  XI 


TV 


DUTIES    AND    LIABILITIES    OF    AOEXTS    AND    PRINCIPALS    TO 

THIRD  PERSONS. 

L  AGEJfTS.  •  -  (a)  Ok  Contracis;  (b)  For  TorU. 


§    99. 

§100. 

§101. 

§102. 

§103. 

§104. 

§  105. 

§100. 

§  107. 

§108. 

§  109. 

§110. 


§  111. 
§112. 


(o)  On  Contracts. . 

Agent  to  bind  principal  must  execute  authm-ity  in  hia  name. 
Instruments  under  seal.  "^name. 

Instruments  not  under  seal. 
Illustrations. 

When  agent  personally  hovijxd  -  DescripUo  persons. 

Agent  not  personally  liable. 

Foreign  principal. 

Irresponsible  prin'-ipal. 

Agent  liable  where  principal  not  disclosed. 

Agent  may  bind  himself  personally. 

Notice  to  agent  not  to  pay  over  money  to  priffcipaL 

i^bildy  of  agent  acting  without  authority. 

(6)  For  Tortg. 


Agent  not  liable  persooaUy  for  torts. 
Exoeptiona. 

2.    PEIXClPAtS, 


ST. 


CHAPTER  XII. 


DUTIES  AND  LL^njTIES  OF  THIIID  PERSONS  TO  PRINCIP.iLS 

AND  AGENTS. 


§  115. 
§  116. 
§  117. 
§11S. 
§  119. 
§  120. 
§  121. 
§  122. 
§  12.3. 
§  124. 
§  125. 


Rights  of  principal  against  third  persons. 

Prmcipal  may  enfo.  ce  agent's  contracts. 

Subject  to  frauds  and  misrepresentatioua. 

And  equities. 

Contracts  under  seal. 

Exclusive  credit  given  to  agent. 

Trincipal  may  recover  money  wrongfully  paid  by  agent. 

May  sue  for  torts  to  his  property  in  agent's  hands. 

Agent  ordinardy  cannot  sue  on  his  contracts 

i-xceptions  —  When  agent  may  sue. 

Agent's  right  to  sue  controllable  by  principaL 


XVI 


TABLE   OP   CONTENTS. 


P.UIT  II.  —  ATTORNEY  AND  CLIENT. 


CHAPTER  Xni. 


THE  ADMISSION  AND  REMOVAL  OF  ATTORNEYS. 


81 
§1 


§  126.  Attorneys  defined. 

§  127.  Admission  to  the  bar — License  essential  to  practice. 

§  128.  Office  of  attorney  — Nature  of  the  office. 

§  129.  Power  of  court  to  disbar  attorneys. 

§  130.  Causes  good  grounds  for  disbarment. 

§  131.  Causes  not  grounds  for  disbarment. 

§  132.  Suspension  for  a  time. 

§  133.  Previous  conviction  not  necessary. 

§  1 34.  Practice  on  disbarment  proceeding —  Proof  —  Appeal. 

§  135,  Mandamus  to  restore  attorney. 

§  136.  Rcadmissiun  after  disltarmeat. 


§10 
§1C 


CHAPTER   XrV. 

PRIVILEGES,   DISABILITIES,   AND  LlABnJTIES  OP  ATTORNEYS 

TO  THIRD  PERSONS. 


§  r.S7.  Privileges  and  exemptions  of  attorneys. 

§  138.  Exemption  from  arrest, 

§  139.  Privilege  of  suing. 

§  140.  Exemption  from  civil  dntiea, 

§  141 .  Exemption  from  responsibilty  for  words  spoken. 

§  142.  Disabilities  of  attorneys. 

§  143.  To  act  in  diverse  capacities, 

§  144.  To  act  for  both  parties,  or  on  both  sides. 

§  145.  To  purchase  demands  for  suit. 

§  140.  Communications  between  attorney  and  client. 

§  147.  Privileged  communications  —  Exccptiooa  to  iha  /  ijt 

§  148.  To  become  surety  for  client. 

§  149.  To  bo  witness  in  cause. 

§  150.  Liability  to  third  persons. 

§  151.  Liability  for  acting  without  autborityv 

§  152.  Liability  to  third  persons  on  implied  contracts. 

§  153.  Liability  for  costs  and  fees. 

§  154.  Liability  for  trespass. 

§  155,  Liability  for  malicious  prosecution* 


TABLB    OP   CONTENTS. 


XVll 


CHAPTER  XV. 
AUTHORITY  AND  POWERS  OF  ATTORNEY. 


ial. 


S156. 
8157. 
§158. 
§159. 
§160. 
§161. 
§162. 
8163. 
§164. 
§165. 
§166. 
8167. 
§168. 
§169. 
§170. 


8171, 


8172. 
8173. 


§174. 
§175. 


Authority  evidenced  by  retainer. 
Authority  to  appear  presumed. 
Court  may  order  authority  to  be  produced. 
Appearance  for  several  persons. 

Appearance  by  attorney  binds  party,  though  unanthorized. 
Delegation  of  authority. 
Law  partnerships. 
Law  clerks. 

Termination  of  authority  —  By  disaolation  of  partnership. 
Termination  of  authority  —  By  act  of  parties. 
Termination  of  authority  —  By  termination  of  suit. 
Termination  of  authority  —  By  death. 
Termination  of  authority  —  Other  cases. 
Implied  powers  of  attorneys. 

Implied  powers  of  attorneys  (continued)  —  Admissions  —  Affidavits  — 
Altering  securities  —  Appeal  —  Arbitration  —  Arrest  —  Assignment 

—  Attachment. 

Implied  powers  of  attorneys  (conti , .  i  od)  —  Compromise  —  Continuance 

—  Contract  —  Discharge  —  Discontinuance  —  Employing  counsel  — 
Error  —  Executing  bonds  —  Execution  —  Guaranty. 

Implied  powers  of  attorneys  (continued)  — Judgment —  Payment. 

Implied  powers  of  attorneys  (continued) — Process  —  Purchase  —  Re- 
lease —  Sell  —  Set-off  —  Sue  —  Supplementary  Proceedings  —  Waiv- 
ers and  releases. 

Extent  of  authority  as  to  time. 

Ratification  of  unauthorized  acts. 


CHAPTER   XVI. 
LIABILITY  OF  ATTORNEY   TO  CLIENT. 


176. 
177. 
178. 
179. 
180. 
181. 
182. 
183. 
184. 
185. 
186. 
187. 


Duty  of  attorney  to  client  —  Dealings  between  attorney  and  client 
Duty  to  render  accounts —  Mixing  money. 
Duty  to  notify  client  of  collection  of  money. 
Duty  to  pay  over  money. 

Skill  required  of  attorney  in  his  professioa  —  Liable  for  negligence. 
Negligence  a  question  of  fact. 
Liability  of  attorney  for  mistakes  of  law. 
Mistakes  in  drawing  papers  and  pleadings. 
Mistakes  in  prosecution  of  suit. 
Mistakes  in  giving  advice. 
Measure  of  damages. 

Aitoruey  must  follow  client's  uufcructiona, 
b 


XVlll 


TABLE    OF   CONTENTS. 


§  188.  Liability  of  attorney  for  miatakes  or  frauds  of  agents  or  associates. 

§  189.  Liability  for  acting  without  authority. 

§  190.  Liability  for  actin;'  in  excess  of  authority. 

§  191.  Not  liable  as  to  matters  outside  his  professiou. 

§  19*2.  Remedy  is  against  attorney  alone  —  Proceedings  not  affected. 

§  193.  Summary  jurisdiction  as  to  attorneys. 

§  194.  When  summary  jurisdiction  will  and  will  not  bo  exercised. 

§  195.  For  what  acts  summary  jurisdiction  will  be  exercised. 


CHAPTER  XVII. 

LIABILITY  OF  CLIENT  TO  ATTOEITEY. 

§  196,  Attorney  and  counsel  may  sue  for  services. 

§  197.  Contract  implied  to  pay  for  attorney's  services. 

§  198.  How  basis  of  compensation  is  arrived  at. 

§  199.  What  compeiuation  allowed  where  no  express  contract. 

§  200.  Attorney  may  deduct  fees  from  client's  funds. 

§  201.  Compensation  out  of  fund  iu  court, 

§  202.  Retainer  must  be  proved. 

«?  ?03.  And  that  services  were  renderea. 

§  205-.  In  appellate  courts. 

§  205.  Attorney  cannot  recover  compensation,  when. 

V  '206.  Attorney  may  make  special  contract  for  compensation. 

§  207.  Special  contracts  for  compensation  sustained. 

§  208.  Special  contracts  for  compensation  not  sustained. 

§  209.  Special  contract  for  complete  service —  Completion  of  service  inter* 

rupted. 

§  210.  Special  contract,  for  complete  service  —  By  withdrawal  from  case. 

§  211.  Special  contract  for  complete  service  —  By  di.smi»Ba1  of  or  from  case. 


Part  HI.  —  AUCTIONEERS. 
CHAPTER  XVni. 

AUCTIONEERS. 

§  212.  Nature  and  effect  of  sales  by  auction. 

§  213.  Auctioneer  defined,  etc 

§  214.  Duties  of  auctioneer. 

§  215.  Powers  possessed  by  auctioneer. 

§  21 G.  Auctioneer  as  agent  of  both  —  Statute  of  frauds. 

§  217.  Powers  not  possessed  by  auctioneer. 

§  218,  Liabilities  of  auctioneers. 

§  219.  Liabilities  and  rights  of  bidders. 

§  220.  Fictitious  bids  —  "  Puffers  "  —  Agreements  not  to  compete. 

§  221.  The  auctioneer's  compensation. 


•^■M- 


ssociates. 

bed. 

L 


5  000 
§223. 
§224. 
§225. 
§226, 
§227. 
§228. 
§229. 
§230. 


TABLE   OP  CONTENTS. 

Part  IV.— BROKERS  AND  FACTORa 
CHAPTER  XIX. 

BROKERS  AND  FACTORS. 

Different  classes  of  brokers,  and  authority. 

mat  authority  implied  to  brokers  generally. 

What  authority  not  implied  to  brokers  generally. 

Brokers  authority  a  limited  one -His  duties  and  liabilities. 

Broker  s  compensation.  •"«•«». 

Factors  and  del  credere  agents. 

Authority  implied  to  factor. 

Authority  not  implied  to  factor. 

What  factor  bound  to  do  -  His  duties  and  liabilities. 


XIX 


rvice  inter* 

■ 

X  case. 

■ 

om  case. 

! 

•t 

§232. 
§233. 

■•'•- 

1 

§2.34. 
§235. 
§  236. 

'A 

§  237. 

§238. 

•1 

§239. 

ipete. 


I 


Part  V.^  MASTER  AND   SERVANT. 
CHAPTER  XX. 

SCOPE  OP  THIS  part. 
§  231.    Who  are  servants. 

CHAPTER  XXL 
APPRENTICES. 

Who  are  apprentices  — How  bound. 

Contract  is  Personal-Assignmenfc-Renumloat  of  state. 
Duties  of  master  to  apprentice.  ^^ 

Right  of  master  to  discharge  apprentice. 
Right  of  master  to  apprentice's  earnings -Exoeptioiu 
Rtights  of  parent  or  guardian. 
Liabilities  of  parent  or  guardian, 
hat  18.  and  what  wUl  excuse,  breach  of  covenant  for  faithful  service. 

CHAPTER  XXn. 

CONTRACTS  BETWEEN  AND  RIGHTS  AND  DUTIES  OP  MAST^ 

AND  SERVANT.  ^^^mv 

§240.    Contract  of  service-Need  not  be  in  writing. 
^241.    S-vacesrendered-When  promise  to  pay  iSpIiai 


XX 


TABLE   OF  CONTENTS. 


§  242.  Services  of  intruder  wi^!iout  request. 

§  243.  Servicea  r«u>lo<w1  tarougb  durosa  or  fraod. 

S  244.  Illogal  or  immoral  Bcrvicc. 

§  245.  Kciitieat  implivs  proiuiso  to  pay. 

9  246.  Exceptions  —  Request  without  benefit  to  party. 

§  247.  Services  rendered  iu  expectation  of  bequest  or  legacy. 

S  248.  Presumption  that  services  are  for  hire. 

fi  249.  Exception  —  Near  relatives. 

§  250.  Contract  for  certain  term,  or  certain  thing,  an  entire  contract. 

8  251.  Abandonment  of  contract  —  No  recovery  for  timo  served. 
I  252.  Exceptions  —  Whore  ijptaiUum  tneruU  recoverable. 

g  253.  Hours  of  labor. 

K  254.  Extra  hours  —  Compensation  not  recoverable  for  working  extra  hoars 

—  Exceptions. 

1 255.  Work  performed  on  Sunday. 

f  250.  Right  to  order  servant  to  di£ferent  employment  —  Compensation. 

%  257.  Increased  duties  —  Extra  compensation. 

§  258.  Contract  is  personal  —  Delegation, 

g  259.  Lost  timo. 

I  2G0.  General  hiring  —  Priina/acie  for  what  term. 

%  2C1.  Continuance  of  service  after  expiration  of  term  —  Presumption. 

%  262.  Regulations  of  master. 

9  263.  Duty  to  keep  master's  secrets. 
S  264.  Master  must  provide  work. 

%  265.  Board  of  servant. 

§  266.  Compensation  of  servant  —  Measnre. 

§  267.  Master  may  recoup  damages. 

§  268.  Right  of  master  to  servant's  earnings. 

g  269.  Right  to  discharge  servant  —  By  contract. 

§  270.  Right  to  discharge  servant —  By  law  in  absence  of  special  contract. 

§271.  Valid  grounds  for  dismissal. 

g  272.  Involuntary  breaches  by  servant. 

§  273.  Discharged  servant  must  leave  peaceably. 

S  274.  Servant  may  recover  wages  to  time  of  dismissal. 

§  275.  Servant  occupying  master's  house  —  When  and  when  not  tenant. 

8  276.  Wrongful  discharge  of  servant  —  Remedies. 

S  277.  Servant  bound  to  seek  other  employment. 

§  278.  Waiver  by  servant  of  wrongful  discharge. 

§  279.  Waiver  by  master  of  breach  or  forfeiture. 

§  280.  Causes  which  will  justify  servant  in  abandoning  service. 

§  281.  Dissolution  of  contract  —  By  expiration  of  time  or  consent  of  parties. 

§  282.  Dissolution  of  contract  —  When  service  may  be  dissolved  by  either 

party. 

%  283.  Dissolution  of  contract  —  Dissolution  of  paiinership. 

§  284.  Dissolution  of  contract  —  Bankruptcy  of  master. 

§  ?85.  Dissolution  of  contract —  Abandonment  of  servant. 

§  286.  Dissolution  of  contract  —  Dismissal  by  master. 


TABLE   OP   CONTENTS. 


XXI 


S  287.  DisBolntion  of  contract  —  By  death  or  diiiability- 

§  'J88.  KightH  of  maHtiT  —  Injurien  to  Hervant  by  third  person. 

§  289.  Enticing  hervant  from  vinployinent. 

§  290.  CombiiiationB  among  worknten. 

CILAJ»TER  XXIII. 
LIABILITIES  OF  MASTER  AND  SERVANT. 


§  201.  Master  im  liablo  for  torts  of  servant. 

S  292.  Willful  and  malicious  acts  of  servar  o. 

§  293.  Trospaasos  of  servant. 

§  294.  Who  aro  "  aorvant ^  "  within  previous  sections. 

§  295.  Master  not  liable  for  acts  of  independent  contractor. 

§  296.  Exceptions — Where  work  is  a  nuisance  or  dangerous  per  fe. 

§  297.  Exceptions  — Where  duty  is  imposed  by  contract. 

§298.  Sxceptionu — Where  duty  is  impodfld  bylaw. 

fi  299.  Exceptions  — Where  employer  interferes  with  or  directs  work. 

fi  .300.  Exceptions  —  Other  cases  where  employer  is  liable. 

§  301.  Master  not  liable  for  injury  to  servant. 

%  ;>02.  Exceptions  —  Defective  machinery,  buildings,  or  appliances. 

§  .303.  Exceptions  —  Latent  defects  and  dangers. 

§  304.  Duty  of  railroad  companies  to  servants  employed. 

§  305.  Knowledge  by  master  of  defect  necessary. 

§  .306.  Direct  negligence  of  master. 

§  307.  Concurrent  negligence  of  master  and  fellow  servant. 

§  308.  Unsuitable  or  incompetent  fellow-servants. 

§  309.  Where  servant  is  an  infant  or  minor. 

§  310.  Statutory  provisions  as  to  liability  of  master  to  servant. 

^311.  Servant  waives  defect  by  entering  or  remaining  in  service  knowing  of  it. 

§  312.  AlUer  where  he  complains  and  master  promises  to  remedy. 

§  313.  Contributory  negligence  of  servant  —  Failing  to  notify  master  of  defect. 

§  314.  Contributory  negligence  of  servant — (loiug  into  dangerous  sitoatioa 
I>y  command  of  master. 

§  315.  Contributory  negligence  of  servant  — Other  cases  of  contributery  neg- 
ligence. 

§  316.  Contributory  negligence  of  servant — What  not  contributory  negligence 
in  servant. 

?  317.  Doctrine  of  "comparative  negligence." 

§  318.  Contracts  between  master  and  servant  as  to  injuries. 

§  319.  Who  are  "  fellow-servants" — Common  employment  the  test. 

§  320.  Who  are  not  "  fellow-servants." 

§  321.  Superior  servant  having  control  of  inferiors  a  vice-principal. 

§  322.  Servant  having  charge  of  construction  or  repair  of  machinery  used  hf 
other  servants. 

§  323.  Servants  of  different  masters. 

§  324.  When  relation  of  master  and  servant  does  not  subsist — Time. 


ZXll 


TABLE   OF  CONTENTS. 


§  325.  Volunteer  aasisting  ncrvant. 

§  H'iO.  Evitloiico  of  iucompetcuco  of  follow-BervBnt. 

§  327.  Ev'iJciieo  of  noglitjvncu  in  Holuctiug  and  maintaining  machinery  and 

appliances  —  Ciwch  wliero  it  was  held  HuiBciently  nhown. 

!  328.  iSoiiiu  —  Coijoa  wlioro  it  waa  liuld  not  eailiciuatly  uhowu. 

§  .TJi).  Lialiility  of  uervaiit  to  third  putHuu. 

8  3.'i0.  Liability  of  servant  to  inautur. 

S  33L  Liability  of  Hurvuut  to  fullow>Hcrvant. 


Title  II.  — CORPORATIONS.* 

Pabt  I.— Corporations  in  General ^ 332-1)08 

IL— Banks 509-537 

in.  —  R.ULUOAD  COMPANIE.1 538-569 

IV.  — Gas  Companies 570-579 

V.  —Building  ani>  Loan  Association.^ 580-593 

VI.  —  Voluntary  Associations 594-607 

VII.  —  Relihious  Societies  and  Corporations 608-021 

Vlil.  —  CUAKITABLU  AiMOCUXIUNS  AMD  €UA1UT1£3 622-634 


Part  I.  —  CORPORATIONS  IN  GENERAL. 
CHAPTER  XXIV. 

THE  FORMATION  OF  CORPORATIONS. 

§  332.  Definition  of  corporation  —  The  different  classes  of  corporations. 

§  333.  Corporation  is  created  by  state. 

§  334.  Power  of  Congress  to  charter  corporations. 

§  335.  Delegation  of  power  to  create  corporations. 

§  330.  Form  of  grant  of  corporate  franchises. 

§  337.  Ratitication  by  state  of  unauthorized  corporation. 

§  338.  Franchise  must  bo  accepted. 

§  339.  Form  of  acceptance  of  grant. 

§  340.  Incorporation  under  general  laws  — Procedure  —  Conditionsprecedent. 

§  341.  Conditions  precedent  to  grant  —  Performance,  when  necessary. 

§  342.  Corporations  by  prescription. 

§  343.  Who  may  bo  corporators. 

§  344.  Proof  of  incorporation,  how  made. 

§  345.  Proof  of  performance  of  conditions  precedent,  how  made. 

§  346.  Foreign  corporations — Grant  of  franchise  cannot  extend  beyoadlimits 
of  state.  • 

^  Parts  II.  to  VIII.  will  be  found  in  the  second  volume. 


TABLE   OF   CONTENTS. 


XXUl 


6  347.    Poroign  corporations  —  But  by  comity  foreign  corporativ/.«8  arc  jxjr- 

iiiittiMl  to  <lo  l>uitinoHa. 
§  348.     Foroigti  corporations  —  Subjoct  to  local  laws, 

§  341.     Foreign  corporationH  —  CitizouHhiji  of  coriiorationo  witliiii  federal  laws, 
g  3J0.     Ftiriiign  coritoratious —  Foreign  corporationii  may  l)i»  Hueil. 
§  351.     Foruigu  corporatioua  —  Service  of  proceas  on  foreign  corjioratiaiis. 

CHAPTER  XXV. 


§352. 

.331^-{}08          H 

§353. 

.50{)-537          H 

§  354. 

.538-569          H 

§355. 

..570-579          H 

§  350. 

.580-593          H 

§357. 

..594-G07          H 

..608-G21           H 

§358. 

.  .G22-ti34          H 

§  359. 

§300. 

^B 

§301. 

^H 

§30-.; 

§  303. 

§304. 

§305. 

§300. 

^H 

§307. 

§308. 

§  309. 

§370. 

§371. 

§  372. 

'Bcedent.              9 

§  373. 
§  .*?74. 

H^H 

§375. 

§370. 

§377. 

i^^B 

§  378. 

idlimita              M 

§379. 
§380. 

§381. 

§382. 

THE  POWERS  OP  CORPORATIONS  AND  THl-]  VALIDITY  OF  COR. 

PORATE    ACTS. 


Powers  of  corporation  aro  only  those  conferred  by  charter. 

Acta  or  contracts  of  corporation.s  in  violation  of  rules  of  law. 

Acta  or  contracts  of  corporations  in  violation  of  statutes. 

Acta  or  contracts  of  corporations  in  viuhition  of  cluuter. 

Statutory  prohibition  against  exercising  ))ower.s  not  granted  by  charter. 

Prohibitions  in  charter  —  If  legislative  intent  bo  that  prohibited  act 
shall  bo  void,  courts  will  bo  hohl. 

Prohibitions  in  charter  —  AUter  whcro  prohibition  is  merely  for  benefit 
of  share-holders. 

Proliibitions  of  charter—  Formalities  prescribeil  by  charter. 

Act  1  of  majority  of  corporators  bind  corporation. 

But  only  where  act  is  authorized  by  charter. 

Contracts  itUrti  viren — May  bo  voided  if  unexecuted. 

Defense  of  ultra  viren—  Not  good  against  person  without  notice. 

Transfers  of  property  —  Valid  though  altrn  viren. 

Executed  contracts  —  Valid  though  ultra  vires. 

Contracts  unenforceable  because  ultra  vires  —  Benefits  received  must 
bo  repaid. 

Corporations  liable  for  torts. 

Corporation  liable  for  torts  committed  in  ultra  vires  transaction. 

Di' facto  corporation  —  Validity  of  acts  of. 

Fraud  in  obtaining  charter —  Misuser  or  nou-uscr  no  defense  in  collat- 
eral proceeding. 

Corporation  must  be  in  existence  r^ejMcc  or  (/e/ficto. 

Proof  of  existence  of  corporation. 

Powers  of  corporation  are  only  those  given  by  charter. 

Or  those  implied  from  nature  of  business. 

Grants  of  special  privileges  to  corporations  strictly  construed. 

What  aro  franchises. 

Franchises  cannot  bo  transferred  nor  mortgaged. 

Consolidation  of  corporations. 

Implied  powers  of  corporations  —  To  purchase  and  hold  property. 

Implied  powers  of  corporations  —  To  transfer  aud  sell  property. 

Implied  powers  of  corporations  —  To  hold  property  in  trust. 

Implied  powers  of  corporations  —  To  take  by  devise.  , 


XXIV 


TABLE   OF  CONTENTS. 


§  383.  Implied  powers  of  corporations  —  To  borrow  money  and  make  debts. 

§  384.  Implied  powers  of  corporations  —  To  mortgage  property. 

§  385.  Iiiiplied  powers  of  corporations  —  To  issue  negotiable  paper. 

§  380.  Implied  powers  of  corporations  —  To  bue  and  be  sued. 

§  387.  Implied  powers  of  corporations  —  Other  acts. 

§  388.  Implied  powers  of  corporations  —  Power  of  expulsion  of  members. 

§  389.  Implied  powers  of  corporations  —  Remedies  for  wrongful  expulsion  — 

Restoration. 

§  390.  Corporation  may  do  business  in  foreign  state. 

§  391.  May  employ  its  surplus  or  property  to  best  advantage. 

§  392.  May  alter  its  business  to  suit  changes  of  time  and  circumstances. 

§  393.  Power  tn  issue  preferred  stock. 

§  394.  Power  to  issue  perferred  stock  —  Rights  to  perferred  stockholders. 

§  395,  Power  to  alter  charter. 

§390.  Power  to  alter  charter  —  What  not  "alterations"  —  Grant  of  addi* 

tioual  franchises  —  Discharge  of  obligations  to  state. 

§  397.  EflFect  of  alteration  on  stockholder's  liability. 

§  398.  Cannot  engage  in  different  business  than  that  which  it  was  chartered 

to  engage  in. 

§  399.  Authority  to  wind  up  business. 

§  400.  No  implied  power  to  enter  into  partnership. 

§  401.  No  implied  X)ower  to  deal  in  shares  of  other  corporations. 

§  402.  No  implied  power  to  alter  amount  of  capital  stock,  or  purchase  its  own 

shares. 

§  403.  No  implied  power  to  give  away  property  gratuitioosly. 

§  404.  The  corporation  name. 

§  405.  The  corporation  seal. 

CHAPTER  XXVI. 

THE  POWERS  AND  LIABIUTIES  OF  OFFICERS  AND  AGENTS  OP 

CORPORATIONS. 


§  406.  Powers  of  agents  of  corporations  generally. 

§  407.  Liability  of  corporations  for  acts  of  promoters. 

§  408.  The  board  of  directors  have  all  powers  of  the  corporation. 

§  409.  The  board  of  directors  cannot  make  radical  changes. 

§  410.  The  board  of  directors  cannot  wind  up  corporation. 

§  411.  Directors  are  trustees  for  corporation. 

§  412.  The  board  of  directors  mast  not  have  confl.icting  interests. 

§  413.  Liability  of  directors  for  fraud. 

§  414.  Liability  of  directors  for  neglect. 

§  415.  Liability  of  directors  for  mistakes  made  in  good  faith. 

§  416.  Directors  must  act  as  board —  Majority  govern. 

§  417.  Directors'  meetings. 

§  418.  Implied  authority  to  appoint  inferior  agents  and  delegate  authority, 

§  419.  Powers  of  secretary  and  treasurer. 


TABLE   OP  CONTENTS. 


XXV 


£C  debts. 

§420. 

§421. 

§  422. 

§  423. 

§424. 

mbers. 

§■-:. 

xpulsioD  — 

§426. 

§427. 

§428, 

inces. 

§  429. 

§:430. 

bolJers. 

§431. 

§432. 

at  of  addi* 

§43.3. 

§434. 

s  chartered 

President  of  corporation  —  Powers  of. 

Removal  of  officers. 

Corporation  bound  by  acta  of  agents  within  their  authority. 

Acts  iMjyond  powers  of  corporation  not  binding. 

Acta  of  agent  not  in  form  required  by  statute  not  binding. 

Agent  with  general  powers  —  Third  parties  not  presumed  to  know  — 

Limitations  of  hie  power. 
Third  persons  presumed  to  know  limitations  in  charter. 
But  not  by-laws  or  regulations  of  company. 
Liability  of  corporations  for  fraudulent  representations  of  agent. 
Unauthorized  act  of  agent  may  be  ratified  by  corporation. 
Unauthorized  act  of  agent  may  be  ratified  by  superior  agent. 
Ratification  inferred  from  conduct. 
Act  beyond  authority  of  agent  cannot  be  ratified  by  majority  of  stock* 

holders. 
Implied  ratification  by  stockholders  from  conduct. 
What  acta  cannot  be  ratified. 

CHAPTER  XXVn. 


base  ita  own 


}ENTS  OP 


IJGHTS  AND  LIABILITIES  OP  STOCKHOLDERS  -  CRFJ)ITOES  OP 

THE  CORPORATION. 

§  435.  The  contract  of  membership  —  How  created. 

§  436.  Statutory  method  of  becoming  a  stockholder  mnst  be  followed. 

§  437-  De  facto  corporation  —  Subscriber  for  shares  not'  liable  until  corpora- 
tion legally  organized. 

§  438.  Corporator  cannot  avoid  his  contract  because  corporation  not  duly  or> 
ganized. 

§  439.  Subscribers  not  stockholders  until  all  shares  have  been  taken. 

§  440.  Agreements  to  form  corporation  —  Inchoate  corporation. 

§  441.  Mutual  assent  necesbc.y  to  contract  of  membership. 

§  442.  Preliminary  deposit  with  subscription  —  When  a  condition  prccedentk 

§  443.  Proof  of  contract  of  subscription. 

§  444.  Liability  of  stockholder  to  contribute  his  share  of  capital  stock. 

§  445.  Liability  of  subscriber  —  Capital  agreed  must  be  subscribed. 

§  44C.  Other  conditions  precedent. 

§  447.  Assessu/  Jilts  and  calls  —  Who  may  make. 

§  448.  Notice  of  time  and  place  of  payment,  when  requisite,  and  how  given. 

§  449.  Liability  of  subscriber  after  abandonment  of  enterprise. 

§  450.  Subscriptions  upon  conditions. 

§451.  Subscriptions  upon  conditiona  —  When  subbcriber  held  nnoonditica* 
ally. 

§  452.  Subscriptiona  obtained  by  fraud,  when  voidable. 

§  453.  When  not  voidable. 

§  454.  Laches  of  subscriber. 

1 455.  Stockholder  cannot  rescind  contract. 


XXVI 


TABLE   OP  00NTENT9. 


§  456.  Violation  of  charter  no  gi-onnd  for  rescission.  '  '» 

§  457.  Forfeiture  of  shares  for  non-payment  of  assessments. 

§  458.  Right  to  transfer  shares. 

§  459.  When  stoekhoklcr  liable  notwithstanding  transfer. 

§  460.  Efifect  of  transfer  of  shares. 

§  461 .  Formalitiea  in  transfer  required  by  charter  most  bo  observed. 

§  462.  Equitable  assignments. 

§  463.  Assignment  by  indorsement  of  certificate. 

§  464.  Effect  of  assignment  of  certificate  by  indorsement  —  Rights  of  pur- 
chaser. 

§  465.  Lien  of  corporation  on  shares. 

§  466.  Remedies  against  corporation  for  refusing  to  allow  transfer. 

§  467.  Liability  of  corporation  for  making  or  permitting  unauthorized 
transfers. 

§  468.  Status  of  shares  as  property. 

§469.  What  are  "profits." 

§  470.  Dividends  and  interest  can  only  be  paid  out  of  profits. 

§  471.  Distribution  of  profits  —  Discretioa  of  directors. 

§  472.  Stock  dividends. 

§  473.  Issuing  new  stock — Increasing  the  capital  stock. 

§  474.  Payment  of  dividends. 

§  475.  Right  to  examine  books  —  Other  rights  of  stockholders. 

§  476.  Stockholders'  meetings — Notice  of  time  and  place  esaeutial. 

§  477.  Who  may  call  meetings.. 

§478.  General  and  special  meetings — Distinction. 

§  479.  Adjourned  meetings. 

§  480.  Who  has  right  to  vote. 

§  481.  Election  of  officers. 

§  482.  Power  of  majority  to  make  by-laws. 

§  483.  By-laws  held  valid. 

§  484.  By-laws  held  invalid. 

§  485.  Individual  stockholders  cannot  sne  for  injary  to  corporation, 

§  486.  WHien  stockholders  entitled  to  relief. 

'  §  487.  Discretionary  powers  of  officers  will  not  be  interfered  with  at  suit  of 
stockholders. 

§  488.  Stockholders'  bill  —  Who  may  or  must  be  complainants. 

§  489.  Who  may  or  must  be  defendants. 

§  490.  Stockholders  not  personally  liable  on  corporate  contracts. 

§  491.  Nor  for  debts  of  corporation. 

'§  492.  Capital  stock  a  trust  fund  for  creditors. 

§  493.  Shares  must  be  paid  for  in  money  or  property. 

§  494.  When  property  cannot  be  taken  in  payment  of  shares. 

§  495.  Rights  of  a  creditor  to  unpaid  assessments. 

§  496.  Personal  liability  of  stockholders  by  statute. 

§  497.  Construction  of  such  statutes. 

§  498.  Nature  of  personal  liability. 

§  499.  Personal  liability  for  wagus  of  employees  and  laborers. 


v9 


TABLE   OF   CONTEXTS. 


XXVU 


f  m     Sff  1 '  "7:  ^^'  ^*''^^'- ""'  '"^^^^  '^P^---°«y  paid  up. 


CHAPTER  xyvnrii 

DISSOLUTION  OF  CORPORATIONS. 

§  504.    By  surrender  of  chartsr. 
§  505.    Other  cases. 

§508.    Revivor  of  corporatioo. 


P] 


DnasiON  I. 

PERSONS  AM)  PEB80NAL  EELATIONS. 


I 
I 
I 
p 


TITLE    I. 

PRINCIPAL  AND  AGENT. 


Part     I.-LAW  OF  AGENCY  IN   GENERAL,  88  1-125. 

1.  The  Contract  of  Aoenct,  §§  1-55.  ^^ 

2.  The  Adtuority  Confeaued,  §§  5(i-76, 

3.  Duties  and  Liabilities,  §§  77-125. 

Part    II.- ATTORNEY  AND  CLIENTrgS  126-211 
Part  III.-_AUCTIONEERS,  §§  212-221 
Part  IV.-BROKERS  AND   FACTORS,  §§  222-230 
PART     V. -MASTER  AND  SERVANT,  §§  231-331  ' 


Wli 

to 

Wli 

soi; 

pri 

is  i 

hoi 

clai 

titl( 

assc 

Ag 

the 

ticu 


TITi;iO    t. 


PlllN(J|l>Ah  AND  A(;KNT. 

I'AHT  I.-LAW  ov  a(;i.;n(;y  m  cmmAL 

1.    TlIK    CONTUACT   OF    AdKSCY. 


CITAITKU   r. 

DEFINITIONH  AN/)  DIVIHIONa 

§1.     J^K*'iicy  ,h.iiu,.,\  an,]  ,]ivi,h>il 
9 '2.     JWormit  diiHrnm  of  ug„„t„. 

8  1.    Agency  Defined  and  Divided       a,. 

eluim  of  title  u  "''"""'''"  ^'"«.  "■■  '""n.  than  a  nako,] 
titlc,oit,  La  „;'Z  rn^'1  '•"^  "■"  -"-"io,.  of 
assorted  title  'A  '  Z  ■  '"■ '"'  ""  I'"''"'''""  •'''  "" 
A  general  I„t1„n^r7  "  ""''■^  «""'-™'  "^  «r'<"i"'- 

ticular  kind    a  tieoTa    ■'"    '.  "'  ""  ''''  ''"»"""^'  '^^  "  Par- 
M,  a  6poe,aI  agent  .s  one  wl,o  is  authorized  to 

Votl-l     '•'"*''*''*'«l"'li«=<»i,33Cal,3!i«. 


mm 


§2 


rrjXCTPAL   AND   AOEN'T. 


ft 


act  only  in  a  particular  transaction.*  But  "the  only  dif- 
ference in  doctrine  arising  out  of  this  distinction  is,  that 
all  the  restrictions  upon  the  authority  of  the  special  agent 
take  effect;  while  in  the  case  of  a  general  agent,  all  acts 
embraced  in  the  delegation  are  valid  as  to  third  parties, 
though  directly  opposed  to  private  instructions."-  The 
rights  and  liabilities  of  principal  anc  third  persons  a3 
to  the  acts  of  general  and  special  agents  respectively  arc 
discussed  in  a  succeeding  chapter.' 

§  2.  Different  Classes  of  Agents. — The  principal  classes 
of  agents  are  Attoiineys,  Auctioneeks,  DrioKEns,  Fac- 
tors, and  Partneiis.  An  attorney  is  either  in  fact  or  in 
law.  An  agent  is  broadly  one  who  is  em[)loyed  to  do 
any  act  in  iiais  for  another,  or  by  authority  of  deed.  It 
may  be  said  to  bo  a  generic  name,  including  all  classes 
of  agents.  Attorneys  in  fact  act  under  special  power 
created  by  deed;  the  term  "agent"  including  all  classes 
of  agents,  an  agent  is  not  necessarily  an  attorney  in  fact, 
though  an  attorney  in  fact  is  an  agent.^  An  attorney 
in  law — or  better,  at  law  —  is  a  person  empowered  with 
the  management  of  suits  or  controversies  in  courts  of  law.* 
An  auctioneer  is  a  person  authorized  to  sell  goods  or  mer- 
chandise at  public  sale."  A  broker  is  an  agent  employed 
to  make  bargains  and  contracts  between  other  persons  in 
matters  of  trade  or  commerce.'    A  factor  or  a  commission 


*  "A  special  arjency  properly  exists 
when  there  is  a  dulegatiou  of  autlior- 
ity  to  do  a  single  act.  A  general 
agency  properly  exists  where  there  is 
a  (lelegatiiin  to  do  all  acts  connected 
with  a  particular  trade,  business,  or 
employment.  Tlius  a  person  who  is 
authorized  by  his  principal  to  execute 
a  jjarticular  deed,  or  to  sign  a  partic- 
ular contract,  or  to  purchase  a  par- 
ticular i)areel  of  merchandise,  is  a 
special  agent.  But  a  person  who  is 
authorized  by  his  principal  to  execute 
all  deeds,  sign  all  contracts,  or  pur- 
chase all  goods  required  in  a  particu- 
lar trade,  business,  or  employineut  is 


a  general  agent  in  that  trade,  business, 
or  employment":  Story  on  Agemy, 
sec.  17. 

^  Farmers'  Bank  v.  Butchers'  Bank, 
IG  N.  Y.  US;  CO  Am.  Due.  GTS. 

^Chapter  VIII.,  on  the  Authority 
of  ilic  Ayent. 

*  TorteV  r.  Hermann,  8  Cal.  G19. 

'•'  8ue  Part  II.,  Attorneys,  post. 

*■  Sco  Part  I! I.,  Auctioneers,  post. 

'  See  Part  IV.,  Brokers  and  Factors, 
post.  "A  broker,"  says  Tiudal,  C.  J., 
"is  one  who  makes  a  bargain  for  an- 
other, and  receives  a  connnission  for 
so  doing":  Pott  v.  Turner,  G  Biug. 
702. 


8 


DKFINITIOXS    AXD    DIVISTDXS. 


§2 


morchnnt—flio  terms  nro  synonymous'  — i:^  nn  a-ont  om- 
I)Ioycfl  to  soil  poods  eonsi-n,.,l  or  dolivorod  to  hin^  A  tkl 
cvcdcrc  agent  is  one  -usually  a  faetor-ulio  puarant«>o.s 
the  responsibility  and  en-aprcments  of  (Lose  to  whom  l,o 
solls/^  Partners  ore  agenis  of  each  other  in  the  partner- 
ship  business.* 

J^Soo  Part  IV.,  Broker. and  Fautors.    ;,o.s^  '*  ^^  -  ^'''^'''  ''""^  ^'^^^""' 

^'°^^'  *  «iJC  Title  III.,  rartnorship.ywf. 


3,4 


PRINCirAL   AND   AGENT. 


CnAPTER  II. 

PARTIES  TO    IHK  CONTRACT. 

I  3.  All  i)crHon9  mijurin  may  bo  principals. 

§  4.  Idiots,  lunaticH,  infuutH,  iiiarriud  women. 

§  0.  Alien  unemius,  convicts. 

S  6.  All  pi'Fsons  may  Im  agents. 

§  7.  Persions  having  advurao  interests.     (Seo  post,  Part  I.,  Chapter  IX. 

9  8.  Doing  of  unlawful  acts  —  Pursoual  actd.    (See  post,  Part  I. ,  Chapter  V.) 

§  3.  All  Persons  Sui  Juris  may  be  Principals. — What- 
ever, as  a  general  rule,  a  person  may  legally  do  himself 
ho  may  legally  do  hy  the  hand  of  another,'  and  therefore 
only  tho.so  under  a  legal  disahility  arc  incapahle  of  heing 
jirincipals."  Infants,  idiots,  lunatics,  and  married  women 
are  to  some  extent  under  legal  disability,  and  constitute 
an  important  exception  to  the  general  rule. 

§  4.  Idiots,  Lunatics,  Infants,  Married  Women. — Idi- 
ots, lunatics,  and  persons  non  compos  mentis  arc  wholly 
incapable  of  appointing  agents.''  An  infant  cannot  legally 
appoint  an  agent,*  except,  it  seems,  where  the  business  to 
bo  done  is  to  the  infant's  interest.^     By  tho  common  law, 


'  A  county  oflFers  a  reward  for  tho 
apprehension  of  a  tiiief.  B  employs 
another  person  to  jjursuo  and  capture 
tho  thief,  paying  all  tho  expenses,  and 
tho  thief  i.-i  appreiiended  by  him.  Tlie 
county  i.i  liable  to  B  for  tho  reward: 
Montgomery  County  r.  Robinsem,  8." 
111.  174,  and  see  Sherli'y  r.  Riggs,  11 
Humph.  53.  Tlie  maker  of  a  nolo  can 
authorize  anotlier  to  .sign  his  name  to 
it:  Coy  r.  Stiuer.  53  Mich.  42;  ^Vca- 
vcr  V.  Carnall,  35  Ark.  198;  37  Am. 
Rep.  22. 

^  Coombc'.s  Case,  9  Coke,  756;  Lee 
V.  Bringier,  19  La.  Ann.  197. 

*  Story  on  Agency,  sec.  6.  In 
England,  by  recent  decisions,  if  the 
principal's  unsoundness  of  mind  be 
unknown  to  tho  other  party,  tho  dis- 
ability will  not  void  the  contract 
where  it  has  been  partly  or  wholly 
executed,  and  no  advantage  has  been 


taken  of  him:  Molton  v.  Camroux,  4 
Ex.  17;  and  see  Evans  on  Agency,  11. 

*  Bennett  v.  Davis,  0  Cow.  303;  Fet- 
row  r.  Wi.^oman,  40Ind.  1 18;  Vaughan 
V.  Parr,  20  Ark.  COS;  Lawrence  r.  Mc- 
Artimr,  10  Oliio,  ,37;  Ferguson  v.  Bell, 
17  Mo.  351;  Cummings  r.  Powell,  8 
I'ix.  90;  Whitney  v.  Dutch,  14  Mass. 
4  .2;  7  Am.  Dec.  229;  Chapin  v.  Sha- 
ier,  49  N.  Y.  412;  Iliestcii  v.  Kuns,  8 
Blackf.  345;  40  Am.  Dec.  481;  Fonda 
V.  Van  Hornc,  15  Wend.  G31;  SO  Am. 
Dec.  77.  An  infant,  it  has  been  held, 
cannot  ratify  what  lie  cannot  author- 
ize: Armitago  r.  Widoe,  3l>  Mich.  124. 
But  see  Ward  v.  Steamboat,  8  Mo.  358. 

*  Wharton  on  Agency,  sec.  812; 
Evans  on  Agency,  13;  Story  on  Agen- 
cy, sec.  G.  Where  tho  power  given  is 
one  coupled  with  an  interest,  it  in  void- 
able only,  and  not  void:  Duval  v. 
Graves,  7  Bush,  4CL 


PAUTIES   TO   TUB   CONTRACT. 


§g  r.,  0 


a  married  woman  could  not  make  a  valid  business  con- 
tract, and  therefore  could  not  appoint  an  a;^ent.*  Hut  in 
modern  times,  liy  statute,  femes  covert  have  been  j^'iveii 
power  to  contract  in  th(>ir  own  names,  and  whatever  they 
iiow  may  do  by  tluuiselves,  it  must  be  conceded  they  may 
aj)point  another  to  do  for  them.'* 

§6.  Alien  Enemies,  Convicts. — And  alien  enemies' 
and  convicts'*  seem  to  be  incapable  of  appointinj^  agents. 

§  6.  All  Persons  may  be  Agents.  — On  the  otlier  hand, 
as  a  rule  any  one  may  bo  an  agent,  an<l  the  incapacities  to 
being  principals  do  not  extend  to  being  appointed  agents.* 
"The  reason  given  fortius  distinction  between  principals 
and  agents  is,  that  tho  execution  of  a  naked  authority  can 
be  attended  with  no  manner  of  prejudice  to  tho  persons 
under  such  incapacities  or  disabilities  as  aro  involved  in 
inlancy  and  tho  rest,  or  to  any  other  person  who  by  law 
may  claim  any  interest  of  such  disabled  persons  after 
their  death." "  Therefore  an  infant  may  bo  an  agent,'  and 
so  may  a  married  woman  bo  tho  agent  of  a  third  person,* 
or  of  her  husband;"  a  husband  may  bo  the  agent  of  his 
wife;'"   in  shivery  times,  a  slave  might  bo  his  master's 

'  Marsliall  v.  Rutton,  8  Term  Rep.  coupled  with   an   interest:   Ilearlo  r. 

54,';  Lowia  v.  Lee,  3  Barn.  &  C.  291;  Groenliank,  .3  Atk.  OOj.    But  hoo  Brad- 

yiiydur  i\  Hponable,  1  Hill,  5G7.  iah  v.  Gibba,  3  Johns.  L'ii.  i)"_.">. 

•  Wiiarton  on  Agency,  sec.  811,  *  Fcnowd  ?■.  E;norHon,  ]i>  Vt.  G,')3; 
note.  CantwcU    r.    Calwell,    3    IIca<l,    471; 

^  Evans  on  Agency,  IG.  Pickering  v.  ric!;uring,  0  X.  H.   1"J4; 

*  Evans  on  Agency,  IG.  Mackinlcy  ?*.  McGru;.'()r,  3  Whart.  'M'.); 
'■  Lyon  V.  Kent,  45  Ala.  G56.  31  Am.  Dec.  52'2;  Edgcrton  r.  Thoin- 
"Evan-,  0:1  Agency,   17.     A  princi-  aa,  9  N.  Y.  49;  Ilo|)kiii:i  v.  Molliaeux, 

p:d  who  knowingly  acta  through  an  4  Wend.  4(3.j;   Sinqictnu  v.  ^La:ln,  3 

iacDmpctcnt  agent,  and  id  sued,  can-  Mo.  4Gj;  MarsoK.i  v.  Hciim:m,  '21  Barl). 

not  sot  up  the  invalidity  of  tho  agcn-  319;  Lang  r.  Waters,  47  Al:i.  Ci'l;  Stall 

cy  i:i  an  action  on  tho  case,  though  ho  v.  Meek,  70  Pa.  St.  181;  Bunjamia  r. 

laiglit  to  o  suit  brought  on  a  void  con-  Benjamin,  15  Conn.  347;  39  Am.  Dec. 

tract  of  agency:  Wharton  on  Agency,  385. 

si^L'.  17.  10  Readr.  Bragg,  1  Head,  oil;  Row- 

'  T.illjot  V.  Bowen,  1  A.  K.  Marsh,  ell  v.  Klein,  44  Ind.  291;  15  Am.  Rep, 

4313;  10  Am.  Dec.  747;  Brown  v.  Hart-  235;  McLaren  r.  Hidl,  20  Iowa,  297; 

ford  Iu3.  Co.,  117  Mass.  479.  Knapp  v.  Smith,  27  N   Y.  277;  Wood- 

"  Story  on  Agency,  sec.  7.     Infanta  worth  v.  Sweet,  51  N.  Y.  8;  Buckley 

or  fcin^i  covert  cannot  bo  attorneys  to  v.  Wells,  33  N.  Y.  518. 
prosecute  suits,  nor  to  execute  a  power 


§7 


PRINCIPAL   AND   AGENT. 


6 


agent;'  a  corporation  may  be  the  agent  of  an  individual;' 
u  father  may  be  his  son's  agent, ^  or  a  son  may  bo  his 
father's.'*  An  alien  enemy  may  be  an  agent**  for  the  pur- 
pose of  attending  to  the  properly  of  his  absent  principal 
when  a  war  comes  on.  Thus  it  v\'as  held  that  an  agent 
intrusted  with  the  management  of  real  estate  in  New  Or- 
leans, belonging  to  a  resident  of  the  North  before  the  war, 
continued  to  bo  his  agent  during  the  time  of  the  war.* 
But  during  the  existence  of  a  war  between  two  countries 
or  states,  no  agent  can  be  appointed  by  a  citizen  of  one 
government  to  act  in  the  territory  of  the  other.  "There 
is  no  power  to  appoint  an  agent  for  any  purpose  after 
hostilities  have  actually  commenced."^ 

§  7.  Persons  having  Adverse  Interests.  —  A  person 
having  an  adverse  interest  cannot  act  as  an  agent  in  the 
transaction.**  Therefore  one  person  cannot  be  the  ngcnt 
of  both  parties,"  the  interests  being  adverse  or  incom- 
patible. This  is  the  limit  to  the  rule.  "  Tlie  authority 
of  agents  may,  when  no  law  is  violated,  be  as  large  as 
their  employers  choose  to  make  it.  There  are  multitudes 
of  cases  where  the  same  person  acts  under  powers  from 
difieront  principals  in  their  mutual  transactions.  Every 
partnership  involves  such  double  relations.  Every  sur- 
vey  of  boundaries  by  a  surveyor  jointly  agreed  upon 

'  Chastain  r.  Bowman,  1  II'U  (S.  C),     570;  Montgomery  v.  United  States,  5 

'"      ■  '     Ct.  of   CI.    018;   Stoil.lanl  r.    United 

Statiis  0  Ct.  of  CI.  340;  Monsseux  r. 
Urqniiart,  19  La.  Ann.  48'J;  Lyon  v. 
Kent,  45  Ala.  lioO.  Other  oases  hold 
that  war  revokes  an  a.L^ents  authority: 
IJowcll  I',  fiordon,  40  (!a.  oO'J;  Couley 
V.  Benson,  1  Heisk.  l45. 

"jNlousseux  i\  Unjuhart,  19  La. 
Ann.  482;  anid  see  Manhattan  Ins. 
Co.  r.  Warwiek,  20  Cratt.  G14;  3  Am. 
Rep.  218. 

'  United  States  v.  Grossniayer,  9 
Wall.  72;  Huhhard  v.  Matthews,  54 
N.  Y.  4:?;  13  Am.  Rep.  5G2. 

8  Baiii  r.  Brown,  50  N.  Y.  2S5. 

0  Hinckley  v.  Arey,  27  Me.  362. 


270;  Gov;riiorr.  Daily,  14  Ala.  41)9. 

-  MoVv'iUiams  v.  Detroit  Mills  Co., 
31  Mich.  274. 

^  K.'evos  ?•.  Kelly,  .-^O  Mich.  132. 

*  Cha.^o  r.  Siiiiw,  52  Vt.  525;  Com- 
monwealtli  v.  llulines,  ll'J  Mass.  195. 

"  Sands  r.  Lis.  Co.,  59  Barb.  550; 
Conn  )'.  Penii,  1  Pet.  C.  C.  52:);  Deii- 
niston  r.  Inilirie,  3  Wash.  C.  C.  390; 
CJrisWdld  r.  AVaddington,  10  JoJiiis. 
480;  Halo  r.  AVall,  22'(^ratt.  424;  Yea- 
ton  V.  ]5ei'nov,  02  111.  01;  Bank  i\ 
Matthcw.s,  49  N.  Y.  12;  Ward  v. 
Smith,  7  Wall.  447;  University  v. 
Finch,  IS  Wall.  100;  Robinson  v.  Ins. 
Co.,  42  X.  Y.  54;  1  Am.  Rep.  490; 
Furmau  v.  United  States,  6  Ct.  of  CI. 


& 


PARTIES    TO    THE    CONTRACT. 


19  La. 
ttau  Ins. 
|4;  3  Am. 

Jiiiayer,   9 
Ihews,  54 


would  como  within  similar  difficulties.     It  is  only  wlicro 
the  aj^ent  has  persional  interests  conflicting  with  those  of 
his  principal  that  the  law  requires  peculiar  safeguards 
againnt  his  acts."*     When,  therefore,  the  double  agency 
is  with  the  consent  of  the  principals  it  is  vtilid."    In  mak- 
ing a  contract  for  the  composition  of  a  debt,  while  tho 
same    i)erson    cannot    bo  the  agent  of   both  parties,  yet 
when  the  composition  is  agreed  upon  with  tho  creditor 
bv  the  am-'nt  of  the  debtor,  ho  can  become  the  aiient  of 
the  creditor  for  another  and  distinct  purpose,  as  holding 
the  money  for  tlie  use  of  the  creditor.^     A  contract  made 
Ijy  an  agent  for  Ijoth  parties  is  not  void,  —  it  is  simi)ly 
vi)idal)I(-!  at  tnc  election  of  tho  principal;^  and  in  coming 
into  court  to  avoid  it,  ho  is  not  obliged  to  show  injury  or 
an  impj'oper  advantage  gained  over  him, —  it  is  his  op- 
tion to  repuiliatc  it  irrespective  of  proof  of  actual  fraud.'' 
An  agent  cannot  in  tho  same  transaction  act  both  for 
hiniiclf  and  for  Ids  principal."     One  of  the  parties  to  a 
contract  cannot  be  the  agent  of  the  other  for  the  purpose 
of  jiigning    it.''     Thus  the  seller  of  land   cannot  act  as 
agent  for  the  purchaser  so  as  to  bind  him  by  any  mem- 
orandum ho  may  make  and  sign  himself.® 

Ir.LfsTUATioNs.  —  A  employed  C,  who  was  depot  agent  of  tho 
R.  raih-oad,  to  purchase  cotton  for  him,  and  hold  and  ship  it. 
fcrome  of  the  cotton  was  damaged  on  the  II.  railroad.     In  an 

'  A(lum3  Mining  Co.  v.  Scater,  20  09  X.  Y.  .389.     An  agent  cannot  bind 

Midi.  To;   CiihvcU  v.  Kuydtouo   Iron  his  princiinil  to  tlio  receipt  of  inomy 

Co.,  r>0  Midi.  01.  iluo  from  h'nisclf  l)y  a  niure  acknowl- 

-  iScD  jio^-i,  Duties  and  Liabilities  of  eilgnient  .signed  by  binr;ulf  a^  agent 

Agents.  that  ho  ha  I  received  it:  Xeuenlorll' r. 

■^  Hinckley  n  Arey,  27  Me.  .%2.  World  Life  Ins.  Co.,  0'.)  X.  Y.  3S9. 
_M;reL:i\vood  r.  Spring,  54  Barb.  A  bank  president  given  jiower  to  cer- 
37o.  An  agent  employed  to  sell  land  tify  cheek.^  cannot  certify  Iii.s  own 
may  reeover  eoiiipeutjation  from  his  checks:  Titus  v.  (Jreat  Western  Turn- 
employer,  alLJioiigh,  with  the  knowl-  piko  Road,  5  Lans.  2j0;  New  Yoi-k 
eiigo  ot  the  latter,  he  has  ailixcd  tlie  etc.  II.  R.  Co.  v.  Schuyler,  .31  X.  Y. 
pureJKiser's  n.-.nio  to  the  contract  of  01;  Claflin  v.  Farmers'  Bank,  25  X.  Y. 
kuIl:  IJarry  v.  Schmidt,  57  Wis.  172;  293. 
40  Am.  Hep.  35.  '  Wright  v.  Dannah,  2  Camp.  203. 

1  Greenwood  r.    pring,  54  Barb.  375;         ^  ^,v^ms  ,..  Scales,  57  Tenn.  3;i7;  25 

GiUutt  c.  Peppercorne,  3  Beav.  78.  Am.  Rep.  772.     See  font,  Duties  and 

^cueudortf  v.  World  Life  Ina.  Co.,  Liabilities  of  Agents. 


It 


PRINCIPAL  AND   AGENT. 


8 


action  for  damages,  held,  that  C,  in  the  transaction,  could  only 
be  A's  agent,  and  the  railroad  could  not  be  liable  for  his  acts 
or  bound  by  them:  Sumner  v.  Charlotte  etc.  R.  R.  Co.,  78  N  G. 
289.  A  person  stands  in  the  position  of  agent  for  both  A  and  B. 
He  cannot  execute  a  mortgage  as  attorney  for  A  for  the  benefit 
of  B:  Greenwood  v.  Spring,  54  Barb.  375.  A  stock-broker  em- 
ployed to  buy  canal  shares  purchased  the  shares  from  his  own 
trustee.     Held,  void:  Gillett  v.  Peppercorne,  3  Beav.  78. 

§  8.    Doing  of  Unlawful  Acts  —  Personal  Acts.  —  An 

agent  cannot  bo  appointed  to  do  an  unlawful  or  prohib- 
ited act,*  or  an  act  personal  in  its  nature.* 


'  Hcugh  V.  Abergavenny,  23  Week. 
Ecp.  40. 
»Coombe's  Case,  9  Coke,  76G;  Ex 


parte  Agra  Bank,  L.  R.  6  Ch.  206.  See 
Chapter  V,,  Delegation  of  Authority, 
post. 


9 


THE   APPOINTMENT  OF   AGENTS. 


§9 


CHAPTER  m. 

THE  APPOINTMENT  OF  AGENTS.* 

§   9.  Authority  essential  to  agency. 

§  10.  May  be  conferred  by  parol. 

§  11.  Or  implied  from  acts. 

§  12.  Declarations  of  agent. 

§  1.3.  Authority  to  execute  instmment  under  seaL 

§  14.  Same — Principal  present. 

§  15.  Unsealed  writings. 

§  16.  Statute  of  frauds. 

§  17.  Agents  of  corporations.    See  Title  11.,  CorporatiooB. 


§  9.  Authority  Essential  to  Agency. — One  cannot  be- 
come another's  agent  except  by  his  authority,  express  or 
implied.^  The  relation  of  principal  and  agent  cannot  be 
established  by  evidence  of  dealings  between  the  alleged 
agent  and  a  third  person  which  the  alleged  principal  has 
neither  authorized  nor  ratified,  but  which  he  expressly 
repudiates.  Testimony  of  such  transactions  is  irrelevant.' 
A  denial  by  an  alleged  principal  of  the  existence  of  any 
agency  operates  to  destroy  the  effect  of  previous  circum- 
stances to  establish  any  agency  existing  by  implication 
prior  to  the  inquiry  eliciting  such  denial.  Such  circum- 
stances are  then  admissible  only  to  explain  the  import  of 
his  answer.*  An  interpreter  is  not  necessarily  an  agent 
of  the  parties,  so  that  what  he  said  can  be  given  in  evi- 
dence if  the  party  sought  to  be  charged  by  his  declarations 
had  no  knowledge  of  the  language  in  which  they  were 
made,  unless  accompanied  with  proof  that  the  interpreter 
correctly  interpreted  the  language  of  the  party.*  To  make 
a  letter  to  an  agent  evidence  in  a  case,  the  agency  must 

'  As  to  appointment  of  agents  of  cor-  52  N.  Y.  612;   Bercich  v.  Marye,  9 

porations,  see  Title  II.,  Corporations.  Nev.  312. 

^  Stringhaiu  v.  St.  Nicholas  Ins.  Co.,        '  North  v.  Metz,  57  Mich.  612. 
4  Ahb.   App.  315;   Pole  v.  Leask,  8        *  Norton  r.  Richmond,  93  111.  367. 
L.  T.  Rep.  615;  McGoldrick  v.  Willits,        *  Diener  v.  Schley,  5  Wis.  483. 


§9 


PRINCIPAL   AND    AGENT. 


10 


I 


first  l)u  cstaLlishcd.'  One  Avho  buys  exchange  for  a  prin- 
cipal irf  the  agent  of  that  principal,  and  not  of  the  seller 
of  the  exchange.- 

Ilmstkations.  —  Without  proof  of  agency,  a  warranty  of  a 
grasP-cutting  machine,  signed  "A  B,  agent,"  wasofiered  and  re- 
ceived in  evidence  in  an  action  upon  the  warranty.  Ilchl,  that 
tliis  was  erroneous:  Gray  v.  G'dUlan,  15  111.  45o.  The  plaintiff 
having  sold  and  delivered  to  the  defendants  granite  hlorks,  which 
they  refused  to  accept,  on  the  ground  that  the  hlotks  were  of 
dimensions  different  from  those  for  which  they  had  contracted, 
and  a  dispute  having  thus  arisen,  the  plaintiff  Avrote  to  the 
defendants  a  letter  containing  the  following  passage:  '•  I  have 
Been  E.,  and  he  has  consented  to  sec  you  on  the  suhject  of  the 
granite,  and  I  have  authorized  him  to  do  so,  atul  if  possihle 
come  to  some  nniicable  arrangement  in  the  matter."  Shortly 
afterwards  E.  went  to  the  defendants,  and,  on  behalf  of  the 
plaintiffs,  agreed  with  them  that  on  payment  of  fifty  pounds 
the  granite  should  he  theirs,  and  no  further  claim  in  respect  of 
it  made  by  the  plaintiff.  The  plaintiff  repudiated  the  agree- 
ment made  by  E.,  and  sued  the  defendants  for  the  price  of  the 
granite.  Held,  that  the  plaintiff's  letter  to  the  defendants  con- 
stituted E.  his  agent,  witli  power  to  make  the  agreement  v.'hich 
in  fact  he  did  make,  and  that  the  jdaintiff  was  therefore  found 
by  it:  Triclcc.lt  v.  TomUnson,  13  Com.  B.,  N.  S.,  GG3;  7  L.  T., 
N.  S.,  G78.  B  employed  C  to  raise  money,  and  C  procured  one 
hundred  and  sixty  pounds  from  A,  which  he  handed  to  B, 
from  whom  he  took  a  check  for  that  sum,  payable  to  him 
(C)  or  bearer.  C  subsequently  applied  to  B  for  iwyment  of 
the  check.  In  an  action  by  A  against  B  on  the  check,  held, 
that  (J  was  clearly  B's  agent,  and  that  delivery  to  him  sup- 
ported the  averment  in  the  declaration  of  a  delivery  to  A: 
Samuel  V.  Green,  10  Q.  B.  2G2;  11  Jur.  G07;  IG  L.  J.  Q.  B.  239. 

A,  being  aware  that  B  wished  to  obtain  shares  in  a  certain 
company,  represented  to  B  that  he.  A,  could  procure  a  certain 
number  of  shares  at  three  pounds  a  share.  B  agreed  to  pur- 
chase at  that  price,  and  the  shares  were  thereupon  transferred, 
in  part  to  him  and  in  part  to  his  nominees,  and  he  paid  to  A 
three  pounds  a  share.  lie  afterwards  discovered  that  A  was  in 
fact  the  owner  of  the  shares,  having  just  bought  them  for  two 
pounds  a  share.     Held,  that  on  the  facts  A  was  an  agent  for 

B,  and  A  was  ordered  to  pay  back  to  B  he  difference  between 
the  prices  of  the  shares:  Kimher  v.  Barh  ,  L.  R.  8  Ch.  App.  5G; 
27  L.  T.,  N.  S.,  52G;  21  Week.  Rep.  65.     A  was  to  acquire  ar= 


'  Brown  v.  Bank  of  Missouri,  2  Mo. 
191;  Browu  v,  Harriaou,  17  Ala.  774. 


'^  Horstmann   v.  Baltzer,   38    Hun. 
3G7. 


11 


THE    APPOINTMENT    OF    AGENTS. 


;§  10,11 


interest  in  a  vessel  when  she  should  ho  huilt.  //(/(/,  that  tho 
huilder  hud  no  iuipHcd  author! tv  to  purchasu'  an  outdt  ou  A's 
credit:  Dc  Wolf  v.  Tupper,  24  Fed.  Hep.  280. 

§  10.  May  be  Conferred  by  Parol. — The  authority  may 
be  expressed  in  writing,  eitlier  by  deed  or  unsealed  instru- 
ment; it  may  be  given  orally.^  Formerly  it  was  said  that 
an  autiioriiy  to  act  as  one's  agent  should  1)0  given  by  deed 
or  other  instrument  under  seal,  so  that  tho  proof  of  tho 
authority  would  be  clear  and  indisputable  iu  every  case." 
But  such  a  rule  would  be  clearly  absurd  in  an  ago  liko 
the  present,  where  the  multifarious  business  of  connnerco 
must  be  carried  on  with  speed  and  without  circumlocu- 
tion; and  so  it  is  now  well  settled  that  no  such  formality 
is  essential  to  tho  formation  of  tho  contract  of  agency.  A 
parol  (verbal)  authority  is  sullicient  to  authorize  an  agent 
to  contract  for  the  sale  of  land;''  to  confess  judgnu'ut;'  to 
enter  on  land;°  to  contract  for  the  sale  of  a  mining  claim j^ 
to  tender  money  to  redeem  land  sold  for  taxes;"  to  exe- 
cute a  lease  for  a  year,  not  requiring  a  seal.''  An  author- 
ity from  a  mortgagor  of  land  to  a  third  person  to  deliver 
possession  to  tho  mortgagee  in  order  to  foreclose  need  not 
bo  in  writing.® 

§  11.  Or  Implied  from  Acts. — Or  tho  appointment 
may  be  implied  from  the  relations  and  actions  of  tho 
parties,"^ — from  tho  recognition  of  tho  principal,  or  his 
acquiescence  in  the  acts  of  tho  agent."     Where  one  man 

'  Story  on  Agency,  sec.  4G;  Lon;^  ?\  "  .Skinner  ?•.  Brewer,  4  Tick.  408. 

Culbuni,  11  Ma:i3.  "J7;  G  Am.  Dec.  ICO;  '''Story  on   Agmcy,    .scc-i.    Bl,    n.'); 

lIo^vo  Mailiiuu  Co.  v.  Clark,  15  Kan.  Wharton  fin  Agency,  svcs.  4;)-ll;  Gil- 

41)1';  Tari-i  ,■.  Lowia,  85  111.  597.  brait'.i  r.  Linel)er;:cr,  CO  N.  ( '.  145. 

-  Evauitm  Agency,  10.  "  Mecliaiuci'  li  k  r.  BiUchcrs'  B'k, 

^  Ledl.i'tter  r.  Walker,  31  Ala.  175;  10  N.  Y.  145;  Gi)  Am.  Dec.  (i7S;  Anicr- 

rontra,  Wallace  v.  Brown,  10  N.  J.  Eij.  ic:in  lui.  Co.  r.  O.i'.dey,  0  I'aiye,  4!)(); 

SOS.  38  Am.  Dec.  5til;  I'iekett  r.  J'oirsons, 

*  Dial  V.  Farrow,  1  Spears,  114.  17  Vt.  470;  Millij^au  r.  Davi  ^  J'J  Iowa, 

'"  Miles  V.  Cook,  1  Grant  Cas.  58.  ll'o;  Cnidicy  r.  I'orter,  'Jl  I'a.  St.  :};tO; 

'''  PatterHon  r.  Koystouo  etc.  Co.,  30  Diiwj  c.  (Irecn,  10  Bar!).  7-;  Guliek  v. 

Cal.  3G0.  Grover,  3:)  N.  J.  L.  4;;!];  'J7  Am.  Dec. 

'  Gracio  v.  White,  18  Ark.  17.  7'J8;  Kik'y  v.  For.seo,  57  Mo.  IVM;  \Vea- 

8  State  V.  Watta,  -14  N.  J.  L.  12G.  vcr  v.  O^letrec,  3'J  Ga.  5dG;  Kelsey  v. 


§11 


PRINCIPAL   AND   AGENT. 


12 


acts  openly  and  avowedly  for  another  in  leasing  or  eon- 
trolling  his  property,  this  is  sufficient,  as  against  third 
persons,  to  show  that  the  property  is  that  of  the  person 
recognized  hy  the  agent  as  owner;  and  the  possession  of 
the  agent  is  the  possession  of  the  principal,  who  can 
maintain  forcihlo  and  unlawful  entry  and  detainer  against 
such  third  persons,  whether  ihe  agent  had  any  written 
authority  or  not.*  The  consent  of  the  owner  to  a  disposi- 
tion of  his  property  may  be  inferred  from  acts  as  well  as 
given  in  direct  terms.  It  may  be  inferred  when  he  gives 
such  evidence  of  the  authority  of  disposal  as  usually  ac- 
companies such  authority,  according  to  the  custom  of 
tr.if^  'id  the  general  understanding  of  business  men.^ 
fle'^'i  'jj  .  conveyance  containing  a  receipt  for  the  con- 
siueration  to  a  person  for  the  purpose  of  completing  a 
s;i'C  '^f  the  land  described  in  the  deed,  and  calling  on  the 
grantee  Lo  so-mo  with  such  person,  constitute  the  latter 
the  grantor's  agent.'  Where  one  bids  off  property  at  a 
sheriff's  sale,  in  pursuance  of  an  agreement  previously 
made  with  another,  by  which  the  latter  is  to  receive  a 
portion  of  the  property  at  a  certain  price,  the  relation 
between  the  two  is  that  of  principal  and  agent,  and  not  of 
vendor  and  vendee.'*  An  agreement  by  a  purchaser  that 
a  third  person  shall  have  a  lien  by  mortgage  or  otherwise, 
after  a  certain  time,  for  a  debt  due  him  from  the  vendor, 
does  not  constitute  the  vendor  the  agent  of  the  purchaser  to 
execute  such  mortgage.®  An  astronomer  who  assists  con- 
tracting engineers  in  their  survey,  and  is  paid  with  their 
money,  but  who  is  not  appointed  by  them,  and  cannot  be 
discharged  by  them,  and  who  is  not  responsible  to  them. 


National  Bank,  69  Pa.  St. 426;  St.  Louis 
etc.  Packet  Co.  v.  Parker,  50  111.  23; 
Sunimerville  t>.  Hannibal  etc.  R.  R. 
Co.,  62  Mo.  391;  Morgan  t'.  Durrah,  39 
Tox.  171;  Commercial  Bank  v.  War- 
ren, 15  N.  Y.  577;  Kouiitz  v.  Price,  40 
Miss.  341 ;  Bank  of  Kentucky  r.  Brook- 
ing, 2  Lit.  41;  Sweetzer  v.  French,  2 
Cash.  LOJ;  4S  Am.  Dec.  666. 


1  Minturn  v.  Burr,  16  Cal.  107. 

^  WrigLt  V.  Soloman,  19  Cal.  64;  79 
Am.  Dec.  196. 

»Popo  V.  Chafee,  14  Bich.  Eq. 
69. 

*  Wright  V.  Calhoun,  19  Tex.  412. 

^  Hyde  V.  Boston  and  Barra  Co.,  21 
Pick  90. 


Rib 

I 


12 


13 


THE   APPOINTMENT  OF   AGENTS 


§11 


3r  con- 

t  third 

person 

sioii  of 

lio  can 

against 

written 

lisposi- 

wcll  as 

le  gives 

ally  ac- 

itoni  of 

s  men.^ 

ho  con- 

ieting  a 

J  on  the 

[Q  latter 

rty  at  a 

3viously 
1 
ceive  a 

relation 

not  of 

ler  that 

erwise, 

cndor, 

laser  to 

its  con- 

their 

not  be 

them, 

107. 
jil.  64;  79 

lich.    Eq. 

Ix.  412. 

le  Co.,  21 


11 


is  not  their  agent.*  But  where  the  agent  is  appointed  by 
writing,  the  writing  must  be  produced  or  accounted  for.- 
An  agent's  authority  to  execute  a  sealed  instrument  can- 
not be  shown  by  a  parol  acknowledgment  of  the  principal 
that  a  sealed  authority  had  been  given.' 

Illustrations.  —  There  was  an  agreement  between  A  and  B 
that  A  should  purchase  property  at  a  sale  for  the  Ijoncfit  of  B's 
creditors,  and  allow  it  to  remain  with  B,  to  roscll  and  reim- 
burse A,  and  retain  the  surplus,  if  any.    Held,  that  this  did  not 
make  A.  the   agent  of  li:    Ilnynes  v.   Crutchfirld,  7  Ala.  189; 
Cravens  v.  Cravens,  1  Morris,  285.     A  agrees  with  B,  his  debtor, 
that  ho  will  permit  his  note  to  be  renewed,  if  it  is  indorsed 
by  C.     Held,  that  this  does  not  constitute  B  the  agent  of  A; 
nor  is  A  liahle  for  any  fraud  of  B  in  procuring  the  indorse- 
ment of  C:  Harris  v.  Bradley,  7  Yerg.  310.     II.  api)licd  to  W. 
for  a  loan  of  one  thousand  dollars.     \V.  told  him  if  ho  would 
meet  him  on  a  certain  day,  with  a  bond  and  mortgage  made 
out  to  one  C,  and  would  assign  also  to  said  C.  a  certain  other- 
bond  and  mortgage  as  collateral,  ho  should  have  the  money; 
they  met,  and   W.  telling  II.  that  ho  had  only  six  hundred 
dollars,  which  he  would  pay  him  as  soon  as  he  could  raise  it, 
if  he  would  deliver  to  him  the  bonds  and  mortgages,  II.  de- 
livered the  papers.    Held,  that  thereby  II.  made  W.  his  agent  to 
deliver  them  to  C,  and  to  receive  the  money  from  him:  Cooper 
V.  Ileadlcy,  12  N.  J.  Eq.  48.     The  question  is,  whether  an  agent 
(not  having,  by  the  papers  which  created  him  such  agent  and 
defined  his  powers,  any  authority  to  alter  a  policy  which  had 
been  issued  by  his  principal),  "was  permitted  to  alter  policies 
in  respect  to  days  of  sailing,  from  time  to  time,  so  that  that 
became  the  customary  usage  and  course  of  business."     Held, 
that  the  evidence  must  show,  in  order  to  bind  the  principal,  at 
least  several  eases  in  which  the  agent,  without  asking  the  sanc- 
tion of  his  acts  by  the  principal,  had  made  alterations  of  a  like 
_  nature  on  which  the  principal  had  acted,  and  in  which  he  had 
"^  acquiesced  when  such  alterations  came  to  his  knowledge;  or  it 
;  nmst  tend  to  prove  that,  although  communicated  by  the  agent, 
I  they  were  acquiesced  in,  as  acts  which  he  was  competent  to 
|perform,  and  as  binding  on  bis  principal;  or  that  he  was  held 
§out  to  the  public  as  authorized  to  do  such  acts:    Bunten  v. 
lOricnt  etc.  Ins.  Co.,  4  Bosw.  254.     A  son  had  been  for  years  in 
:  the  habit  of  signing  his  father's  name  as  indorser  upon  promis- 


'  Jones  V.  United  States,  1  Ct.  of  CI. 
:v383. 

I     '  Neal  V.  Patten,  40  Ga.  363:  Raw- 
iBon  V.  Curtis,  IS)  111.  456. 


»  Blood  V.  Goodrich,  9  Wund.  G8;  24- 
Am.  Dec.  121;  Paine  v.  Tucker,  21  Me.. 
138;  38  Am.  Dec.  255. 


§11 


rni-N'CIPAL    AND    AGENT. 


14 


pory  notos  made  by  liiiiisi-lf,  iuid  tho  fatlior  know  tlio  fact,  but 
toolc  no  Htcps  lo  jiri'Vi'iit  Hucli  use  of  his  nauH',  and  gave  no  no- 
tice, ctr.  //(/(/,  that  u  ])r('suin[)tion  was  ciratcd  that  the  son  had 
nutliority  to  sign  his  father's  nani(\  and  tho  fatlu  r  w;is  Hahlc 
upon  such  notes:  Ilrc/rr/'  v.  Oijhlrrr,  []',)  (ia.  58(5.  In  an  action 
fof  tuiinj;  the  j)hiinli(r  in  th(;  name  of  a  third  ])ers(jn,  without 
authority,  evidence  tliat  tlie  tliird  pi-rson  bad  Puil'.'red  ji  default, 
and  that  execution  had  issued  against  liim  to  recover  for  ser- 
vices rendered  i:i  jirosecuting  tho  suit  so  brought  witliout  his 
authority,  lirJd,  ina(huissih!(>  to  sliow  that  tho  defeiKbmt  Avas 
autliori/v'd  to  I)ring  tho  pn^vious  suit  in  bis  name:  Foificr  v. 
l)oii\  'J'.)  ]\b'.  •112.  I'jion  a  pahi  of  grain  in  store,  tho  vendor 
luinded  the  order  on  tlio  storekcM'per  for  tlie  delivery  of  tlie  corn 
to  a  I'^hter-nian,  and  cuii)loyed  him  to  carry  it  away,  instead  of 
leaving  that  lo  be  done  by  tlu;  purcliasers,  as  was  customary, 
but  tlio  latter  paid  tho  ligliterage.  IlchJ,  tliat  tlie  lighter-man 
was  to  be  considered  as  tho  agent  of  tho  latter  for  tho  trans- 
portation of  tho  grain,  of  which  there  bad  been  a  delivery  to 
the  purchasers  according  to  the  custom,  while  it  was  yet  in 
fc;tore:  McCrcady  v.  ]Vri[iIif,  5  Duer,  571.  A  baidc  delivered  to 
A  certain  notes,  with  a  retjuest  that  ho  would  pass  tliem  aw;ty 
for  the  benefit  of  the  bank,  or,  if  bo  could  not  do  that,  to  return 
them,  which  bo  agreed  to  do.  ITcJil,  A,  quoad  Imr,  is  the  servant 
of  tho  bank:  Toicson  v.  Havre  De  (irace  IJanl:,  G  llnr.  tt  J.  47; 
ItridcnhrcJici'  v.  Lowrll,  o2  Uarb.  0.  W.,  an  agent  for  A.,  sold 
but  did  not  transfer  stock  to  C,  and  promised  C.  to  "bo  account- 
able for  such  dividends  as  ho  or  his  agent  should  receive  before 
transfer."  Held,  that  be  thereby  became  C.'s  agent  to  receive 
such  dividends:  Cropper  v.  Adnm^,  8  Pick.  40.  Where  a  per- 
son, acting  ostensibly  as  the  agent  of  the  defendants,  was  at  tho 
time  of  the  transaction  in  question,  and  for  years  bad  been,  a 
clerk  in  their  store,  and  had  as  their  agent  done  business  in  many 
instances  with  the  plaintiffs.  Held,  that  these  facts  established 
liis  general  agency:  Eacjle  Bank  v.  Smith,  5  Conn.  71;  13  Am. 
Dec.  37.  A  received  of  !>  a  note,  and  agreed  to  indorse  it  on 
another  note  in  favor  of  C.  Held,  in  a  suit  against  A,  that  proof 
of  such  act  and  agreement  alone  did  not  conduce  to  prove  that 
A  in  such  transaction  was  the  authorized  agent  of  li:  Plant  v. 
MeEwen,  4  Conn.  544.  Defendant  sent  to  a  builder,  whom  be 
had  employed  to  build  and  finish  his  house,  a  note  requesting 
him  to  procure  mantel-pieces  like  some  which  another  person 
had  purchased  from  plaintiffs.  This  note  tho  builder  showed 
to  plaintiffs  without  comment,  and  ordered  some  mantel-pieces 
from  them.  Held,  that  defendant  was  not  liable  to  plaintiffs 
for  the  price.  The  circumstance  did  not  warrant  plaintiffs  in 
assuming  that  the  builder  made  the  purchase  as  agent:  Murphy 


11 


15 


THE    ArroiXTMKXT    OF   AGENTS. 


S  1-2,13 


net,  but 
t?  no  no- 
son  had 
s  li:il.lo 
11  action 
without 
(lefault. 
•  for  Hrr- 
lout  his 
ant  was 

/'ot'fC/-  V. 

',  vendor 
the  corn 
istead  of 
stomary, 
itcr-nian 
10  trans- 
•livcry  to 
IS  yet  in 
ivercd  to 
oni  away 
to  return 
u  servant 
&  J.  47; 
k'  A.,  pold 
account- 
ve  l)cfore 
)  receive 
re  a  pcr- 
as  at  the 
1  been,  a 
in  many 
ablishcd 
13  Am. 
frsc  it  on 
liat  proof 
ovc  that 
Plant  V. 
Ivbom  ho 
questing 
[r  person 
showed 
el-pieces 
(laintiffs 
n tiffs  in 
Murphy 


V.  ]Vii}rhr>Jrr,  .".'  Piarb.  Oir,.  TIic  mas'ter  of  a  barpe  finds  a  jx  r- 
8on  appan'titly  in  char'Ti' of  a  wharf,  and  nioor-;  his  bar;.'!' wIkto 
this  person  (hrccts,  pri'suniinj:;  liiin  to  he  t  hi-  ajri'iit  of  thr  w  harf- 
owner.  Ilrld,  that  ho  may  hold  tlic  owner  lialilc  if  the  hargo 
sustains  iiijurv  bv  tlio  phioe  of  mooring  l)iiiig  an  unsafe  one: 
I'rnnsi/Jrn.i'in  'li.  11.  Co.  y.  AUni,  '22  Fi'ih  Kcp.  '.fJO.  A  ticket- 
agent  in  the  employ  of  the  L.  11.  11.  ('o.  sold  tlie  tickets  of  the 
v.  K.  R.  Co.  lie  was  directed  to  do  so  by  (he  L.  Co.,  wliich  was 
compf^nsated  liy  the  P.  Co.  uu'Ier  a  contract  between  them.  Tho 
agent,  after  selhiig  tlie  1'.  Co.'s  tickets,  as  well  as  those  of  th'-  b. 
Co.,  for  two  years,  left  tluM'tniiloynu'iit  of  the  b.  Co..  ami  i>ronght 
suit  against  the  P.  Co.  for  services  in  selling  its  tickets.  There 
was  no  proof  of  a  contract  or  of  an  e.xpri'ss  promise.  Jld'K  that 
1m!  could  not  recover:  Pcnnftylvnnla  It.  A'.  Co.  v.  Flaniiian,  112 
Pa.  8t.  5o8. 

g  12.  Declarations  of  Agent. — The  aniliority  of  tlio 
aL;cnt  to  bind  the  princii)al  cannot  bi;  i)roved  by  tlio 
agent's  statements  as  to  the  extent  of  bis  authorily;'  nor 
can  ail  agent  give  himself  authority  to  bind  bis  pi'incipal 
by  false  statements  to  those  with  whom  bo  deals  as  to  the 
extent  of  liis  authority;'  nor  can  a  s])eeial  agent  enlarge 
his  authority  bv  such  statements.^  Statements  bv  an 
agent,  before  ho  received  authority  to  act,  or  after  it  had 
been  withdrawn,  or  not  within  the  scope  of  his  agency, 
do  not  bind  his  principal.'' 

§  13.    Authority  to  Execute  Instrument  under  Seal.  — 

Yet  where  the  agent  is  to  execute  his  authority  by  deed, 
his  appointment  is  required  to  bo  under  seal  also."     But 

'  Ifdwo   Machine   Co.   v.   Clark,    15  maybe  prnved  by  tli'.' a'^ciit  liimsolf: 

Kail.  4'.)'J;  Uoyiiolds  r.  Continent  Ins.  Thayer  v.  Meeker,  8(5  111.  4~i). 

Co.,  lUi  Midi.   ]:il;  Maxey  ?•.   lleeko-  -  Striu^liam     r.    St.    Nielinlis     Ins. 

tiidiii,  44  111.  4:58;  Raw.sou  v.  Curtis,  Co.,    4    Al)l).    App.    31.');    Cmver    ami 

]'.»  ill.  474;  BriL'hani  r.  Peters,  1  Cray,  Baker  Co.  >\  Voliienm.s,  ;i4  Mieii.  1217. 

l:i'.l;   Peck   r.    llitohey,    0(5    Mo.    114;  ■' StoUenwerek  c.  Thacher,  1  l.j  .Ma.ss. 

Streeter  r.  Poor,  4  Kan.  412;  Chiea-o  224. 

etc.  l\.  R.  Co.  r.  Fox,  41  111.  lO');  liar-  *  Clark  v.  Baker,  2  Whart.  340. 

k.r  /•.  Dement,  9  (Hll,  7;  52  Am.  Dec.  ''  Kowe  r.  Ware,  :50(;a.  278;  Wlieel- 

1)7(1;  Prikins  c.  .Stebl)ins,  2'J  Barb.  523;  cr  r.  Nevins,  ;]4  Me.  54;  Haniord  v. 

.Mi'DongaM   ?'.  Daw.son,   30  Ala.  a,').'};  McXair,  '.)  Weud.  51;  Blooil  /•.  (;f>otl- 

Searhoroiigh  r.  Keynolds,  12  Ala.  2.")2;  rich,   •)  Weml.   (i8;  24  Am.   Di'C.    121; 

Sirmgham  r.  Li.s.  Co.,  4   Abb.   App.  12  Wend.  525;   Desi.atch  Line  ;•.  Bel- 

315;    :i7    IT.nv.    pr.    375;   Whiting    v.  lamy  Mfg.  Co.,  12  Is'.  H.  205;  :;7  Am. 

Lake,  1)1  Pa.  St.  349.     But  an  agency  Dec.  203;  Worrall  v.  Munii,  5  x\.  Y. 


13 


PRINCIPAL  AND   AGENT. 


16 


a  deed  of  land  by  an  agent,  authorized  simply  by  a  power 
not  under  seal,  though  inoperative  to  convey  the  legal 
title,  will  in  equity  be  evidence  of  a  contract  to  convey,  to 
sustain  a  suit  for  specific  performance  against  the  prin- 
cipal.' If  an  agent,  not  properly  authorized  to  execute  a 
contract  under  seal,  execute  a  contract  under  seal  which 
does  not  require  this  formality,  it  will  bo  held  valid  and 
binding  on  the  principal  as  a  simple  contract.'^  "  It  is  a 
maxim  of  the  common  law,  that  an  authority  to  execute 
a  deed  or  instrument  under  seal  must  bo  conferred  by  an 
instrument  of  equal  dignity  and  solemnity, — that  is, by  one 
under  seal.  This  rule  is  purely  technical.  A  disposition 
Las  been  manifested  by  most  of  the  American  courts  to 


229;  Preston  v.  Hull,  2.3  Gratt.  (500; 
14  Am.  Rep.  153;  Soheutzo  v.  Bailey, 
40  Mo.  09;  Cooper  t'.  Rankin,  5  Binn. 
613;  McNaughten  v.  Partridge,  11 
Oiiio,  223;  38  Am.  Dec.  731;  Cuiiuniua 
V.  Caasely,  5  B.  Mon.  75;  Emerson  i\ 
Prov.  Hat  Co.,  12  Mass.  240;  7  Am. 
Dec.  C6;  Harshaw  v.  McKesson,  63 
N.  C.  088;  Mans  v.  Worthing,  3  8cam. 
26;  Adama  v.  Power,  52  Miss.  828;  Da- 
mon V.  Granby,  2  Pick.  345;  Banorgee 
V.  Hovey,  5  Maaa.  11;  4  Am.  Dec.  17; 
Reed  v.  Van  Oatrand,  1  Wend.  424;  19 
Am.  Dec.  529;  Gordon  v.  Biilklcy,  14 
Serg.  &  R.  331;  Wells  v.  Evans,  20 
Wend.  251;  Van  Home  v.  Frick,  6 
Sorg.  &  R.  90;  Lawrence  r.  Taylor,  5 
Hill,  113;  Dulais  v.  Cawthorne,  2  Dev. 
90;  Davenport  v.  Sleight,  2  Dev.  &  B. 
381;  31  Am.  Dec.  420;  Drumright  v. 
Philpot,  16  Ga.  424;  00  Am.  Dec.  7.^S; 
Blackwell  v.  Parish,  G  Jones  Eq.  72; 
Phelps?'.  Call,  7  Ired.  2(>4;  47  Am.  Dec. 
327;  Tuberville  i>.  Ryan,  1  Humph. 
113;  34  Am.  Dec.  622;  Williams  v. 
Gillies,  75  N.  Y.  202.  But  see  Peine 
V.  Weber,  47  111.  44;  Hefner  v.  Palmer, 
67111.  101;  Cady  V.  Shepherd,  11  Pick. 
400;  22  Am.  Dec.  379;  Humphreys  v. 
Finch,  97  N.  C.  303;  2  Am.  St.  Rep. 
293.  The  acknowledgment  of  a  power 
of  attorney  to  convoy  lands  is  not 
necessary  to  admit  it  in  evidence:  Val- 
entine V.  Piper,  22  Pick.  85;  33  Am. 
Dec.  715. 

'  Groffr.  Ramsey,  19  Minn.  44;  Law- 
rence V.  Taylor,  5  Hill,  107;  Baum  v. 
Dubois,  43  Pa.   Sk   260;   Pringle  v. 


Spaulding,  83  Barb.  17;  Scheutze  v. 
Bailey,  40  Mo.  09;  Irvine  v.  Thomp- 
son, 4  Biblj,  2%;  Stackpole  r.  Arnold, 

11  Mass.  27;  0  Am.  Dec.  150;  Johnson 
V.  McGruder,  15  Mo.  305;  Blood  v. 
Hardy,  15  Me.  01;  Morrow  r.  Hig- 
gins,  29  Ala.  4.")0;  Ledbettcr  v.  Walk- 
er, 31  Ala.  170;  Newton  v.  Bronson, 
13  N.  Y.  593;  07  Am.  Dec.  89;  Jack- 
son V.  Murray,  6  T.  B.  Mon.  184;  17 
Am.  Dec.  53;  Jones  v.  Marks,  47  Cal. 
242. 

*  Dickerman  v.  Ashton,  21  Minn. 
5.38;  State  r.  Spartenburg  R.  R.  Co.,  8 
S.  C.  129;  Despatcli  Lino  v.  Bjllimy, 

12  N.  H.  205;  37  Am.  Dec.  20.3:  Law- 
rence V.  Taylor,  5  Hill,  107;  Worrall 
V.  Munn,  5  N.  Y.  229;  55  Am.  Dec. 
330;  Longr.  Hartwell,  34  N.  J.  L.  110; 
Cooper  V.  Rankin,  5  Binn.  013;  Lcd- 
better  r.  Walker,  31  Ala.  175;  Drum- 
right  r.  Phdpot,  10  Ga.  424;  CO  Am. 
Dec.  738;  Tapleyr.  Butterfield,  1  Met. 
515;  35  Am.  Dec.  374;  Love  r.  Sierra 
Nevada  Co.,  32  Cal.  0.-)4;  91  Am.  Dec. 
002;  Ingrahain  v.  Etlwards,  04  111.  528; 
Dean  v.  Rocslcr,  1  Hilt.  421;  Ilaight  v. 
Sabler,  .30  Barb.  223;  Wood  v.  Auburn 
etc.  R.  R.  Co.,  8  N.  Y.  107:  Ford  v. 
Williams,  13  N.  Y.  585;  07  Am.  Dec. 
83;  Bellinger  v.  Bentley,  4  Thomp.  & 
C.  74.  But  see  Baker  i\  Freeman,  35 
Me.  485;  Fullam  v.  West  Brookiield,  9 
Allen,  6.  Yet  if  it  bo  declared  on  as 
a  contract  under  seal,  there  can  bo  no 
recovery  against  the  principal:  Ingra- 
ham  V.  Edwards,  64  111.  526. 


le 


17 


THE    APPOINTMENT   OF   AGENTS. 


§  14 


power 
legal 
rcy, to 
prin- 
cuto  a 
which 
id  and 
It  is  a 
xccute 
by  an 
by  Olio 
osition 
arts  to 

heutze  v. 

,  Ihonip- 

•.  Arnold, 

;  Jolmson 

Blooil  V. 

f  V.   Hig- 

,..  Walk- 

Bronson, 

81);  Jack- 

1.   184;  17 

47  Cal. 


111.  5-28; 


relax  its  strictness,  especially  in  its  application  to  partner- 
ship and  commercial  transactions.  I  think  tlic  doctrine 
us  it  now  prevails  may  bo  stated  as  follows,  viz.:  If  a  con- 
veyance or  any  act  is  required  to  bo  by  deed,  the  authority 
of  the  attorney  or  agent  to  execute  it  must  bo  conferred  by 
deed;  but  if  the  instrument  or  act  would  be  effectual  with- 
out a  seal,  tho  addition  of  a  soul  will  not  render  an  author- 
ity under  seal  necessary,  and  if  executed  under  a  parol 
authority,  or  subsequent y  ratified  or  adopted  by  parol, 
the  instrument  or  act  Wiil  bo  valid  and  binding  on  tho 
principal."* 

Illu.strations. — A  deed  was  executed  by  the  grantor,  a 
blank  being  loft  for  the  name  of  tho  grantee,  who  afterwards, 
by  parol,  authorized  an  agent  to  fill  in  his  iianio.  The  deud 
was  held  void:  Ilibhkwhito  v.  McMorlac,  G  Mees.  tt  W.  2U0; 
Grahnm  v.  Holt,  3  Ired.  300;  40  Am.  Dec.  408;  Wlllinmn  v. 
Crutchcr,  5  IIow.  (Miss.)  71;  35  Am.  Dec.  422;  Davenport  v. 
Sleight,  2  Dev.  &  B.  381. 

§  14.  Same — Principal  Present. — Unless  tho  deed  be 
made  in  his  presence.  In  this  case,  if  tho  principal  bo 
present,  and  verbally  or  impliedly  authorize  the  agent 
to  execute  a  deed  for  him,  it  is  binding  on  him.'' 

Illustrations. — A,  by  B's  authority,  and  in  his  presence, 
signed  B's  name  to  a  recognizance  of  bail  for  the  stay  of  exe- 
cution. IlehU  binding  on  B:  Croy  v.  Ittisenhnrl;  72  Ind.  48.  A 
authorized  B  to  borrow  money  of  C,  and  sign  his  name  to  a 
note  for  it.  B  borrowed  the  money,  and  at  his  request  and 
in  his  presence  D  signed  A's  name  to  the  note,  thus,  "A  by  D." 
Held,  that  this  was  tho  act  of  B,  and  in  legal  effect  the  act  of  A; 
and  that  A  was  bound:  Weaver  v.  Carnnll,  35  Ark.  108;  37  Am. 
Rep.  22.  A  marriage  settlement  was  brought  to  the  door  c*  ii, 
room  where  the  bride  was  preparing  for  the  wedding  ceremon), 
and  she  requested  the  bearer  in  the  presence  of  a  witness  to  sign 
it  for  her.  lie  withdrew  to  tho  yard  adjoining  and  signed  it 
there.  Held,  a  good  execution:  Reinhart  v.  Miller,  22  Ga.  402; 
G8  Am.  Dec.  506.  A  daughter  testified  that  a  servant  of  II. 
brought  a  bond  to  her  father  signed  by  II.  and  containing  a 
Beal  for  another  name,  with  a  request  from  II.  to  her  father  to 

*  Paige,  J.,  in  Worrall  v.  Munu,  5  ■'Gardner  v.  Gardner,  5  Cush.  483; 
N.  Y.  'J29;  55  Am.  Dec.  330.  McMurtry  v.  Brown,  G  Nelj.  308. 

Vol.  L-2 


§15 


PRINCIPAL   AND   AGENT. 


18 


Bign  it.  Ilor  father  by  reason  of  infirmity  could  not  write,  and 
directed  her  to  higii  it  for  him;  for  tiiat  purpoHo  ho  laid  the 
paper  on  a  t:ii)le,  and  then  went  out  of  the  house.  She  nignod 
his  natno  as  Hh(!  liad  often  (h)ne  before,  and  dehvered  it  to  II. 's 
servant.  Tiie  father  made  iio  ohjcelion  afterwards.  Ifcld,  ndt 
to  be  bueh  a  tjigniiig  in  his  j)reBenee  as  wouhl  hind  tlie  father: 
Kimr  V.  />/'fK)/>x,  U  Ire'h  'JIS.  One  partner  read  and  app  ' 
an  arbitration  botid,  and  consented  ti)at  his  copartner  s 
execute  it.  Jlrlil,  that  such  execution  in  the  name  of  tlu;  (irm 
by  the  copartner,  his  partner  being  in  the  store  at  tho  time 
althouf^'h  not  in  iiis  immediate  presence,  was  good:  Muchny  v. 
Dloodijond,  D  Johns.  2.So.  A  married  woman  reijU'sted  her 
daughter  to  sign  her  name  to  a  mortgage,  Avliieh  was  done  in 
lier  presence.  Held,  as  vaUd  as  if  it  had  been  wnttt  ii  by  her- 
self: Janmi  v.  McCahill,  22  Cal.  r)(3rj;  m  Am.  Dee.  .S4.  A  bus- 
band  at  ins  wifii's  request  signed  her  name  to  a  deed  several 
days  after  his  own  had  been  signed,  and  in  her  absence.  It 
also  appeared  that  8h(»  had  subsequently  stated  several  times 
that  he  did  so  at  her  request.  Held,  suflicient  to  bar  her  dower: 
Froiit  V.  Decrhiff,  21  Me.  150.  An  illiterate  son  conveyed  his 
lands  to  his  father,  and  executed  tho  deed  by  orally  authorizing 
another  person  to  sign  it  in  his  presence,  afterwards  dul;'  ac- 
knowledging it.  IJdd,  to  be  a  valid  conveyance:  B'  v. 
Decker,  ()4  Me.  550.  One  witness  who  was  present  at  the 
action  testified  that  a  married  woman  executed  a  deed  Uj  a 
third  person  taking  hold  of  her  hand  and  signing  her  name, 
which  deed  was  then  duly  acknowledged.  Held,  to  constitute 
a  good  signing:  Pierce  v.  Ilalrs,  23  Pa.  St.  231.  A  written 
lease  was  shown  and  read  to  a  woman  who  took  a  pencil  to  sign 
it,  but  found  that  her  name  had  been  already  written  by  her 
brother,  who  had  himself  signed  as  surety  for  tho  rent.  She 
thereupon  delivered  tho  lease,  stating  that  she  supposed  he  had 
written  her  name,  and  it  was  all  right.  Held,  in  tho  absence  of 
fraud,  that  there  was  a  sufiicient  execution  to  bind  her:  Speckels 
V.  Sax,  1  E.  D.  Smith,  253. 


§  15.  Unsealed  Writings.  —Yet  the  law  does  not  require 
that  an  authority  to  an  agent  to  sign  an  unsealed  instru- 
ment or  writing  should  likewise  bo  in  writing.^  Thus 
an  agent  may  be  verbally  authorized  to  sign  or  indorse 


*  McWhorterv.  McMahan,  10  Paige, 
386;  Worrall  v.  Muiin,  5  N.  Y.  229; 
55  Am.  Dec.  330;  Newton  v.  Bronson, 
13  N.  Y.  587;  C7  Am.  Dec.  89;  Baum 
V.  Dubois,  43  Pa.  St.  260;  Lawrence  v. 


Taylor,  5  Hill,  107;  Riley  v.  Minor,  29 
Mo.  439;  Curtis  v.  Blair,  26  Mias.  309; 
59  Am.  Dec.  257;  Shaw  v.  Nudd,  8 
Pick.  9. 


18 


19 


THE   ArrOINTMFNT   OP    AOENTfl.  §§  K^  17 


0,  and 
d  tho 
nipiiod 
()  II.'h 
Id,  "*Jt 
father: 

I'         ' 

H.  -* 

lie  firm 
('  tiino 
icktty  V. 
cd   her 
done  in 
by  hcr- 
A  hus- 
Bcvoral 
iicc.     It 
il  times 
r  dower: 
>yed  his 
horizing 
dul"  ac- 
L'      v. 
ho 

;ed  i>j  a 
cr  name, 
onetitute 
written 
1  to  sign 
n  by  her 
nt.     She 
he  had 
sence  of 
Specheh 


require 

instru- 

II    Thus 

indorse 

I.  Minor,  29 
Mi88.  309; 
Nudd,  8 


notes  for  another/  thonj^li  it  has  l)ecii  licld  tlmt  nii  au- 
thority to  «ell  binds  is  not  ^ood  by  piirol.^  On  the  other 
lumd,  it  has  boon  hebl  that  tho  authority  of  an  a.ijjcnt  to 
make  a  contract  fur  tho  sal<J  of  real  e^tat(>  ni'ed  lu't  bo 
luidor  seal;' or  even  in  writin^i^.'  But  tho  proof  of  tho 
ajjcnt's  authority  must  bo  clearly  shown  l>y  tho  party 
seeking  to  enforce  tho  contract  nmdo  by  him.'' 

Illvstrations.  —  A  principal  wrote  to  his  general  agent  to 
poll  his  lands  in  Miiiiie«ota.  .'i. ''/,  that  tho  ngiMit  was  tlicreby 
authorized  to  coiitruet  to  euiivey,  I  hough  he  had  no  uuthority 
under  seal  which  was  necessary  for  an  actual  conveyance:  iUt- 
nor  V.  Willot((jhhy,  'A  Minn.  225. 

§  16.  Statute  of  Frauds. — Tho  authority  of  an  ascnt 
to  make  a  contract  for  tho  salo  of  lands,  under  the  fourth 
or  sovcntccntli  sections  of  the  statutes  of  frauds,  is  not  rc- 
(piired  to  be  in  writing." 

§  17.  Agents  of  Corporations.  — The  agents  of  corpora- 
tions, originally  at  common  law  required  to  be  authorized 
hy  the  seal  of  tho  corporation  in  almost  every  case, arc  now 
appointed  without  seal,  as  by  vote  of  the  directors,  or  even 
hy  recognition  of  their  acts.^ 


*  Riuvsoii  V.  Curtis,  19  111.  456. 

'  Viinliomo  V.  Frick,  (>  Serg.  &  K.  90. 

'  Damn  v.  Dubois,  4.'}  Pa.  St.  200; 
Riloy  r.  Minor,  29  Mo.  4159;  Ilottniau 
V.  Wusson,  6  Kau.  552;  Evans  on 
Ag(^ney,  27. 

*  Dickcrman  v.  Ashton,  21  Minn. 
BUS;  Brown  v.  Eaton,  21  Minn.  409. 

''  rroiulfoot  r.  Wightnian,  78  111.  5.')3; 
DuO'y  r.  Hobson,  40  Cal.  240;  G  Am. 
Hep.  017;  Treat  r.  Dc  Cells,  41  Cal.  202. 

'Lawroueo  v.  Taylor,  5  Hill,  107; 
Mortimer  c.  Cornwell,  1  HoflF.  Ch.  351; 
Riley  V.  Minor,  29  Mo.  439;  Rottman 
V.  Wasson,  5  Kan.  552;  Long  v.  Hart- 
wdl,  34  N.  J.  L.  110;  Dickermau  v. 


Ashton,  21  Minn.  538;  Brown  r.  Eaton, 
21  Minn.  409;  McWliortcr  r.  McMa- 
hau,  10  Paige,  3Sli;  Mooily  r.  Smith, 
70  N.  Y.  50S;  .lackson  r.  Murray,  5 
T.  K  Mou.  184;  17  Am.  Dec.  5:5;  Wor- 
rail  V.  Mnnn,  5  N.  Y.  22!);  5.-)  Am. 
Dec.  .S.W;  Doty?'.  Wilder,  15  111.  411; 
00  Am.  Deo.  755;  .Squier  i'.  Norris,  1 
Lans.  284;  Henry  v.  Root,  33  N.  Y. 
550;  Haydoek  v.  Stone,  40  N.  Y.  308; 
Briggs  V.  Partridge,  04  N.  Y.  304;  21 
Am.  Rep.  017.  Rulo  changed  in  som** 
states  hy  statute:  See  Bissell  v.  Terry, 
09  111.  184. 

'  This  Fuhject  is  considered  under 
Title  II.,  Corporations,  po6t. 


^i^ 


§§  18, 19 


PRINCIPAL  AND  AGENT. 


20 


CHAPTER  IV. 

JOINT  PRINCIPALS  AND  AGENTS. 

§  18.  Joint  principals  not  agents  for  each  other. 

§  19.  Unless  they  bo  partners. 

§  20.  Riglits  and  liabilities  of  joint  principals. 

§  21 .  Joint  agents  must  act  together. 

§  22.  Agency  for  public  purpose. 

§  23.  Liability  of  joint  agents. 

§  18.    Joint  Principals  not  Agents  for  Each  Other. — 

One  of  two  or  more  joint  tenants  or  owners  or  tenants  or 
owners  in  common  cannot  appoint  an  agent  to  act  for 
and  bind  the  interest  of  the  other  or  others  without  their 
assent.^ 

Illustrations. — A,  the  owner  of  a  parcel  of  clo^h,  and  B,  the 
owner  of  another  parcel  of  cloth,  by  a  joint  instrument  consign 
the  two  parcels  to  C  to  sell.  The  parcels  are  subject  to  sepa- 
rate instructions,  and  C  cannot  sell  B's  parcel  on  instructions 
by  A,  or  vice  versa:  Cooper  v.  Eijre,  1  II.  Black.  37;  Story  on 
Agency,  sec.  38;  Wharton  on  Agency,  sec.  54;  Johnson  v. 
O^IIara,  5  Leigh,  45G.  One  of  two  tenants  in  common  repre- 
sents himself  as  the  agent  of  the  other,  and  sells  the  land  of 
both.  The  title  to  his  co-tenants'  land  will  not  pass:  Sewcll  v. 
Holland,  61  Ga.  G08. 


§  19.  Unless  They  be  Partners. — But  if  they  he  part- 
ners the  rule  is  different,  for  one  partner  is  the  agent  of 
the  others  for  all  the  purposes  of  the  partnership  busi- 
ness.^ Therefore,  wh^re  two  railroad  companies  do  busi- 
ness together,  sharing  the  profits  with  a  common  office 
under  the  charge  of  a  general  agent,  they  are  jointly  liable 


*  Story  on  Agency,  sec.  38;  Wharton 
on  Agency,  sec.  54;  United  States  Ins. 
Co.  V.  Scott,  1  Johns.  106;  Evans  on 
Agency,  26. 

'  Story  on  Agency,  sec.  39.  As  to 
notice  to  quit  given  by  one  of  seveial 


joint  tenants,  see  Evans  on  Agency, 
2G;  Chemung  Caual  B'k  v.  Bradnei ,  44 
N.  Y.  080.  But  the  agent  of  a  part- 
nership is  the  agent  of  the  firm,  and 
not  of  the  individuals:  Johnston  v. 
Brown,  IS  La.  Ann.  330. 


20 


21 


JOINT  PRINCIPALS  AND  AGENTS.  §§  20,  21 


on  a  contract  made  with  a  shipper  by  such  agent.*    And  so 
of  part  owners  of  ships.* 


ther. — 

lauts  or 

act  for 

ut  their 


id  B,  the 

,  consign 
[to  Bcpa- 
ructions 
5tory  on 
i7ison  V. 
\n  repre- 
land  of 
Sewcll  V. 


)e  part- 
Iffcnt  of 
|p  busi- 

10  Lusi- 

11  office 
|y  liable 

Agency, 

^adiier,  44 

jf  a  part- 

I  firm, aud 

inston  V. 


§  20.    Rigfhts  and  Liabilities  of  Joint  Principals.  —  On 

the  sale  of  several  parcels  of  goods  by  a  factor,  belonging 
to  different  principals,  on  a  credit,  taking  one  note  from 
the  purchaser  for  the  whole,  payable  to  himself,  the  right 
of  each  principal  to  his  remedy  for  his  share  is  not  extin- 
guished.' And  one  principal  can  sue  another  to  recover 
money  belonging  to  him  paid  by  the  agent  to  the  wrong 
party.*  But  where  a  number  of  persons  appoint  a  com- 
mon agent  for  a  common  purpose,  no  one  of  them  has  a 
right  to  compel  a  separate  account  to  himself.®  Where 
onQ  of  several  claimants  to  a  fund  appoints  an  agent  to 
coll'ct  it,  and  account  to  him,  he  becomes  a  trustee  for  the 
others,  and  an  action  may  be  brought  in  his  name  against 
the  agent  to  recover  the  fund."  Where  the  same  agent 
was  appointed  by  two  different  mines  in  the  same  place, 
and  it  became  necessary  for  one  to  deal  with  the  other,  it 
was  held  that  he  had  the  same  power  to  act  for  both  that 
two  agents  acting  separately  would  have  had.^  So  several 
principals  may  employ  the  same  agent  without  incurring 
a  joint  liability.* 

§  21.  Joint  Agents  must  Act  Together.  —  Where  au- 
thority is  given  to  two  or  more  persons  to  do  an  act,  all 
must  concur  in  its  execution."    One  of  two  private  agents 


'  Birretfc  v.  ladianapolis  etc.  R.  R. 
Co.,  14  Am.  Law  Rev.  002. 

-  Story  ott  Agency,  sec.  40;  Reiman 
r.  Hamilton,  1 1 1  Mass.  245. 

^  Corlies  v.  dimming,  G  Cow.  181. 

*  Hathaway  v.  Cincinuatus,  02  N.  Y. 
434. 

'  Louisiana  Trustees  v.  Dupuy,  31 
La.  Ann.  30.">. 

'■  X(w  V.  Christie,  61  N.  Y.  270. 

'  Adams  Mining  Co.  v.  Senter,  26 
Midi.  73. 

'  Eva-.iH  on  Agencv,  26;  Cooper  v. 
Eyre,  1  il.  Black.  37. 


»  Peter  v.  Beverly,  10  Pet.  5.32;  De- 
spatch Tiine  ?'.  Bellamy  Mfg.  Co.,  12 
N.  H.  205;  .37  Am.  Dec.  203;  Towne 
V.  Jacquith,  6  Mass.  40;  4  Am.  Doc. 
84;  Kupfer  v.  Inhabitants,  12  Mass. 
185;  Low  V.  Perkins,  10  Vt.  532;  33 
Am.  Dec.  217;  Heard  r.  March,  12 
Cush.  580;  Green  v.  Miller,  0  Johns. 
39;  5  Am.  Dec.  184;  Cedar  Rapi.ls  R.R. 
Co.  V.  Stewart,  35  Iowa,  115;  Osgood  ». 
Franklin,  2  Johns.  Ch.  1 ;  7  Am.  Dec. 
513;  Franklin  v.  Osgood,  14  Johns. 
527;  Johnston  v.  Bingham,  9  Watts  & 
S.  50;  Commiasionera  v.  Lccky,  0  Serg. 


§21 


PRINCIPAL  AND  AGENT. 


22 


under  a  joint  power  of  attorney  cannot  delegate  liis  power 
to  the  other.*  In  like  manner,  where  a  firm  is  employed  as 
agents,  one  of  the  partners  cannot  act  after  the  death  of  the 
other.  ''It  is  a  general  rule  of  the  common  law  that  an  au- 
thority hy  a  principal  to  two  persons  to  do  an  act  is  joint, 
and  the  act  must  be  concurred  in  by  both.  Where  a  firm  is 
appointed  to  an  agency,  this  rule  would  ncces:  irily  be  void, 
to  tlie  extent  that  either  member  of  a  firm  could  do  any  act 
within  the  scope  of  the  agency,  the  same  as  ho  could  per- 
form any  other  partnership  act.  By  appointing  a  part- 
nership firm,  it  would  bo  implied  that  the  authority  was 
joint  and  several;  but  upon  a  dissolution  of  the  firm, 
such  an  agency  would  cease.  This  is  the  necessary  result 
of  the  principles  alluded  to.  The  principal  would  not  bo 
bound  by  the  act  of  a  surviving  member  of  a  firm,  be- 
cause ho  had  never  appointed  him  to  act  nor  agreed  to 
be  responsible  for  his  acts,  and  the  latter  could  incur 
no  obligation  against  the  deceased  member  or  his  repre- 
sentatives."^ The  power,  however,  may  be  given  in  such 
terms  as  to  authorize  a  several  execution,  or  an  execution 
by  a  less  number  than  the  whole.'  Usage  of  trade  may 
change  this  rule, — as  where  it  is  the  custom  of  business 
for  one  of  several  joint  factors  to  act  for  the  common 
principal.*  The  authority  to  receive  money  on  a  debt 
due  to  their  assignor  may  be  exercised  by  one  of  several 
And  so  where  the  power  is  coupled  with  an 


assignees. 


&  R.  IGG;  9  Am.  Dec.  418;  In  re  Turn- 

Eiko  Road,  5  Binn.  481;  Ilawley  r. 
feeler,  53  N.  Y.  114;  Sinclair  v.  Jack- 
Bon,  8  Cow.  543;  Hartford  Fire  Ins. 
Co.  V.  Wilcox,  57  111.  180;  Floyd  v. 
Johnson,  2Litt.  115;  13  Am.  Dec.  255; 
Rollins  V.  Phelps,  5  Minn.  4G3;  Union 
Bank  v.  Beirnc,  1  Gratt.  226;  Inhabi- 
tants i\  Cole,  3  Pick.  232;  Damon  v. 
Inhabitants,  2  Pick.  345;  Woolsey  v. 
Tompkins,  23  Wend.  324;  White  v. 
Daviilson,  8  Md.  1G9;  G3  Am.  Dec. 
699;  Damon  v.  Granby,  2  Pick.  345; 
Suttou  Pariah  v.  Cole,  3  Pick.  232. 


*  Loeb  V.  Drakcford,  7?  Ala.  4G4. 

*  ^lartino  ?'.  International  Life  Ins. 
Co.,  53  N.  Y.  339;  13  Am.  Rep.  529. 

*Ccd;irRapivl3otc.  R.  R.  Co.  v.  Stew- 
art, 25  Iowa,  115;  French  v.  Prica,  24 
Pick.  13;  Hawleyr.  Keelcr,  53  N.  Y. 
114;  G2  Barb.  231;  Ga^  Co.  v.  Wheel- 
ing,  8  W.  Va.  321;  Phippen  v.  Stick- 
ney,  3  Met.  384. 

*  Story  on  Agency,  sec.  44;  Whar- 
ton on  Agency,  sec.  141. 

*  Heard  v.  Lodge,  20  Pick.  53;  32 
Am.  Dec.  197. 


22 


23 


JOINT   PRINCIPALS   AND   AGENTS. 


§21 


464. 

Life  Ing. 

cp.  520. 

),'.  Stcw- 

'ric3,  24 

53  N.  Y. 

Whccl- 

V.  Stick- 

\;  Whar- 

53;  32 


interest,  it  maybe  executed  by  the  survivor/  Where  two 
agents  arc  appointed  by  separate  instruments,  to  act  with 
equal  authority  for  the  principal,  the  right  to  act  is  not 
exclusive  in  either;  but  any  act  done  by  one  within  tiie 
authority  granted  will  bo  binding  ou  the  other."  One  of 
several  assignees  of  a  chose  in  action,  with  power  to  col- 
lect debts,  may  make  a  demand  for  it.^ 

Illustrations. — A  gives  B  and  C  jointly  power  to  sell  his 
property.  A  sale  by  either  B  or  C  alone  will  not  bind  A:  Copr- 
land  V.  Insurance  Co.,  G  Pick.  198.  Two  persons  are  appointed 
agents  jointly  to  take  charge  of  their  orincipal's  business.  One 
of  them  becomes  incapacitated.  The  business  cannot  be  con- 
ducted by  the  other  alone:  Salishury  v.  Brisbane,  Gl  N.  Y.  GIT; 
Hartford  Fire  Ins.  Co.  v.  Wilcox,  57  111.  180.  Authority  is  given 
to  A  and  B  to  use  their  principal's  name  as  an  iiidorser.  This 
authority  can  only  be  used  by  A  and  B  jointly:  Union  Bank  v. 
Bcirnc,  1  Gratt.  22G.  L.  entered  into  a  contract  with  five  indi- 
viduals, as  agent  or  trustee  of  an  association  for  buihling  a 
church,  to  erect  it  on  certain  terms.  In  ati  action  against  them 
for  the  work,  L.  attempted  to  show  tha'^,  by  an  agreement  be- 
tween him  and  two  of  them,  the  special  contract  v/as  aban- 
doned and  he  was  to  be  paid  a  qvantum  meruit.  Held,  inad- 
missible: Loio  V.  Perkins,  10  Vt.  5'j2;  3.'}  Am.  Dec.  217.*  A  note 
was  given  by  defendants  to  throe  persons,  who  were  to  arbitrate 
the  difference  between  defendant  and  plaintiff,  and  irulorse  it 
over  to  plaintiff  if  they  tl  ouglit  him  entitled  to  it.  It  was 
indorsed  over  to  plaintiff  by  two  of  them,  the  other  refusing 
to  join.  Held,  that  the  power  was  not  properly  cxccutctl,  and 
tlio  plaintiff  could  not  recover  on  the  note:  Patterson  v.  Leavitf, 
4  Conn.  50;  10  Am.  Dec.  98.  A  power  of  attorney  was  given 
by  a  party  to  fifteen  persons  named,  "jointly  and  separately,  for 
him  and  in  his  name  to  sign  and  underwrite  all  such  policies  as 
they,  his  said  attorneys,  or  any  of  them,"  should  jointly  think 
proper.  Held,  that  a  policy  made  by  four  of  the  fifteen  was 
binding  on  the  principal:  Guthrie  v.  Armstrong,  5  Barn.  &  Aid. 
G28.  Authority  is  given  to  A  and  B.  or  cither  of  them.  Held, 
that  a  joint  or  pf^veral  execution  will  be  valid:  Cedar  Rapids 
cte.  R.  R.  Co.  V.Stewart,  25  Iowa,  115. 


'  reter  r.  Beverly,  10  Pet.  5^2;  Oj- 
gooil  r.  Franklin,  2  Joluu.  Ch.  1;  7 
Am.  Dec.  513;  Fraaklin  r.  Osgood,  14 
Johns.  527. 

^  Cmlunan  v.  Glover,  11  111.  COO;  52 
Am.  Dec.  401. 

^  Hoard  V.  Lodge,  20  Pick.  53;  32 
Am.  Dec.  107. 


♦  "The  court," said  Phelps,  J.,  "did 
riilit  in  rejecting  the  testimony. 
Where  scver:\l  inilividual*  arcajsoci- 
atad  in  a  puhlic  trust,  it  h  oompctunt 
for  a  majority  to  act  and  to  bind  their 
principals;  Init  in  thy  ca.se  of  a  private 
truitorageucy.  the  lulcijdiir.-'rc'it, and 
the  concurrence  of  all  is  uecejoary." 


§§  22,  23 


PRINCIPAL  AND   AGENT. 


24 


§  22.  Agoncy  for  Pnblic  Pnrpose. — And  where  the 
joint  authority  is  given,  not  by  the  act  of  the  principal, 
but  by  the  act  of  the  law,*  or  is  for  a  public  purpose,"  the 
rule  is  difFerent.  Thus  in  the  execution  of  trusts  for 
public  purposes  (as,  for  example,  boards  of  public  works, 
boards  of  charity,  boards  of  corporations),  unless  the 
power  is  otherwise  limited  by  the  act  of  incorporation,  or 
the  act  creating  the  board,  the  acts  of  the  majority  are 
binding.'  "In  all  matters  of  public  concern,  the  voice 
of  the  majority  must  govern.  Whether  the  statute  cx- 
l)rcssly  authorize  a  majority  to  act  or  is  silent,  the  prin- 
ciple to  be  extracted  from  the  numerous  cases  on  this 
head  is,  that  where  a  number  of  persons  are  intrusted  with 
power,  not  of  mere  private  confidence,  but  in  some  respect 
of  a  general  nature,  and  all  of  them  are  assembled,  the 
majority  will  conclude  the  minority."*  But  a  majority 
must  act,  and  therefore  if  the  board  bo  composed  of  only 
two,  one  cannot  exercise  the  powers  alone,^  and  though 
a  majority  may  decide,  all  must  meet  and  deliberate.* 

§  23.  Liability  of  Joint  Agents. — Joint  agents  are 
jointly  liable  each  for  the  other's  acts  and  receipts,  and  it 
is  no  defense  that  one  wholly  transacted  the  business 
without  the  knowledge  of  the  other.' 

Watts,  128;  Downing  v.  Rugar,  21 
Wend.  178;  3t  Am.  Dec.  223. 

« In  re  State  Road,  GO  Pa.  St.  330; 
Downing  v.  Rngar,  mpra;  Schuyler  v. 
Marsh,  37  Barb.  355,  ami  note  in  34 
Am.  Dec.  228;  Crocker  v.  Crane.  21 
Wenl.  211;  34  Am.  Dec.  228.  Ami 
so  where  a  majority  of  arbitrators  are 
authorized  to  make  an  award,  the  mi- 
nority must  be  present  at  thu  hearing, 
or  at  least  must  have  been  notified  of 
it:  Blin  v.  Hay,  2  Tyler,  304;  4  Am. 
Dec.  738;  Moore  v.  Ewiug,  1  N,  J.  L. 
195;  1  Am.  Dec.  195. 

'  Snelling  v.  Howard,  51  N.  Y.  373; 
Mcllreath  t'.  Margctson,  4  Doug. 
278;  Wharton  on  Agency,  sec.  142; 
Cushman  v.  Cllover,  11  111.  COO;  52 
Am.  Dec.  461.  See  Division  III., 
Trustees,  post. 


1  Caldwell  V.  Harrison,  11  Ala.  735; 
Scott  r.  Detroit  Soc,  1  Doug.  (Mich.) 
119;  Jcwettr.  Alton,  7  N.  H.  253. 

^  Worcester  I'.  R.  R.  Co.,  113  Mass. 
101;  Solus  n  Racine,  10  Wis.  271. 

•*  Id. ;  Despatch  Lino  r.  Bellamy  Mfg. 
Co.,  12  N.  H.  205;  37  Km.  Dec.  203; 
Grindlcy  v.  Barker,  1  Bos.  &  P.  229; 
County  Commissioners  v.  Lecky,  G 
Scrg.  &  R.  170;  9  Am.  Dec.  418; 
Couiiniasioners  v.  Canal  Commission- 
ers, 9  Watts,  470;  In  re  State  Road, 
GO  Pa.  St.  330;  Patterson  v.  Leavitt, 
4  Conn.  50;  10  Am.  Dec.  98;  McCoy 
?•.  Curtice,  9  Wend.  17;  24  Am.  Dec. 
113;  coutrn,  Jeter  r*.  Commissioners,  1 
Bay,  351;   1  A;n.  Dec.  G21. 

*  McCrcidv  V.  Guardians  of  the  Poor, 
9  Serg.  &  R.  91;  11  Am.  Dec.  C07. 

"  Cooper  V.  Lampeter  Township,  8 


25 


DELEGATION    OP   AUTnOllITY. 


§§  24,  25 


CHAPTER  V. 

DELEGATION  OP  AUTHORITY. 

§  24.  Delegation  of  original  and  delegated  authority. 

§  25.  Delegation  of  original  authority. 

§  26.  Dolegation  of  delegated  authority. 

§  27.  Same  —  When  not  permitted. 

§  28.  Same  —  When  permitted. 

§  24.    Delegation  of  Original  and  Delegated  Authority. 

— An  authority  or  power  is  either  original  or  delegated. 
Thus  I  ma}'  make  an  offer  to  another  either  in  my  own 
right  or  on  account  of  authority  given  to  me  by  some  one 
else.  But  the  general  principle  of  the  common  law  is  as 
to  these  two  conditions  quite  different.  I  may,  Avitli  very 
few  exceptions,  do  by  another  what  I  can  do  in  my  own 
right.  On  the  other  hand,  I  may  not,  except  in  some  special 
cases,  do  by  another  what  some  one  else  has  authorized 
me  alone  to  do  for  him. 


§25.  Delegation  of  Original  Authority.  —  Whatever 
a  man  may  do  himself  he  may  do  by  a  legal  agent.  To 
this  general  rule  there  appear  to  be  only  two  exceptions: 
1.  The  power  to  do  an  illegal  act  cannot  be  delegated  to 
another;^  and  2.  The  power  to  do  a  purely  personal  act 
cannot  be  delegated  to  another.  For  example,  a  man 
could  not  appoint  an  agent  to  marry  a  woman  for  him,  or 
to  make  a  will  for  him;^  nor  can,  it  seems,  a  married  woman 
make  a  deed  (required  by  statute  to  be  done  with  certain 


'  Elmore  v.  Brooks,  6  Heisk.  45; 
Brown  V.  Howard,  14  Johns.  120;  Da- 
vis ?\  Burger,  57  Ind.  54;  Wharton  on 
A^i^eiicy,  sec.  25;  State  v.  Mathis,  1 
Hill  (S.  C.)  Wl.  The  authority  of  an 
ag'-ut  to  do  an  illegal  act  will  not  bo 
presumed-  Gokey  v.  Knapp,  44  Iowa, 
H-.  The  authority  is  presumed  legal, 
and  a  servant  has  the  burden  of  show- 
ing a  lawful  reason  for  refusing  to  obey 


an  order:  Chicagoctc.  R.  R.  Co.  v.  Bay- 
field, 37  Mich.  205. 

■•'  So  at  common  law  a  man  could  not 
do  homage  or  fealty  l)y  af'ornej",  for  the 
service  was  personal;  and  though  a  lord 
might  beat  h'n  \illcin  without  cause, 
ho  could  not  authorize  another  to  beat 
him  without  cause:  9  Coke,  70  a,  70  b; 
and  ECO  Ex  parte  Ugra  Bank,  L.  R.  6 
Ch.  206. 


26 


PRINCIPAL  AND  AGENT. 


26 


formalities,  as  to  privy  examination,  etc.)  by  an  attorney.* 
TIio  power  of  an  executor  or  administrator  over  the  estate 
is  not  a  delegated  power,  for  he  is  himself  an  owner  in 
aider  droit;  and  therefore  he  may  make  an  attorney  to 
transfer  stock  belonging  to  the  estate.^  A  covenant  un- 
der seal  to  do  a  particular  thing  requiring  skill  and  judg- 
ment cannot  be  performed  by  an  agent.'  A  bailment  of 
property  with  a  power  of  sale  is  a  personal  trust  to  the 
bailee  which  ho  cannot  delegate.* 


§  26.  Delegation  of  Delegated  Authority.—  An  author- 
ity or  power  received  from  another  cannot  bo  delegated,* 
except  in  the  instances  hereafter  stated.  The  maxim  of 
the  law  is,  Delegata  potcstas  non  potest  delegari;  the  reason 
for  the  rule  being  that  one  who  selects  another  to  do  an 
act  for  him  relics  on  the  skill  and  integrity  of  the  person 
selected,  and  cannot  be  presumed  to  intend  that  another 
not  selected  by  him  should  exercise  the  authority  con- 
ferred on  the  man  of  his  choice.  Where  an  agent  is  ap- 
pointed to  sell  property,  a  sale  made  in  his  absence,  and 
when  he  could  not  control  the  sale  luid  its  terms,  by  one 
pretending  to  represent  him,  is  not  the  act  of  the  agent, 
and  docs  not  bind  cither  him  or  his  principal."  A  broker 
who  sells  on  the  order  of  a  broker  in  another  city  is  the 
agent  of  the  latter,  and  has  no  claim  against  the  original 
principal.'^ 


*  Story  on  Agency,  sec.  12,  notG. 

^  Hutchiaa  v.  State  Bank,  12  Met. 
421,  427. 

=>  Paul  V.  Eilwards,  1  Mo.  30. 

«  Hunt  V.  Douglass,  22  Vt.  128. 

^  Bocock  V.  I'avey,  8  Ohio  St.  270; 
Warner  r.  Martin,  11  How.  209;  Tib- 
bets  V.  Walker,  4  Mass.  597;  Com- 
mercial Bank  v.  Norton,  1  Hill,  501; 
Lynn  v.  Burgoync,  13  B.  Mon.  400; 
Bissell  V.  Roden,  34  Miss.  03;  84  Am. 
Dec.  71;  Smith  v.  Sublett,  28  Tex. 
103;  Loomis  v.  Simpson,  13  Iowa,  532; 
Hawley  v.  James,  5  Paige,  323;  Lyoa 


V.  Jerome,  26  Wend.  485;  37  Am.  Dec. 
271;  Locke's  Appeal,  72  Pa.  St.  491; 
13  Am.  Rep.  710;  Ex  parte  V»^insor,  2 
Story,  411;  Lewis  t».  Ingersoll,  3  Abb. 
App.  55;  1  Keye3,  .S47;  Burrebr.  Rhcm, 
C  Buah,  400;  McCormick  v.  Bush,  33 
Tex.  314;  Hiika  v.  Dorn,  9  Abb.  Pr., 
N.  S.,  53;  42  >:.  Y.  51 ;  White  v.  David- 
son, 8  Md.  ;09;  03  Am.  Dec.  699; 
Wright  V.  Eoynton,  37  N.  H.  9;  72 
Am.  Dec.  319. 

"  Barret  v.  Rliem,  0  Bush,  406. 

'  Hill  V.  Morris,  15  Mo.  App.  322. 


27 


DELEGATION   OP  AUTHORITY. 


§27 


§27.  Same — When  not  Permitted.  —  Tho  following 
have  been  held  not  to  have  the  right  to  delegate  their  au- 
thority: An  agent  appointed  by  the  owner  of  an  estate  to 
sell  it;^  or  an  executor  with  power  to  sell;"  or  a  broker  au- 
thorized to  sign  a  contract  for  his  principal;''  or  an  agent 
authorized  to  give  a  note  or  do  other  acts;'*  a  general  agent 
of  an  insurance  company;®  arbitrators  appointed  to  decide 
a  question;"  a  judge;^  a  keeper  appointed  by  a  sherilF;*  the 
governing  body  of  a  municipal  corporation,  to  an  inferior 
body  or  agent;"  an  attorney  at  law;***  a  corporation  au- 
thorized to  levy  assessments  on  its  members;"  directors  of 
a  corporation  authorized  to  execute  a  lease  for  tho  cor- 
poration;*" a  committee  appointed  to  repair  dams  and 
firihways;"  canal  commissioners  having  authority  by  stat- 
ute to  enter  upon  lands  and  take  and  use  property  "as 
they  may  think  proper.""    An  agent  employed  to  drive 


'  Bocock  r.  Piivey,  8  Ohio  St.  270. 

*  iStory  on  Agency,  sec.  1.3. 

*  Evans  on  Agency,  sec.  40. 

*  Brewster  ?•.  Hohart,  15  Pick.  302; 
Euierdou  r.  Providence  Hat  Co.,  12 
Mass.  2?>~;  7  Am.  Dec.  GO;  Crozier  v. 
Rcvis,  4111.  Ap]).  504. 

'•'  McCliiro  ?•.  Mis.sissippi  Valley  Ins. 
Co..  4  Mo.  Anp.  148. 

''Haven  v.  Winnisimmct  Co.,  11 
Allen,  377;  87  Am.  Dec.  723;  Little  v. 
Newton,  2  Scott  N.  R.  509.  Such  pow- 
er.! are  judicial,  and  are  clearly  not  to 
be  delegated.  They  may,  however, 
it  seems,  delegate  purely  ministerial 
acts:  Moore  r.  Barnet,  17  Ind.  349. 
And  though  they  agree  to  be  bound  by 
the  opinion  of  a  third  person,  if  they 
af  terwardj  disregard  it,  the  award  will 
not  be  void:  Half  v.  Blossom,  5  Bosw. 
559. 

'  Winchester  v.  Ayres,  4  G.  Greene, 
104. 

"  Connor  v.  Parker,  114  Mass.  331. 

»  State  V.  Jersey  City,  25  N.  J.  L. 
300;  2G  N.  J.  L.  444;  White  v.  Mayor, 
2  Swan,  3GI;  Thompson  v.  Schermer- 
horn,  G  N.  Y.  92;  55  Am.  Dec.  385; 
Shcehau  r.  Gleason,  4G  Mo.  100;  Rug- 
glc3  V.  Collier,  43  Mo.  359;  Richardson 
V.  Heydeufeldt,  4G  Cal.  CSj  East  St. 


Louis  V.  Wehnung,  50  111.  28;  Foss  v. 
Chicago,  56  111.  354. 

"^  O'Connor  v.  Arnold,  53  Ind.  203; 
Weeks  on  Attorneys,  sec.  240. 

"  Ex  parte  Winsor,  3  Story,  411. 

12  (iiUis  V.  Bailey,  21  N.  IL  149. 

"  Stoughton  V.  Baker,  4  Mass.  522;  3 
Am.  Dec.  23G. 

'*  St.  Peter  v.  Dcnison,  58  N.  Y.  421 ; 
17  Am.  Rep.  258;  Curtisa  v.  Lcavitt, 
15  N.  Y.  190;  Tho  California,  1  Saw. 
G03;  Lyon  v.  Jerome,  2G  Wend.  485; 
.37  Am.  Dec.  271.  In  this  cayo  it  was 
said:  "In  all  cases  of  delegated  au- 
thority, where  tho  dclegatio:i  indicates 
any  personal  trust  or  coufideiico  re- 
posed in  the  agent,  and  especially 
where  such  personal  tru.st  is  implied 
by  making  the  exercise  a:id  applica- 
tion of  the  power  subject  to  tho  judg- 
ment or  discretion  of  tho  agent  or  at- 
torney, the  general  rule  U,  that  these 
are  purely  personal  authorities,  incapa- 
ble of  being  again  delegated  to  another, 
unless  a  special  power  of  substitution 
be  added.  From  an  early  period  of 
our  law,  this  rule  has  been  laid  down 
as  to  powers  give;i  by  will  or  docd  to 
executors,  trustee.^,  and  attorneys,  to 
sell  lands,  make  leases,  etc. ;  and  mod- 
era  deciaioaa  havo  extended  tho  priu- 


§28 


PRINCIPAL  AND  AGENT. 


28 


e 


cattle,  to  whom  the  possession  thereof  is  intrusted  by  th^ 
principal,  cannot  deliver  such  possession  to  a  subagent 
appointed  by  himself.' 

Illustrations.  —  M.  gave  J.  a  power  of  attorney  to  sell  lands, 
with  power  of  substitution ;  J.  executed  a  power  to  C.  to  sell  them 
in  J.'s  name,  and  signed  it  with  his  own  name,  not  referring  to 
his  principal,  M.  C.  made  a  deed  as  attorney  of  M.  Held,  in- 
valid, as  C.  was  not  appointed  M.'s  attorney:  Stinchcomh  v.  Marsh, 
15  Gratt.  202.  P.,  a  sheriff',  by  a  writing  directed  to  one  by 
name,  "or  bearer,"  appointed  him  keeper  of  attached  property. 
He,  with  P.'s  knowledge,  transferred  his  oflice  and  the  writing 
to  another,  who,  without  the  sheriff" 's  knowledge,  transferred 
them  to  C.  Ilehl,  that  an  action  by  C.  to  recover  pay  as  keeper 
could  not  be  maintained,  because  the  assignor  could  not  dele- 
gate his  authority;  but,  if  the  authority  cou  J  be  delegated, 
evidence  that  C.'s  assignor  had  agreed  to  act  without  pay  was 
admissible,  because  the  plaintiff'  must  take  the  authority  on 
the  terms  on  which  the  assignor  held  it:  Connor  v.  Parker^  114 
Mass.  331. 

§  28.  Delegation  of  Delegated  Authority,  when  Per- 
mitted.— But  an  agent  may  appoint  a  subagent  and 
delegate  his  authority  to  him,  where  he  is  authorized  to 

ciplc3  to  the  less  formal  appointments 
of  factors,  brokers,  and  other  commer- 
cial agents.  How  much  more  strongly, 
then,  must  tlio  reason  and  policy  of  the 
rule  apply  to  the  delegation  of  author- 
ity by  the  state,  to  its  high  public 
officers,  made  with  the  solemnity  of  a 
legislative  act?  The  language  of  the 
statute,  as  well  as  the  nature  of  the 
trust  itself,  shows  that  this  is  an  au- 
thority confided  to  the  judgment  and 
discretion  of  the  commissioners  them- 
selves, for  the  impartial  discharge  of 
which  tliey  are  responsible  to  the  state. 
In  this  instance,  as  in  similar  cases  of 
authority  to  represent  private  individ- 
uals, the  person  thus  intrusted  may 
have  occasion  to  depend  upon  scientific 
or  professional  advice  for  the  guidance 
of  his  own  judgment.  He  may  even 
in  matters  out  of  the  scope  of  his  own 
information  rely  entirely  upon  the 
authority  of  his  adviser  or  assistant. 
Yet  he  is  still  bound  to  form  a  judg- 
ment for  himself,  and  to  assume  its 
responsibility.  In  this  case  there  was 
no  exercise  of  any  judgment  or  dis- 


cretion  whatever  by  the  commission- 
ers; there  was  merely  such  a  general 
reliance  on  the  supervision  and  judg- 
ment of  the  engineer  as  might  amount 
to  an  implied  delegation  of  authority, 
had  the  commissioner  been  authorized 
by  law  to  make  such  a  substitution. 
But,  as  the  circuit  judges  before  whom 
the  case  was  tried  well  stated  it,  '  it 
is  the  judgment  of  the  comniissiouers, 
or  one  of  tliem,  which  is  to  determine 
the  propriety  of  the  entry,  and  not 
that  of  the  agents, '  etc.  '  Such  is  the 
obvious  construction  of  the  statute. 
A  contrary  construction  would  be  un- 
reasonable and  extravagant.  The 
power  conferred  is  one  of  the  most 
important  character:  nothing  less  than 
taking  of  the  property  of  a  citizen 
without  his  consent.  Yet,  by  the  con- 
struction contended  for,  this  is  con- 
ferred upon  any  and  every  engineer, 
superintendent,  and  agent  whom  the 
commissioners  '.lay  employ,  down  to 
the  chain -bearers.' " 

'  Underwood  v.  Birdsell,  6  Mont. 
142. 


29 


DELEGATION   OF   AUTIIOUITY. 


§28 


do  so  by  statute  or  by  contract,*  and  in  tho  following 
other  cases:  Tho  delegation  of  authority  by  an  agent  is 
legal  where  authorized  by  custom  or  the  usages  of  trade.' 
Tho  legal  maxim  that  an  agent  cannot  delegate  his  au- 
thority to  a  subagent  is  not  of  universal  application  to 
factors  and  commission  merchants,  and  can  only  bo  in- 
voked by  the  principal  when  sought  to  bo  charged  by 
the  act  of  the  subagent.^  It  is  likewise  legal  where  the 
act  delegated  is  a  purely  ministerial  one,^  and  does  not 
require  the  exercise  of  judgment  or  discretion."  Thus  an 
authority  to  receive  and  pay  over  money  for  removing 
buildings  may  be  delegated  by  an  agent  to  another." 
And  where  tho  object  of  the  agency  can  be  best  accom- 
plished or  can  only  be  accomplished  through  a  subagent, 
the  delegation  of  authority  is  proper  and  legal.'  Thus 
trustees  may  employ  agents  where  there  is  a  necessity  for 
it®  Bank  directors  may  delegate  authority  to  a  commit- 
tee of  their  number  to  convey  tho  real  estate  of  the  bank." 
Where  a  draft  payable  at  a  distant  place  is  left  at  a  bank 
for  collection,  the  bank  has  authority  to  transmit  it  to  a 
subagent  at  such  place.'"  And  tho  delegation  is  legal 
where  the  principal  is  aware  that  tho  agent  will  appoint 


'  Furnas  v.  Frankman,  G  Neb.  429. 

"  Lawson  on  Usages  and  Customs, 
sec.  145. 

» Ilarralson  v.  Stein,  50  Ala.  347. 

*  Bodine  v.  Exchange  Fire  Ins.  Co., 
61  N.  Y.  117;  10  Am.  Rep.  5GC;  Wil- 
liams V.  Woods,  10  Md.  22i);  Commer- 
cial Bank  i\  Norton,  1  Hill,  501 ;  Grady 
V.  American  Cent.  Ins.  Co.,  CO  Mo. 

lie. 

^  A  painter,  for  example,  engaged  to 
paint  a  portrait  could  not  hand  it  over 
to  another  to  do  for  him.  But  where 
au  agent  is  authorized  to  sell  certain 
land,  exercising  his  discretion  as  to 
price  and  terms,  ho  may  properly  em- 
ploy a  subagent:  Renwick  v.  Ban- 
croft, 56  Iowa,  527.  It  has  been  held 
that  a  sexton  may  delegate  the  per- 
formance of  his  duties  to  another: 
Burial  Board  v.  Thompson,  L.  R.  G 
Com.  P.  445. 


*  Grinnell  v.  Buchanan,  1  Daly, 
538. 

'  Johnson  v.  Cunningham,  1  Ala. 
249;  Dorchester  etc.  Bauk  v.  New 
England  Bank,  1  Cush.  177.  "Wlien 
the  power  given  by  a  person  is  of  such 
a  nature  as  to  require  its  execution  by 
a  deputy,  tho  attorney  may  appoint 
such  deputy  ":  Quebec  etc.  II.  R.  Co. 
V.  Quinn,  12  Moore  P.  C.  C.  2G5; 
Laussatt  v.  Lippincott,  G  Serg.  &  R. 
380;  9  Am.  Dec.  440.  A  corporation, 
for  example,  can  only  act  through 
agents:  Story  on  Agency,  sec.  IG. 

*  See  Division  III.,  Trustees,  pout. 

*  Burrell  v.  Nahant  Bank,  2  Met. 
163;  35  Am.  Dec.  395. 

'*  Dorchester  etc.  Bank  v.  Now  Eng- 
land Bank,  1  Cuali.  177;  Planters' 
etc.  Bank  v.  First  Nat.  Bank,  75  N.  C. 
534;  Appleton  Bank  v.  McGilvray,  4 
Gray,  518;  64  Am.  Dec.  92. 


28 


PRINCIPAL  AND  AGENT. 


80 


a  deputy,*  or  the  delegation  is  directly  or  indirectly  au- 
thorized by  him." 

Illustrations.  —  An  insurance  policy  is  signed  by  a  sub- 
agent  for  the  regular  agent  and  delivered  by  the  latter,  who 
receives  the  premium.  This  is  valid:  Grady  v.  American  Cent. 
Jns.  Co.,  CO  Mo.  1 16.  A  is  authorized  by  B  to  sign  his  name  to 
a  subscription  paper.  C  signs  A's  name  to  the  paper  at  B's 
request  in  his  presence.  Held,  valid:  Norwich  University  v. 
Denny,  47  Vt.  13.  A  broker  may  authorize  his  clerk  to  make 
and  sign  a  memorandum  of  contract  in  his  presence,  the  clerk 
simply  acting  ministerially  and  exercising  no  discretion:  Wil- 
liama  v.  Woods,  16  Md.  220.  A  authorized  B  to  borrow  money 
for  him  of  C,  and  sign  his  (A's)  name  to  a  note  therefor.  B 
borrowed  the  money,  and  in  his  presence  and  at  his  request  D 
signed  the  note,  "A  by  D."  Held,  that  the  note  was  valid 
against  A:  Weaver  v.  Carnall,  35  Ark.  198;  37  Am.  Rep.  22.* 
A  draft  left  with  a  bank  for  collection  is  payable  at  a  distant 
city.  Held,  that  it  must  be  presumed  that  it  is  intended  for 
transmission  to  a  subagent  at  that  place,  and  not  that  the  bank 
shall  employ  its  own  officers  to  proceed  there  and  obtain  pay- 
ment: Dorchester  and  Milton  Bank  v.  New  England  Bank,  1 
Cush.  177.  A  commission  merchant  is  employed  to  buy  goods 
in  a  distant  market,  and  the  custom  of  that  market  is  for  com- 
mission merchants  to  employ  brokers  to  make  such  purchases, 
and  this  custom  is  understood  by  the  principal.  Held,  that  the 
commission  merchant  may  properly  employ  a  broker  of  experi- 
ence and  good  reputation  to  make  the  purchases,  and  if  he  does 
BO,  he  will  not  be  liable  for  such  broker's  errors  or  misconduct: 
Darling  v.  Stanwood,  14  Allen,  504.  The  principal  of  a  line  of 
stages,  by  letter  to  one  acting  as  his  agent  in  such  business, 
wrote:  "  You  will  do  better  by  getting  new  drivers,  and  agents, 
and  horses."  The  agent  employed  a  subagent,  and  subse- 
quently the  principal  was  informed  of  such  employment  and 
made  no  objection.  In  an  action  for  the  wages  of  the  subagent, 
held,  that  the  facts  were  sufficient  to  authorize  the  jury  to  find 
the  fact  of  authority  in  the  agent  to  employ  the  plaintiff:  Mc- 
Connell  v.  McCormick,  12  Cal.  142. 


^  Van  Schoick  v.  Niagara  Ins.  Co., 
68  N.  Y.  434. 

"  Gray  v.  Murray,  3  Johns.  Ch.  167. 

•  "An  agent,"  said  English,  C.  J., 
ia  this  case,    "cannot  delegate  any 


portion  of  his  power  requiring  tho 
exercise  of  discretion  or  judgment; 
otherwise,  however,  as  to  powers  and 
duties  merely  mechanical  in  their 
nature." 


31 


RATIFICATION. 


29 


CIUrTER  VI. 


RATIFICATION. 

S  29.  Uuauthorizoil  act.  of  agent  may  bo  ratified.    • 

§  30.  But  cannot  divest  vested  righta. 

§  31.  Act  iiiust  not  bo  illegul  or  void. 

§  32.  Must  have  been  demo  on  behalf  of  iirincipal. 

§  33.  Principal  must  bo  in  cxiatcuco. 

§  34.  Ratilication  must  be  made  with  full  knowledge  of  facts. 

§  33.  And  is  then  irrevocal^lc. 

§  36.  Ratification  absolves  agent  and  shifts  liability. 

§  37.  Ap))ointment  of  aubagcnt. 

§  38.  Ratification  must  bo  i.i  toto. 

§  39.  Acta  incapable  of  ratification. 

§  40.  Form  of  ratification. 

§  41.  Acts  and  conduct  show  ratification. 

§  29.    Unauthorized  Act  of  Agent  may  be  Ratified. — 

The  unauthorized  act  of  a  professed  agent  may  be  ratified 
by  the  party  for  whom  ho  pretends  to  act.  After  ratifica- 
tion the  principal  is  bound  by  the  act,  whether  it  bo  for 
his  advantage  or  detriment,  and  whether  it  be  founded  on 
a  tort  or  a  contract,  to  the  same  extent  and  with  all  the 
consequences  which  would  follow  the  same  act  done  under 
his  previous  instructions,'  and  whether  ho  be  a  natural 
person  or  a  corporation.  For  example:  If  A  professes  to 
enter  into  a  contract  on  my  behalf  without  my  authority, 
and  I  afterward^  ratify  it,  my  ratification  relates  back  so 
as  to  have  the  same  effect  as  if  I  had  authorized  A  to 
enter  into  the  contract.^     The  term  "  ratified,"  when  used 


^  Evans  on  Agency,  49. 

» Mound  City  Ins.  Co.  v.  Huth,  49 
Ah.  530;  Palmer  v.  Cheney,  35  Iowa, 
2S1;  Kclsey  v.  Nat.  Bank,  69  Pa.  St. 
426;  Flockner  v.  U.  S.  B'k,  8  Wheat. 
303;  Drakely  v.  Gregg,  8  Wall.  242; 
Hawley  v.  Keelcr,  53  N.  Y.  114;  Gu- 
lick  V.  Grover,  33  N.  J.  L.  463;  97  Am. 
Doc.  728;  Keeler?;.  Salisbury,  33  N.  Y. 
648;  Grant  v.  Beard,  50  N.  H.  129; 
Lowry  v.  Harris,  12  Mian.  255;  Lau- 


rence V.  Taylor,  5  Hill,  107;  Forsyth 
V.  Day,  46  Me.  176;  Hawkina  i'.  Baker, 
46  N.  Y.  666;  Chapman  r.  Leo,  47 
Ala.  143;  St.  Louis  Packet  Co.  v. 
Parker,  59  111.  23;  Rich  v.  State  B"k,  7 
Neb.  201;  23  Am.  Rop.  382;  Despatch 
Line  v.  Bellamy  Mfg.  Co.,  12  N.  11. 
205:  37  Am.  Dec.  203;  Planters'  Bank 
V.  Sharp,  4  Smedes  &  M.  75;  43  Am. 
Dec.  470;  Everett  v.  U.  S.,  6  Port. 
160;  30  Am.  Dec.  584;  Leggott  v.  New 


29 


PRINCIPAL   AND   AGENT. 


32 


in  ref(Tcnco  to  n  contract,  is  applicable  only  to  contracts 
nuulo  by  a  party  acting  or  assuming  to  act  for  anotber. 
Tbo  latter  may  tlion  adopt  or  ratify  tlio  act  of  tbo  former, 
however  unauthorized.  To  adoption  and  ratification  there 
must  bo  some  relation,  actual  or  assumed,  of  principal  and 
agent.'  Yet  persons  who  deal  with  a  subagent  as  one  hav- 
ing authority  have  no  right  as  against  the  principal  to  set 
up  that  ho  had  no  authority."  A  party  may  ratify  the  acts 
of  an  agent  whoso  name  is  unknown  to  him.^  The  rulo 
that  a  principal  cannot  bo  permitted  to  enjoy  the  fruits 
of  a  bargain,  without  adopting  the  instrumentalities  of 
the  agent  in  consummating  it,  has  never  been  applied 
where  tho  cause  of  action  was  not  created  by  the  agent's 
unauthorized  act.  If  a  principal  sue  upon  a  security 
bought  without  authority,  or  sue  upon  a  substituted  se- 
curity given  for  one  canceled  without  authority,  ho  rati- 
fies tho  agent's  act  by  which  tho  securities  were  obtained. 

Intyrc  v.  Teck,  11  Gray,  102;  71  Am. 
Dec.  CDO;  Hamilton  v.  Plia'uix  Ins. 
Co.,  100  Masa.  31)5;  Grogau  i\  San 
Francidcn,  18  Cal.  590;  Boll  v.  Bycr- 
son,  11  Iowa,  142;  77  Am  Dec.  142; 
Taylor  v.  Connor,  41  Mais.  722;  97 
Am.  Dec.  419;  Culver  v.  Warren,  .30 
Kun.  :VJ1;  Sax  v.  D.-ake,  C9  Iowa,  7G0; 
Gallagcrn  Railroail  Co.,  (J7  Wia.  529; 
(ross  V.  Stevens,  12  Minn.  472.  As  to 
time  to  which  ratification  of  entry  by 
agent  relates,  sea  Campbell  r.  Wallace, 
12  N.  H.  302;  .37  An>.  Dec.  219.     An 


Jersey  Mfg.  Co.,  1  N.  J.  Eq.  541;  23 
Am.  Dec.  72S;  Clcaland  v.  Walker,  11 
Ala.  1058;  4:5  Am.  Dec.  238;  Cilmoro 
V.  Wilbur,  12  Tick.  120;  22  Am.  Dec. 
410;  Starki  r.  Sikes,  8  Gray,  C()9;  GO 
Ami.  Dec.  270;  Vincent  v.  Rather,  31 
Tex.  77;  98  Am.  Dec.  51G;  Carcw  v. 
Lillienthal,  50  Ala.  44;  Piko  v.  Doug- 
las-i,  28  Ark.  59;  Whitehead  v.  Wells, 
28  Ark.  99;  Roby  r.  Cosset,  78  111.  038; 
Abbot  V.  May,  50  Ala.  97;  Gold  Min- 
ing Co.  V.  Nat.  Bank,  90  U.  S.  640; 
Ogden  V.  Marchand,  29  La.  Ann.  01; 
Sentoll  V.  Kennedy,  29  Id.  079;  Francis 
V.  Kerker,  85  111.  190;  Chamberlain  v. 
Callison,  45  Iowa,  429;  Harrod  v.  Mc- 
Daniels,  120  Mass.  413;  Gibson  v.  Sav- 
ings Bank,  09  Me.  579;  Curry  r.  Hall, 
15  W.  Va.  807;  Woods  v.  Rocchi,  32 
La.  Ann.  210;  Whilden  v.  Merchant's 
Bmk,  04  Ala.  1;  ,38  Am.  Rep.  1;  Mc- 
Dowell V.  McKenzie,  05  Ga.  030;  Hart 
r.  Dixon,  5  Lea,  330;  Sheldon  Hat 
Co.  V.  Eschmeycr  Hat  Co.,  90  N.  Y. 
Gi)7;  Jones  v.  Atkinson,  68  Ala.  107; 
Pollock  V.  Gantt,  09  Ala.  373;  41  Am. 
Rep.  519;  Brooks  v.  Fletcher,  50  Vt. 
624;  Myers  v.  Mut.  Ins.  Co.,  32  Hun, 
321 ;  Davis  r.  Krum,  12  Mo.  App.  279; 
Wallace  v.  Tiawycr,  90  Ind.  499;  Breed 
V.  Central  City  Bank,  Q  Col.  235;  Mo- 


extension  of  tho  power  of  tho  agent 
without  a  ratification  of  tlio  act  tlono 
will  not  legalize  it:  Monro  v.  Lockett, 
2  Bibb,  07;  4  Am.  Dec.  683.  A  con- 
tract made  in  a  foreig.i  country  by  an 
agent  without  authority,  if  ratili^  A  !  , 
tlio  principal,  will  be  roi\^  jred  as 
made  in  tho  country  ^\  princi- 

pal resides:  Dord  ioe,  0  La. 

Ann.  5o3;  54  Am.  ,3. 

'  Ellison  V.  Jacksi  \'.  Co.,  12  Cal. 
542. 

^  Mayer  v.  McLure,  30  Miss  '89;  72 
Am.  Dec.  190. 

"  Foster  v.  Bates,  Dan.  &  LI.  400;  12 
Mees.  &  W.  226;  7  Jur.  1093;  13  L.  J. 
Ex.  88. 


n 


33 


RATIFICATION. 


§29 


I  tracts 
other, 
jrmcr, 
I  thoro 
111  and 

0  hav- 

1  to  set 
ho  acts 
10  rulo 
I  fruits 
tics  of 
ipplied 
agent's 
ccurity 
ited  se- 
10  rati- 
)tained. 

2;  71  Am. 
uuix    Iu3. 
jxii  V.  San 
I  V.  Bycr- 
Dec.   142; 
722;  97 
arrcn,  36 
Nva,  700; 
Wis.  529; 
2.     As  to 
Liitry  by 
Wallace, 
219.     Aa 
ho  agent 
act  aono 
Lockett, 
A  con- 
;ry  l)y  an. 

jrcil  iiA 

princi- 

C  La. 

I,  12  Cal. 

89;  72 

400;  12 
13  L.  J. 


But  whoro  tho  contract  was  inado  by  the  principal,  its 
perfornianeo  entitles  tho  principal  to  payment;  and  in 
such  case  payment  to  an  unauthorized  agent  eannot 
ho  ratified  by  tho  principal's  bringing  action  upon  tho 
contract;  ho  claims  nothing  by  reason  of  sueh  payment; 
ho  repudiates  it  entirely.*  Where  an  agent  autliorized 
to  sign  notes  delegates  his  power,  a  ratilication  by  tho 
j)rincipal  of  such  noto  will  maive  it  valid,  but  not  a  rati- 
fication by  the  agent.''  If  tlie  eourt  finds  as  a  fact  that 
one  per.son  executed  a  written  instrument  fin*  another  as 
his  attorney  in  fact,  without  any  power  to  do  so,  but  that 
tho  constituent  afterwards  expressly  ratified  tho  act,  tho 
presumption  will  bo  that  tho  ratilication  was  in  some  l(\gal 
and  sudicient  mode'  If  a  principal  ratifies  his  agent's 
acts,  even  for  a  moment,  he  is  bound  by  them.'  A  prin- 
cipal incurs  liability  in  tort  as  well  as  in  contract  by  rati- 
fying the  acts  of  his  agcnt.*^ 

Illustrations.  —  One  obtains  an  insurance  of  tho  property  of 
another  in  his  possession  witliout  instructions  so  to  do.  JfcUJ, 
that  the  owner  may  adopt  tho  policy  at  any  time  before  or  within 
a  reasonable  time  iifter  a  loss:  Watkins  v.  Durand,  1  Port.  251. 
An  agent  A  does  a  largo  business  witli  a  firm  15.  A  loss  in  sus- 
tained, and  on  account  of  A's  large  and  liberal  dealings  B  com- 
promises with  him  at  one  fourth.  The  prineipal  upon  whose 
goods  the  loss  was  sustained  i.s  entitled  to  settle  with  A,  upon 
the  same  terms,  his  portion  of  the  lo.'^s:  Ou'fhi/v.  Woolhnptcr,  14 
Ga.  124.  Some  of  a  number  of  hondsr.ien  employed  an  attor- 
ney for  a  certain  fee  to  settle  suits  ])ending  against  all,  and  the 
others  with  knowledge  of  the  contract  enjoyed  the  fruits  of 
the  compromise.  Held,  that  the  latter  thereby  ratified  the  con- 
tract, and  were  liable  with  the  others  for  the  fee:  II((vhh  v.  Kih- 
lad-j  80  Ind.  407.  A.  sold  his  bankrupt  stock  in  trade  to  F., 
agreeing  in  writing  to  "do  business"  in  the  same  shop  as  agent 
for  F.,  and  not  buy  on  credit  without  an  order  in  writing  from 
F.,  who  was  to  take  possession  when  dissatisfied,  etc.  A.,  with- 
out such  order,  bought  on  credit  goods  of  S.,  who  was  ignorant 
of  the  relation  between  F.  and  A.;  and  F.  soon  aftc  took  jjos- 

'    .>ylo  II.  City  of  Brooklyn,  53  Barb.  *  Silverman  v.  Bush,    10  111.  App. 

41.  437. 

^  Brewster  V.  Hobart,  15  Pick.  302.  *  Morehouse  v.  Northrop,  33  Conn.. 

3  RacouiUat  r.  Sanscvain,  32 Cal.37G.  380;  89  Am.  Dec.  211. 
Vol.  L  — 3 


29 


PRINCIPAL   AND   AGENT. 


84 


Bession  of  all  the  goods,  including  these,  and  sold  them  as  his 
own.  Held,  that  this  ratified  the  agent's  purchase  of  S.,  who 
could  recover  the  price  from  F.:  Sarticell  v.  Frost,  122  Mass.  184. 
An  agent  to  sell  ordered  the  purchaser  to  ship  produce  in  part 
payment  to  a  third  person  for  sale.  Ildd,  that  the  principal 
after  notice  could  recover  the  proceeds  of  the  purchase  from 
the  third  person,  as  against  the  creditors  of  the  agenJ:  Kcllcyv. 
Munsori,  7  Mass.  319;  5  Am.  Dec.  47.  An  agent  to  got  a  note 
discounted  indorsed  it  and  presented  it  for  discount  as  liis  ov/n; 
the  bank  discounted  it  and  passed  the  proceeds  to  his  credit. 
Held,  that  the  bank  was  responsible  to  the  principal  therefor 
after  notice:  Merrill  v.  Bank  of  Norfolk,  19  Pick.  32.  An  executor 
sold  growing  wheat  belonging  to  a  widow,  supposing  it  to  be  his 
own,  and  took  a  note  for  the  price,  with  an  oral  agreement  for 
measurement  and  correction.  The  widow,  with  notice  that  the 
purchaser  claimed  that  the  sale  was  subject  to  measurement,  ac- 
cepted the  note  from  the  executor  and  sued  it.  Held,  that  she 
wai>  bound  by  the  agreement  for  measurement.  By  consenting 
to  adopt  the  sale,  she  became  bound  by  its  terms:  Carter  v.  Ilnvi- 
ilton,  Held.  Notes,  251;  reversing  11  Barb.  147.  An  agciit  with- 
out authority  submitted  a  claim  of  his  principal  to  arbitration, 
and  took  an  award  in  his  own  name.  The  principal  accepted 
an  assignment  of  the  award  from  him,  and  assigned  it  again  to 
a  third  person.  Held,  that  he  had  thereby  ratified  the  agent's 
acts:  Lowenstein  v.  Mcintosh,  37  Barb.  251.  W.  contracted  with 
defendant  to  put  up  certain  machinery,  and  ordered  a  large 
portion  of  it  from  plaintiffs  in  W.'s  name  and  as  his  agent. 
Plaintiffs  wrote  to  defendant  for  explanations  of  the  order,  and 
defendant  answered,  declining  to  interfere  with  W.'s  order,  but 
not  in  terms  repudiating  it.  Plaintiffs  also  sent  the  bill  of 
lading  and  the  articles  to  defendant,  who  never  returned  any 
of  them.  Held,  that  upon  this  evidence  the  jaiy  might  have 
found  that  defendant  had  ratified  W.'s  order;  and  the  question 
of  ratification  ought  to  have  ':':c'n  submitted  to  them:  Cooper  v. 
Schwartz,  40  Wis.  54.  The  defendants'  agent  pledged  their  credit 
to  the  plaintiffs  for  goods  to  be  delivered  to  K.,  their  subcon- 
tractor; and  the  defendants  agreed  to  pay  therefor  if  they  had 
sufficient  funds  in  their  hands  belonging  to  K.,  which  they  had; 
K.  examined  his  account  with  the  plaintiffs  at  the  defendant's 
request,  and  the  defendants  delivered  a  statement  thereof  to 
said  agent,  who  proceeded  to  pay  a  part  of  the  account.  Held, 
that  although  said  agent  might  have  exceeded  his  authority, 
the  defendants  had  adopted  and  ratified  his  act,  and  were 
bound  by  his  promise:  Burgess  v.  Harris,  47  Vt.  322.  Several 
persons  agreed  in  writing  to  take  an  interest  in  a  voyage,  and 
appointed  P.  and  C.  to  make  purchases;  they  made  them  sepa- 


84 

as  his 

I.,  who 

;s.  184. 

in  part 

incipal 

c  from 

'ellcy  V, 

,  a  note 

is  ovv-n ; 
credit. 

:hcrcfor 

xccutor 

3  be  his 

lent  for 

that  the 

lent,  ac- 

that  Bhe 

iscnting 

V.  Ilam- 

lit  with- 

itration, 

accepted 

again  to 

3  agent's 

ted  with 
a  large 

s  agent. 

der,  and 

der,  but 

bill  of 

nod  any 
hi  have 
question 
ooper  V. 
ir  credit 
subcon- 
hcy  had 
icy  had; 
[endant's 
ereof  to 
Held, 
thority, 
nd  were 
Several 
|age,  and 
m  sepa- 


85 


RATIFICATION. 


§30 


rately  on  credit,  and  the  parties  accepted  and  shipped  the  goods 
purchased.  Held,  that  the  separate  purchases  were  ratified,  and 
that  subsequent  signers  of  the  contract  were  bound  as  ratifying 
the  purchases:  French  v.  Price,  24  Pick.  13.  II.  embezzled  cer- 
tain bonds  belonging  to  W.,  and  pledged  them  to  M.  to  secure 
payment  of  borrowed  money.  After  W.  was  informed  that  tlio 
bonds  had  been  so  pledged,  he  took  II. 's  note  for  then),  and 
afterwards  obtained  judgment  against  him  on  the  note.  In  a 
suit  by  W.  against  M.  to  recover  the  bonds,  held,  that  by  liis 
previous  acts  W.  had  ratified  the  pledge  and  could  not  recover* 
Wciryiehen  v.  Marchand,  18  La.  Ann.  147.  P.,  acting  without 
authority  from  H.,  sells  land  of  II.,  receiving  a  promissory 
note  for  the  price  thereof,  and  II.  receives  the  note  and  indorses 
it  to  a  third  party.  Held,  that  such  action  of  II.  is  a  raHfication 
of  the  acts  of  P.,  and  makes  the  contract  binding  upoa  II.,  and 
he  is  estopped  from  denying  the  original  authority  or  ratifica- 
tion: Moore  v.  Pendleton,  IG  Ind.  481.  M.  stored  corn  in  the 
warehouse  of  F.,  who,  as  M.  alleged,  sold  it  without  authority. 
All  of  the  purchase-money  except  the  amount  of  a  purchase 
made  by  S.  was  tendered  to  M.  by  F.,  and  at  the  same  time  M. 
was  informed  that  all  the  corn  had  been  sold;  no  special  men- 
tion, however,  was  made  of  the  sale  to  S.  M.  accepted  the  money 
tendered.  Held,  a  ratification  of  all  the  sales,  including  that  to 
S.:  Seago  v.  Martin,  G  Heisk.  308. 

§  30.  But  cannot  Divest  Vested  Rights. — But  a  ratifi- 
cation of  an  unauthorized  act  cannot  divest  rights  acquired 
by  third  persons,  or  subject  them  to  losses.*  "Although 
the  general  rule  is  that  the  ratification  relates  back  to  the 
time  of  the  inception  of  the  transaction,  r.nd  has  a  com- 
plete retroactive  eflicacy,  or  as  tlie  maxim  is,  Omnis  ruti- 
hahitio  rdrotiahitur,  yet  this  doctrine  is  not  universally 
fipplicable.  Thus,  if  third  persons  acquire  rights  after  the 
act  is  done  and  before  it  has  received  the  sanction  of  the 
principal,  the  ratification  cannot  operate  retrospectively 
so  as  to  overreach  and  defeat  those  rights.""  A  ratifica- 
tion cannot  change  the  character  of  the  instrument  upon 
which  it  is  indorsed  to  the  extent  of  supplying  a  title  where 

>  Stoadard  V.  U.  S.,  4  Ct.  of  CI.  511;  Belltner,  57  Cal.  12;  Fowler  v.  Pcarce, 

McMahan  f.  McMahan,  13  Ta.  St.  376;  49  111.  59;  rollock  v.  Cohen,  32  Ohio 

53  Am.  Dec.  4S1.  St.  514;  contra.  Persons  v.  McKibben, 

■'  Woo.l  V.  McCain,  7  Ala.  fOO;  42  5  Ind.  201;  Gl  Am.  Dec.  85. 
Am.  Dec.  G12;  and  sec  Wittcnbrock  «. 


§31 


PRINCIPAL  AND  AGENT. 


86 


there  is  none  in  fact.*  Thus  a  mortgage  by  a  married 
woman  of  goods  of  which  she  avouches  herself  therein  to 
be  the  owner,  but  which  really  belong  to  her  husband, 
passes  no  such  title  as  to  enable  the  mortgagee  to  replevy 
them  from  a  third  person,  although  the  husband  has  in- 
dorsed on  the  mortgage  that  he  formally  sanctions  and 
ratifies  his  wife's  action,  "she  having  been  my  agent  for 
the  transaction  of  business."  ^  So  where  goods  have  been 
intrusted  to  an  agent  for  a  special  purpose,  and  have  been 
wrongfully  sold  by  him,  their  owner  cannot  by  ratifying 
his  act  maintain  an  action  by  contract  against  the  pur- 
chaser for  goods  sold  and  delivered,  but  must  sue  in  tort,* 

Illustrations.  —  A  person  in  possession  of  the  -property  of 
anotlier,  without  the  knowledge  of  the  owner,  exchanged  it  for 
other  property,  and  gave  his  individual  note  for  the  difference 
without  disclosing  the  real  ownership.  The  owner  afterwards 
received  the  property  so  taken  in  exchange.  Held,  that  if  the 
payee  of  the  note,  after  learning  the  fact  that  the  maker  acted 
as  agent  in  the  transaction,  failed  to  notify  the  principal  that 
ho  should  look  to  liini  for  the  payment  of  the  note  until  after 
tlie  principal  had  settled  with  the  agent,  and  in  such  settle- 
ment had  paid  the  agent  the  amount  of  the  note,  the  principal 
was  thereby  discharged  from  any  liability  to  the  payee:  Fowler 
V.  Pcarce,  49  111.  59. 

§  31.  Act  must  not  be  Illegal  or  Void. — The  act  must 
not  be  illegal  or  void.*  Thus  where  an  ofiicer  without 
authority  undertook  to  appoint  an  appraiser  for  creditors 
without  first  levying  on  the  land  of  the  debtor,  the  levy 
was  void,  and  it  was  held  not  made  good  by  the  creditors' 


*  Lewis  V.  Buttrick,  102  Mass.  412. 
»  Lewis  V.  Buttrick,  102  Mass.  412. 
»  Berkshire  Glass  Co.  v.  Wolcott,  2 

Allen,  227;  70  Am.  Dec.  781. 

*  Story  ou  Agency,  sec.  240;  Evans 
on  Agency,  50;  iSceery  c.  Spravfielil, 
112  Mass.  512;  O'Connell  v.  Arnold,  53 
Ind.  205;  Armitago  r.  Widoc,  .SO  Mich. 
124;  Board  of  Supervisors  v.  Aniglii, 
54  Miss.  008;  Ncwsoin  v.  Hart,  14 
Mich.  237.  Li  Mason  ?-.  Caldwell,  5 
Crilm.  190,  48  Am.  Dec.  330,  Caton,  J., 
said:  "A  contract  which  was  abso'utely 
void  as  to  all  parties,  which  conferred 


no  rights  and  created  no  liabilities  of 
any  sort,  couM  not,  I  imagine,  be 
adopted  by  any  one  so  as  to  make  it 
valid  and  binding."  The  act  of  direc- 
tors of  a  corporation  going  beyond 
their  powers  cannot  be  ratified  by  the 
stockholders:  Ashbury  &  Co.  v.  Riche, 
L.  R.  7  H.  L.  053;  Price  v.  Grand  Rap- 
ids R.  R.  Co.,  13  Lid.  58;  McCracken 
V.  City  of  San  Francisco,  10  Cal.  591. 
But  aliter,  where  the  directors  act  ir- 
regularly, but  within  their  powers: 
Stato  V.  Tormus,  26  Minn.  1. 


36 


37 


RATIFICATION. 


§32 


acceptance  of  seisin.*  So  where  a  committee  were  empow- 
ered to  sell  a  school-house,  a  sale  on  credit  instead  of  cash 
was  held  void,  ar  d  not  ratified  by  lapse  of  time  or  the  re- 
moval of  the  school-house.^  So  a  sheriff  cannot  legally 
be  a  purchaser  at  his  own  sale  either  for  himself  or  for 
another,  and  his  act  in  doing  so  cannot  be  ratified.^  It 
is  held  in  England  that  a  person  cannot  ratify  a  forgery 
of  his  name;*  while  in  the  United  States  in  a  number  of 
decisions  it  is  laid  down  that  he  can.^  And  the  govern- 
ment has  been  held  liable  for  the  illegal  acts  of  its  officers 
which  it  adopts.* 

§  32.    must  have  been  Done  on  Behalf  of  Principal.  — 

The  act  must  have  been  done  by  the  agent  on  behalf  of  the 
person  who  ratifies  it.  This  principle  is  as  old  as  the  Year- 
books,^ where  this  is  put:  "If  a  bailiff  take  a /icnof,  claiming 
property  in  it  himself,  the  subsequent  assent  of  the  lord 
would  not  amount  to  a  ratification;  but  if  he  takes  it  as 
the  bailiff  of  the  lord,  the  subsequent  assent  amounts  to 
a  ratification  of  the  bailiff's  act."®  Thus,  where  suit  was 
brought  against  the  general  agent  of  a  sewing-machine 
company  for  a  forcible  trespass  committed  by  employees 
while  removing  a  machine  by  his  direction,  and  in  com- 


Mlitor 


^» 


jilities  of 
kgiuc,  be 
make  it 
of  direc- 
beyond 
d  by  the 
V.  Riche, 
,nd  llap- 
Crackcn 
al.  591. 
act  ir- 
powers: 


*  Richardson  v.  Payne,  114  Mass. 
429. 

'  School  District  v.  yEtna  Life  Tns. 
Co.,  G2  Me.  .330;  Fitzpatrick  v.  S-  hool 
Coimiiissioners,  7  Humph.  224;  46.[i.m. 
Dec.  70. 

■'  Harrison  v.  McHenry,  9  Ga.  1G4; 
f)2  Am.  Dec.  435. 

*  Urook  V.  Hook,  L.  R.  G  Ex.  79; 
McKeiizie  v.  British  Linen  Co.,  6  App. 
Cas.  82. 

'■'  Thome  r.  Bell,  Lalor,  430;  Howard 
V.  Duncan,  3  Laus.  174;  Forsyth  v. 
Day,  40  Me.  170;  Fitzpatrick  ?•.  Com- 
missioners. 7  Humph.  224;  46  Am. 
Dee.  7ii;  Union  B'k  r.  Middlebrook, 
33  L'onn.  9.");  (larrctt  v.  Gouter,  42 
l',i_  St.  143;  Livings  v.  Wilcr,  32  111. 
387;  Wellington?'.  Jackson,  121  Mass. 
ir)7;  Turner  v.  Keller,  CO  N.  Y.  GO; 


Charles  River  B'k  v.  Davis,  100  Mass. 
413;  CascoBankn  Keenc,  53  Mo.  103.' 
But  nllter,  Hhesler  v.  Vandyke,  92  Pa. 
St.  447;  37  Am.  Rep.  702,  and  note 
p.  70  k 

®  Wiggins  V.  United  States,  3  Ct.  of 
CI.  412. 

7  7  Hen.  IV.,  35. 

^  Vanderbilt  v.  Turnpike  Co.,  2 
N.  Y.  479;  51  Am.  Dec.  315;  Braitierd 
V.  Dunning,  .30  N.  Y.  211;  Alldred  v. 
Bray,  41  Mo.  484;  Collins ?'.Wagqoner, 
Breese,  26;  Bevenogo  ?■.  Rawrfoii,  51 
111.  504;  Grand  v.  Van  Vleck,  09  111. 
479;  Condit  v.  Baldwin,  21  N.  Y.  219; 
78  Am.  Dec.  137;  Farmers'  Loan  etc. 
Co.  V.  Walworth,  1  N.  Y.  433;  Com- 
mercial Bank  v.  Jones,  18  Tex.  811; 
Collins  V.  Swan,  7  Robt.  623;  Richard- 
son V.  Payne,  114  Mass.  429. 


§§  33,  34 


PRINCIPAL  AND   AGENT. 


38 


pliance  with  the  orders  of  the  company,  from  the  prem- 
ises of  one  who  held  it  under  a  sewing-machine  lease, 
which  had  been  forfeited,  it  was  held  that  he  was  not  lia- 
ble, although  he  afterwards  ratified  the  acts  of  the  em- 
ployees.^ There  is  no  rule  that  one  of  two  joint  agents  is 
deemed  to  ratify  the  separate,  unauthorized  act  of  the 
other,  so  as  to  render  both  liable  for  it,  by  mere  failure 
to  repudiate  it.^ 

§  33.    Principal  must  be  in  Existence. — But  it  is  not  a 

ratification  where  the  principal  is  not  in  existence  when 
the  unauthorized  transaction  took  place.'  Where  a  per- 
son enters  into  a  contract  as  promoter  or  trustee  on  be- 
half of  a  corporation  not  yet  formed,  and  the  company, 
when  formed,  adopts  his  acts,  this  is  making  a  new 
contract,  and  not  ratifying  the  existing  one.*  Yet  if  the 
company  has  received  the  full  benefit  of  a  contract  made 
before  incorporation  by  its  individual  members,  it  will  be 
bound  by  it.^  Where  A  does  an  act  as  agent  for  B  with- 
out any  communication  with  C,  C  cannot,  by  afterwards 
adopting  that  act,  make  A  his  agent,  and  thereby  incur 
any  liability,  or  take  any  benefit  under  the  act  of  A." 

§  34.    Ratification  must  be  Made  with  Full  Knowledge 
of   Facts. — And  the  ratification  is  binding  only  when 


*  Smith  V.  Lozo,  42  Mich.  6. 

'•*  Poua  V.  Evans,  28  La.  Ann.  576. 
'Watson    V.    Swan,     11   Com.    B., 
N.  S.,  771. 

*  Melhado  v.  Porto  Alegro  Co.,  L.  R.  9 
Com.  r.  5U.3;  In  ro  Empress  Engineer- 
ing Co.,  IG  Ch.  Div.  12d;  Kulner  v. 
Baxter,  L.  R.  2  Com.  P.  174;  Mar-, 
chant  V.  Loan  Asa'n,  26  La.  Ann.  389; 
Stainsby  ?'.  Frazer's  Life  Boat  Co.,  3 
Daly,  98;  Rockfordctc.  R.  R.  Co.  v.  St. 
Louis  R.  R.  Co.,  65  III.  328;  Western 
Screw  Co.  v.  Cousley,  72  111.  531.  But 
see  Frankfort  etc.  Co.  v.  Churchill,  6 
T.  B.  Mon.  427;   17  Am.  Dec.   159. 


(A  ratification  of  an  unauthorized  con- 
tract of  reinsurance  or  douhlo  insur- 
ance must  bo  made  before  the  loss  has 
occurred:  Alliance  Ins.  Co.  t\  Louis- 
iana Ins.  Co.,  8  La.  1;  28  Am.  Dec. 
117.) 

*  Edwards  r.  Grand  Junction  R.  R. 
Co. ,  1  Mylne  &  C.  650;  Bell's  Gap  R.  R. 
Co.  V.  Christy,  79  Pa.  St.  54;  21  Am. 
Rep.  39;  Grape  Sugar  Mfg.  Co.  v. 
Small,  40  Md.  395;  Bell  v.  McAboy,  3 
Brewst.  81. 

«  Wilson  V.  Tummon,  6  Scott  N.  R. 
894;  1  Dowl.  &  L.  513. 


88 


incur 

6 


fledge 

when 


rizcil  con- 

|j1o  insur- 

I  loss  has 

Louis- 

Lm.   Dec. 

Ion  R.  R. 

up  R.  R. 

121  Am. 

Co.    V. 

3Aboy,  3 

kt  N.  R. 


39 


RATIFICATION. 


§34 


made  with  a  full  kuowlcdgo  of  all  the  material  circum- 
stances.* 

Illdstrations.  —  Agents  of  an  insurance  company  receive 
money  for  insuring  iron,  which  they  transmit  to  the  company, 
by  wliom  it  is  accepted.  Held,  not  a  ratilication  of  an  unau- 
thorized contract  made  hy  the  agents  for  the  company,  unless 
the  company  knew  on  wliat  account  the  money  was  received, 
and  the  terms  of  tlio  contract:  /Etna  Ins.  Co.  v.  North  Wentcni 
Iron  Co.,  21  "Wis.  458.  An  agent  for  the  sale  of  real  estate 
exceeded  his  instructions  in  selling  a  part  of  the  property  in 
regard  to  which  he  was  authorized  only  to  negotiate  for  a  sale, 
and  his  principal  afterwards  impliedly  ratified  all  his  acts  hy 
receiving  the  money  for  the  sale  of  all  the  land,  hut  it  appeared 
that  he  did  not  know  that  the  portion  in  question  had  heen 
sold.  Held,  that  the  agreement  of  the  agent  was  neither  author- 
ized nor  ratified:  Lester  v.  Kinne,  37  Conn.  9.  A  landlord  au- 
thorized bailiffs  to  distrain  for  rent  due  to  him  from  !iis  tenant 
of  a  farm,  directing  them  not  to  take  anything  except  on  the 
demised  premises.  The  bailiffs  distrained  cattle  of  another  per- 
son (supposing  them  to  be  the  tenant's)  beyond  the  boundary 
of  the  farm;  the  cattle  were  sold,  and  Uie  landlord  received  the 
proceeds.  Held,  that  the  landlord  wa:^  not  liable  for  the  value 
of  the  cattle,  unless  he  ratified  the  act  of  the  bailiffs  with 
knowledge  of  the  irregularity,  or  that  he  chose,  without  incjuiry, 
to  take  the  risk  upon  himself,  and  to  adopt  the  whole  of  their 
acts:  Lewis  v.  Read,  13  Mees.  &  \V.  831;  14  L.  J.  Ex.  295.  II. 
and  W.,  the  agents  of  a  railroad  con^pany,  represented  to  a  land- 


'  Bank  of  Owensboro  v.  Western 
Bank,  13  Bush,  520;  2S  Am.  Rep. 
1:11;  Si)ooner  v.  Thompson,  48  Vt. 
2d9;  Pittsburg  etc.  R.  R.  Co.  v.  Gajs- 
zaiii,  32  Pa.  St.  340;  Humphreys 
V.  Havens,  12  Mitm.  2!)8;  Combs  v. 
Scott,  12  Allen,  41)3;  Manning  n  Oash- 
aric-,  27  Inil.  3'J9;  Doilge  v.  McDonald, 
14  Wis.  535;  ..Etna  Ins.  Co.  v.  Iron 
Co.,  21  Wis.  458;  Hardeman  v.  Ford, 
12 (la.  205;  Mapp  v.  Phillips,  32  Cla. 
72;  Billings  n  Morrow,  7  Cal.  171;  08 
Am.  Dec.  235;  Williams  v.  Storm,  0 
Cold.  3:)3;  Todrick  r.  Rice,  13  Iowa, 
214;  Bell  i\  Cunningliam,  3  Pot.  G'J; 
Owings  V.  Hall,  9  Pet.  007;  Holder- 
ness  V.  Baker,  44  N.  H.  414;  Copcland 
V.  Ins.  Co.,  G  Pick.  202;  Dickinson  v. 
Conway,  487;  Day  v.  Holme.s,  103 
Mass.  3 JO;  Luster  v.  Kinne,  37  Conn. 
8;  Hankui  v.  Baker,  40  N.  Y.  OGO; 
Walters     v.    Munroe,    17    Md.    150; 


77  A.n.  Dec.  .328;  Adams  Exp.  Co.  v. 
Trego,  ;15  Md.  419;  Ma.xoy  r.  Heck- 
thoni,  41  111.  437;  Riynolds  ?'.  Teerce, 
80  111.  570;  Miller  r.  Board  of  E  liica- 
tioii,  41  Cal.  100;  Bannoii  r.  Warlii.kl, 
42  Md  42;  Bosscan  r.  O'Brien,  4  Biss. 
395;  Thompson  t'.  Craig,  10  Abb.  Pr., 
N.  S.,  29;  Kerrr.  Sharp,  83  111.  199; 
Stein  V.  Kendall,  1  Brad.  (111.)  103; 
Snow  V.  Crace,  29  Ark.  131;  Hunt  v. 
Marple,  2  Brad.  (III.)  402;  Fouch  r. 
Wdion,  59  Ind.  93;  Rich  v.  Smitt,  82 
N.  Y.  G27;  Hoffman  v.  Living.ston,  46 
N.  Y.  Sup.  Ct.  552;  Dean  lu  B.is.sett, 
57  Cal.  GIO;  Robert.i  *'.  Ruiiiley,  58 
Iowa,  301 ;  Hovey  v.  Brown,  59  N.  H. 
114;  Herring  v.  Skaggs,  73  Ala.  44(1; 
Gulick  V.  Crover,  .33  N.  J.  L.  403;  97 
Am.  Doc.  728;  Vincent  v.  Rather,  31 
Te.x.  77;  98  Am.  Dec.  51G;  Boliart  v. 
Obcrue,  30  Kan.  284. 


§§  35,  36 


PRINCIPAL   AND   AGENT. 


40 


owner  that  the  company,  in  consideration  of  tho  conveyance  of 
the  right  of  way,  w*iulJ  construct  a  crossing  over  their  embank- 
ment. Ifehl,  that  the  comi)any  hy  accepting  tho  deed  ratified 
what  was  done  hy  II.  and  \V.  in  their  behalf;  and  althougli  it 
is  true  tliat  no  one  is  bound  by  his  ratification  of  what  l)as  been 
done  in  his  behalf  unless  he  is  informed  of  all  the  circum- 
etances,  yet  ho  cannot  avail  himself  of  the  benefit  of  the  act  ex- 
cept cum  oncre:  Morris  and  Kssex  R.  R.  Co.  v.  Green,  lo  \.  J.  Eq. 
470.  An  agent,  without  the  knowledge  of  the  principal,  loans 
his  principal's  money  to  a  third  person,  and  afterwards  makes 
a  note  in  the  principal's  name,  without  his  knowledge,  for  a 
larger  sum,  which  is  discounted  for  the  accommodation  of  such 
third  person,  and  out  of  the  proceeds  of  t;uch  di.scount  tho 
agent  is  repaid  the  sum  so  loaned,  and  applies  it  to  the  princi- 
pal's benefit.  Held,  that  if  the  principal,  immediately  on  being 
notified  of  the  use  of  his  name  to  such  accommodation  paper, 
disavows  the  act  of  tho  agent,  he  is  not  to  be  held  to  have  rati- 
fied the  act  of  the  agent  because  he  does  not  voluntarily  offer 
to  restore  the  money  which  was  paid  to  the  agent  out  of  tho 
proceeds  of  Buch  discount  in  payment  of  such  unauthorized 
loan:  Gulick  v.  Grover,  33  N.  J.  L.  4G4;  97  Am.  Dec.  728. 

§  35.  And  is  then  Irrevocable. — And  a  ratification  once 
thus  made  cannot  be  revoked  by  the  principal.*  There 
is,  as  has  been  well  said,  no  locus  i^ocuitentiae} 

§  36.    Ratification  Absolves  Agent,  and  Shifts  Liability. 

— The  ratification  by  the  priiici];'al  absolves  the  agent 
from  all  liability,  and  estops  the  principal  from  claiming 
damages  against  tho  agent  for  his  unlawful  interference."* 
So,  too,  tho  principal  becomes  solely  liable  for  the  act  as 
though  ho  had  originally  authorized  it,  for  all  tho  re- 
sponsibilities arc  shifted  from  the  agent  to  the  principal,* 
and  tho  principal  may,  in  like  manner,  bring  suit  on  the 


^  Clnrk  V.  Van  Riemsdyk,  9  Crancli, 
153;  Bell  v.  Byer.son,  11  Iowa,  233; 
77  Am.  Dec.  142;  Uazletou  v.  Batchul- 
der,  44  N.  Y.  40;  Breck  r.  Jones.  IG 
Tex.  4il;  Beall  v.  January,  62  Mo. 
431;  Andrews  v.  Mtna,  Ina.  Co.,  92 
N.  Y.  500. 

'•'  Evaus  on  A'^ency,  65. 

'  Muchan  v.  Forrester,  52  N.  Y.  277; 
McCrackea  v.  San  Fraueisco,  10  Cal. 
591 ;  Cairnesr.  Blcccker,  12  Johns.  .300; 
Owing  V.  Hull,  y  Pet.  607;  'xhorndike 


V.  Godfrey,  3  Greenl.  429;  Tow^e  v. 
Johnson,  1  Johns.  Gas.  110;  FarwcU 
V.  Meyer,  3.")  111.  41;  Bray  v.  Gunn,  53 
Ga.  144;  Woodward  v.  Suydam,  11 
Ohio,  300;  Meyer  v.  Morgan,  51  Miss. 
21;  24  Am.  Rep.  G17. 

*  Ballou  V.  Talbot,  IG  IMass.  401; 
8  Am.  Dec.  146;  Lucas  v.  Barrett,  1 
G.  Greene,  511;  Lent  v.  Tadelford,  10 
Mass.  230;  6  Am.  Dec.  119;  Roger.i  v. 
Kneeland,  10  Wend.  218;  Clar'c  r.  Van 
Rennadyk,  9  Crancb,   153;  Roby  v. 


40 


41 


RATIFICATION. 


§§  37,  38 


contract,*  and  tho  agent  becomes  entitled  to  tho  same 
rights  and  compensation  as  if  his  act  had  been  originally 
authorized."  When,  however,  the  principal,  to  prevent 
greater  loss  to  himself,  is  forced  to  assume  the  agent'd 
act,  it  will  not  prevent  his  remedy  against  the  agent. 
Therefore,  where  an  agent  to  collect  money  was  instructed 
to  remit  by  express,  and,  instead,  bought  a  check  on  New 
York,  which  the  principal  forwarded  to  New  York  for 
payment,  but  before  it  reached  there  the  drawers  becanio 
insolvent,  and  the  check  was  dishonored,  it  was  held  that 
sending  the  check  to  New  York  was  not  a  ratification  of 
the  act  of  tho  agent  in  buying  the  check,  and  ho  was 
liable  for  tho  loss  incurred.^  And  where  an  agent  to  loan 
money  takes  insufficient  security,  the  principal  may  keep 
the  security,  and  hold  the  agent  liable  for  any  deficiency.'* 


37. 


acrent 


Lo\v:e  V. 

Farwell 

Junn,  53 

xm,   II 

151  Miss. 


iss.  4C1; 
xrrctt,  1 

Ml,  la 

toger.i  V. 
' :  I'.  Van 
tloby  V. 


Appointment  of  Subagent. — If  an  agent  improp- 
erly appoints  a  subagent,  the  ratification  of  the  acts  of 
tho  subagent  by  the  principal  will  bind  him  in  the  same 
manner  as  though  he  had  originally  given  tho  agent  au- 
thority to  delegate  the  execution  of  his  orders.^  But  it 
v.ill  create  no  liability  on  tho  principal's  part  to  pay  for 
the  services  of  the  subagent." 


38. 


Ratification  must  be  in  Toto. — The  ratification 
must  be  entire;  tho  principal  cannot  ratify  part  of  the 
agent's  acts  and  reject  part.^  If  he  ratifies  what  is  to  his 
interest,  he  must  also  assume  that  which  is  against  his 


Cossett,  78  111.  G38;  Bray  v.  Gunn,  35 
Ga.  11!;  Palmern  Stephens,  1  Dciiio, 
47-2;  Mason  v.  Caldwell,  5  Gilm.  196; 
4S  Am.  Dec.  330;  Violet  v.  Powell,  10 
B.  Moil.  347;  52  Am.  Dec.  548;  mntra: 
Roisiter  i\  Ilossitcr,  8  Wend.  494,  24 
A:n  Dec.  C2,  to  the  eflfect  that  after 
tliG  ratiQcation  tho  agent  will  still  bo 
li;'.lib  to  tho  party  with  whom  he  con- 
tracted. 

'  Story  on  Agency,  sec.  244. 

'  Hopkins  V.  MoUineux,  4  Wend. 
4G5. 


'  Walker  v.  Walker,  5  Ileisk.  425. 

*  Bank  of  Owc'usl)or()  r.  Western 
Bank,  13  Bush,  520;  20  Am.  IJep.  211. 

*  Strickland  r.  Hudson,  55  Miss. 
235. 

"  Homan  v.  Brooklyn  Ins.  Co.,  7 
Mo.  App.  22. 

'  Bennett  v.  Judson,  21  N.  Y.  238; 
EwcU  V.  Chamberlain,  31  N.  Y.  Gil; 
Crans  v.  Hunter,  28  N.  Y.  38!);  Farm- 
crs'  Loan  Co.  v.  Walworth,  I  N.  Y. 
433;  Benedicts.  Smith,  10  Paige,  12G; 
Newell  V.  Hurlburt,  2  Vt.  351;  Cole- 


38 


PRINCIPAL  AND  AGENT. 


42 


interest.*  The  law  does  not  permit  a  principal  to  adopt 
an  agent's  unauthorized  act,  so  far  as  it  is  beneficial,  and 
reject  the  residue.  By  adopting  a  part  ho  becomes  bound 
by  the  whole.*  The  fact  that  a  person  receives  from  a 
broker  the  profits  of  a  transaction  in  buying  and  selling 
stocks  upon  a  margin  does  not  amount  to  a  ratification  of 
another  transaction  in  the  purchase  and  sale  of  stocks  be- 
tween the  same  parties  which  has  resulted  in  a  loss.'  If 
the  ratification  is  made  under  a  mistake  or  in  ignorance 
of  the  full  range  of  the  agent's  act,  it  is  voidable  to  the 
extent  of  the  mistake.* 

Illustrations. — A  sells  to  B  two  mules  belonging  to  C.  C 
ratifies  the  sale  by  accepting  the  purchase  price.  C  is  bound 
by  the  agent's  warranty  of  the  soundness  of  the  mules:  Cochran 
V.  Oiitwood,  59  111.  53.  A  stored  corn  with  B,  who  sold  it  with- 
out authority,  but  handed  over  the  purchase-monf^y  to  A,  except 
the  amount  due  for  one  lot  sold  to  C.  A  accepted  the  money. 
Held,  that  ho  thereby  ratified  all  the  sales,  including  the  one  to 
C:  Seago  v.  Martin,  C  Ileisk.  308.  An  agent  authorized  to  loan 
his  principal's  money  contracted  for  usurious  interest.  Held, 
that  the  principal  could  not  affirm  the  contract  for  the  legal 
interest  only:  Joslin  v.  Miller,  14  Neb.  91. 


man  v.  Stark,  1  Or.  115;  Henderson  v. 
Cummings,  44  111.  325;  Cochran  v. 
Chitwooil,  oi)  111.  53;  Southern  Exp. 
Co.  V.  Palmer,  48  Ga.  85;  Wiilner  v. 
Lane,  14  Mich.  124;  Knox  v.  Western 
College,  31  Iowa,  547;  Menkins  t'.  VVat- 
Bon,  27  ^lo.  1G3;  Billings  v.  Morrow, 
7  Cal.  171;  C8  Am.  Dec.  235;  Harde- 
man V.  Ford,  12  Ga.  205;  Drcnnan  v. 
Walker,  21  Ark.  539;  Fowler  v.  Gold 
E.Kchangc,  C7  N.  Y.  1.38;  Babcock  v. 
Do  Ford,  14  Kan.  408;  Taylor  v. 
Conner,  4  Miss.  722;  97  Am.  Dec.  419. 
'  Odiorne  v.  Maxey,  13  Mass.  182; 
New  England  Ins.  Co.  v.  De  Wolf,  8 
Pick.  63;  Skinner  r.  Dayton,  19  Johns. 
554;  10  Am.  Dec.  28C;  Fowler  v.  Trull, 
1  Hun,  409;  Cochran  v.  Chitwood,  59 
111.  53;  Bennett  v.  Judson,  21  N.  Y. 
238;  Mundorffr.  Wickersham,  63  Pa. 
St.  87;  Romozetti  v.  Bowring,  7  Com. 
B.,  N.  S.,  851.  A  debtor  cannot  have 
the  benefit  of  a  compromise  made  by  an 
agent  with  bis  creditors  without  adopt- 
ing all  the  representations  made  by  the 
agent  in  negotiating  the  same:  Crans 


V.  Hunter,  28  N.  Y.  389.  A  principal 
cannot  say  that  he  will  ratifythe  act  "if 
he  receive  no  harm  thereby  ";ho  must 
repudiate  absolutely,  or  bo  bound  abso- 
lutely: Fortr.  Coker,  11  Heiak.  579. 

*  Farmers'  Loan  and  Trust  Co.  v, 
Walworth,  1  N.  Y.  433,  reviewing  4 
Sand.  Ch.  51;  Dexter  r.  Adams,  1 
How.  App.  Cas.  771,  793;  Cobb  v. 
Dows,  ION.  Y.  335;  Story  on  Agency, 
sec.  250;  Bell  v.  Shibley,  33  Barb.  610; 
Ferguson  v.  Hamilton,  35  Barb.  427; 
N.  Y  &  N.  H.  R.  R.  Co.  v.  Schuyler, 
34  N.  Y.  30,  88;  33  Barb.  534;  Mc- 
Clure  V.  Briggs,  58  Vt.  52;  56  Am.  Hep. 
557;  Rudasill  v.  Falls,  92  N.  C.  222. 

»  Todd  V.  Bishop,  136  Mass.  3SG. 

*  Smith  V.  Tracy,  36  N.  Y.  79;  Bald- 
win  I'.  Burrows,  47  N.  Y.  1S»9;  Lester 
V.  Kinne,  37  Conn.  9.  Thus  if  a  per- 
son pays  on  behalf  of  another  moro 
than  he  was  authorized  to  do,  a  ratifi- 
cation of  his  act  made  under  a  misap- 
prehension will  bo  relieved  against  pro 
tanto:  Miller  v.  Board  of  Education, 
44  Cal.  1G6. 


42 

to  adopt 
;ial,  and 
!S  bound 
from  a 
I  selling 
nation  of 
ocks  be- 
oss.'  If 
jnorance 
e  to  the 


toC.  C 
is  bound 

Cochran 
d  it  with- 
A,  except 
e  money. 
;he  one  to 
id  to  loan 
3t.  Jlcld, 
the  legal 


A  principal 
the  act  "if 
";lio  must 
ound  abso- 
ciiik.  579. 
list  Co.  V. 
eviewing  4 
Adams,   1 
;  Cobb  V. 
n  Agency, 
Barb.  GIO; 
Barb.  427; 
Schuyler, 
534;  Mc 
Am.  Hep. 
C.  222. 
3.  38G."" 
79;  Bald- 
|;»9;  Lester 
3  if  a  por- 
tlier more 
o,  a  ratiii- 
a  misap- 
gainst  pro 
ducatiou, 


43 


RATIFICATION. 


§§  39,  40 


§  39.  Acts  Incapable  of  Ratification. —  "Whcro  an  act 
is  beneficial  to  the  principal,  and  does  not  create  an  im- 
mediate right  to  have  some  other  act  or  duty  performed  by 
a  third  person,  but  amounts  simply  to  the  assertion  of  a 
right  on  the  part  of  the  principal,  there  the  rule  [that  tho 
l>rincipal  may  ratify  an  unauthorized  act]  seems  generally 

applicable On  the  other  hand,  if  the  act  done  by 

such  person  would,  if  authorized,  create  a  right  to  havo 
some  act  or  duty  performed  by  a  third  person  so  as  to  sub- 
ject him  to  damages  or  losses  for  the  non-peribrmanco  of 
that  act  or  duty,  or  would  defeat  a  right  or  estate  already 
vested  in  the  latter,  there  the  subsequent  ratification  or 
adoption  of  tho  unauthorized  act  by  the  principal  will  not 
give  validity  to  it  so  as  to  bind  such  third  person  to  tho 
consequences."*  The  cases  cited  in  illustration  of  this 
rule  by  Story  are  the  case  of  a  lease  containing  a  condi- 
tion for  determination  by  either  party  on  six  months'  no- 
tice, such  notice  being  given  by  an  unauthorized  agent;- 
the  case  of  a  demand  by  one  without  authority  on  a  debtor 
for  a  debt;'  a  notice  of  dishonor  of  a  note;"*  and  others. 
The  ground  upon  which  this  is  put  is,  that  in  these  cases 
the  advantage  is  all  with  the  jjrincipal;  he  may  play  fast 
and  loose;  ho  may  adopt  the  agent's  acts,  if  ho  subse- 
quently thinks  it  beneficial  to  him,  and  repudiate  them 
if  otherwise.  So  it  has  been  held  in  Louisiana  that  the 
ratification  of  an  unauthorized  contract  of  reinsurance  or 
double  insurance  must  be  made  before  tho  loss  occurs, 
or  it  will  bo  of  no  avail.° 

§  40.  Form  of  Ratification. — As  to  the  form  in  which 
tho  ratification  is  made,  it  may  be  express  or  implied.  But 
if  the  act  of  the  agent  is  done  by  an  instrument  which  is 


'  Story  on  Agency,  sees.  245,  246. 

^Buson  V.  Denman,  2  Ex.  107;  Ly- 
ster  V.  Goldwin,  2  Ad.  &  E.,  N.  S., 
143. 

*  Coore  V.  Callaway,  1  Esp.  83;  Free- 


man IK  Boynton,  7  Mass.  483. 

*  Tindal  v.  Brown,  1  Term  Rep.  167; 
Stanton  I'.  Blossom,  14  M;iss.  116. 

'•"  Alliauca  Ass.  Co.  v.  State  lus.  Co., 
8  La.  1;  28  Am.  Dec.  117. 


§41 


PRINCIPAL  AND  AGENT. 


u 


required  by  law  to  bo  under  seal,  then  the  principal's 
ratification  must  bo  under  seal  also.*  But  if  the  agent 
unnecessarily  affix  a  seal,  and,  as  wo  have  seen,  it  operates 
as  an  unsealed  instrument,  the  ratification  need  not  be 
under  seal.* 

§41.  Acts  and  Conduct.  —  From  the  acts  and  con- 
duct of  the  principal,  a  ratification  may  bo  shown.  It  is 
not  essential  that  the  principal  should  declare  the  act 
confirmed  by  him  in  so  many  words."  The  acts  and  con- 
duct of  the  principal  arc  always  construed  liberally  in 
favor  of  the  agent.'*  Where  the  acts  and  conduct  of  the 
principal  are  quite  inconsistent  with  anything  else  but  a 
ratification,  the  presumption  of  ratification  is  almost  coii- 
clusivc.°     When  tho  unauthorized  act  of  an  agent  is  done 

of  a  partnership  or  of  aa  intliviilual 
may  be  ratilieil  by  parol ":  Holl)ro()k 
V.  Chamberlain,  IIG  Mass.  155;  17  Am. 
Rep.  14G. 

^  See  ante,  chapter  3,  and  Leilbetter 
V.  Walker,  31  Ala.  175;  Bates  v.  Best, 
13  B.  Mou.  213.  But  an  action  of 
covenant  would  not  lie  on  such  aa 
instrument:  Hanford  v.  McNair,  9 
Wend.  54. 

^  Lovejoy  v.  Middlesex  R.  R.  Co., 
128  Mass.  480;  Hawkins  v.  Lange,  22 
Minn.  557;  Codwise  v.  Hacker,  1 
Caines,  526;  Cooper  v.  Schwartz,  40 
Wis.  54;  Leaving  v.  Butler,  (i'J  III. 
575;  Wardr.  Williams,  20  111.  447;  79 
Am.  Dec.  385;  Szymanski  v.  Plassan, 
20  La.  Ann.  90;  90  Am.  Dec.  382. 

*  Codwiso  V.  Hacker,  1  Caines,  52G; 
Loraine  v.  Cartwright,  3  Wash.  C.  C. 
151;  Terrill  v.  Flower,  6  Mart.  584; 
Bryne  v.  Doughty,  13  Ga.  40;  Cairo 
etc.  R.  R.  Co.  V.  Mahoney,  82  111.  73; 
25  Am.  Rep.  299. 

*  Pennsylvania  etc.  Nav.  Co.  v.  Dan- 
dridgo,  8  Gill  &  J.  248;  29  Am.  Dec. 
543;  Horton  v.  Townes,  6  Leigh,  47; 
Crocker  v.  Appleton,  25  Mo.  131 ;  Bar- 
nard V.  Wheeler,  24  Me.  412;  Bryant 
V.  Moore,  20  Me.  84;  45  Am.  Dec.  96; 
and  so  where  it  is  manifestly  for  the 
IJriacipal'a  benefit:  Flemming  v.  Ma- 
rine Ins.  Co.,  4  Whart.  59;  33  Am. 
Dec.  33. 


»  Blood  V.  Goodrich,  9  Wend.  08;  24 
Am.  Dec.  121;  12  Wend.  505;  27  Am. 
Dec.  1."j2;  Hanford  r.  McNair,  9  Wend. 
57;  Spolford  v.  Hobbs,  29  Me.  148; 
48  Am.  Dec.  521;  Reese  v.  Medlock, 
27  Tex.  120;  81  Am.  Dec.  Oil;  Boyd 
V.  Dobson,  5  Humph.  37;  Worrall  v. 
Munn,  5  N.  Y.  229;  55  Am.  Dec. 
S.'IO;  Skinner  r.  Dayton,  19  Johns.  513; 
10  Am.  Dec.  280;  Despatch  Line  v. 
Bellamy  Mfg.  Co.,  12  N.  H.  205;  37 
Am.  Dec.  203;  Taylor  v.  Robinson,  14 
Cal.  400;  Peterson  v.  Mayor,  4  E.  D. 
Smith,  417;  Vanderbilt  v.  Peisse,  3 
E.  D.  Smith,  430;  McDowell  v.  Simp- 
son, 3  Watts,  129;  29  Am.  Dec.  3:J8; 
Bellas  V.  Hays,  5  Serg.  &  R.  427;  9 
Am,  Dec.  385;  Stetson  v.  Patten,  2 
Grcenl.  358;  11  Am.  Dec.  111.  An 
antedated  power  of  attorney  is  a  good 
ratification  of  a  bond  executed  by  a 
professed  agent:  Millikin  v.  Coombs, 
1  Greenl.  343;  10  Am.  Dec.  70;  contra: 
Cady  V.  Shepherd,  11  Pick.  400;  22 
Am.  Dec.  379;  McNaughton  v.  Par- 
tridge, 11  Ohio,  223;  33  Am.  Dec.  371. 
And  in  partnership  transactions — that 
is,  where  one  member,  without  author- 
ity, attempts  to  bind  the  firm  by  deed 
—  it  soems  that  a  parol  ratification  will 
do:  See  cases  cited  in  27  Am.  Dec. 
343.  In  a  late  case  in  Massachusetts 
it  is  said  to  be  "settled  in  this  com- 
monwealth that  tho  unauthorized  exe- 
cution of  a  deed  in  the  nature  either 


44 

ncipal's 

0  agent 

aperates 

not  be 


nd  con- 
1.  It  is 
tho  act 
Liid  con- 
rally  in 
it  of  the 
se  but  a 
ost  con- 
,  is  done 

individual 
:  Holbrook 
55;  17  Am. 

I  Ledbetter 
tea  V.  Best, 
action  of 
a  such  an 
McNair,   9 

R.  Co., 
Laiige,  22 
Haekur,  1 
iwartz,  40 
!r,  (i<)  III. 
[11.  447;  79 
'.  Plassan, 

,iiiu3,  526; 
1.  C.  C. 
^lart.  584; 
[40;  Cairo 

!2  111.  73; 

uo.  V.  Dan- 
lAm.  Dec. 
^eigh,  47; 
1 131;  Bar- 
l;  Bryant 
Dec.  96; 
ly  for  the 
Vg  V.  Ma- 
ss Am. 


45 


RATIFICATION. 


§41 


in  tho  execution  of  a  power  conferred,  in  a  mode  not 
sanctioned  by  its  terms,  and  in  excess  or  misuse  of  tho 
authority  given,  ratilication  by  tho  principal  is  more 
readily  implied  from  slight  acts  of  confirmation.  The 
duty  to  disaffirm  at  once,  on  knowledge  of  tho  act,  is  said 
to  be  more  imperative  in  such  cases,  because  tho  confi- 
dence of  the  principal  in  tho  fitness  and  fidelity  of  tho 
person  he  has  selected  as  an  agent  is  shown  by  tho  rela- 
tions already  established  between  them.'  Silence  may 
raise  tho  presumption  of  a  ratification.  A  principal  who 
knows  of  an  unauthorized  act  having  been  done  by  his 
agent  must  give  notice  of  his  dissent  within  a  reasonable 
time,  or  his  assent  to  and  ratification  of  tho  act  will  bo  pre- 
sumed." He  need  not  disavow  the  act  the  instant  ho  has 
notice  of  it,^  but  ho  must  do  so  as  soon  as  ho  reasonably 
can.*  So  accepting  the  benefits  of  tho  act  of  an  authorized 
agent  is  a  ratification  of  his  authority,*^  provided,  of  course, 


'  Harrod  v,  McDauiels,  126  Mass. 
413,  415. 

» Erick  V.  Johnson,  6  Mass.  193; 
Amory  v.  Hamilton,  17  Masa.  103; 
Kiiigsland  v.  Kincaid,  1  Wash.  C  C. 
4r)l;  Couroier  v.  Ritter,  4  Wash.  C.  C. 
510;  Towle  r.  Stevcnaoa,  1  Johns.  Cas. 
110;  Armstrong  v.  Gilchrist,  2  Johns. 
Cas.  421;  Forrcaticr  v.  Boardinan,  1 
Story,  43;  Maddux  v.  Beavan,  .39  ^Id. 
485;  Cairues  v.  Bleecker,  12  Johns. 
300;  Law  r.  Cross,  1  Black,  533;  John- 
son r.  Wiugate,  29  Me.  404;  FaincU  v. 
Howard,  20  Iowa,  381;  Williams  v. 
Morritt,  23  111.  023;  Jervia  v.  Hoyt,  2 
Hun,  (io7;  Pickett  v.  Pearson,  17  Vt. 
470;  liiunmond  v.  Hoyt,  52  Tex.  63; 
Smith  V.  Sheohy,  12  Wall.  358;  State 
V.  Smith,  48  Vt.  200;  Lee  ;;.  Fontaine, 
10  Ala.  755;  44  Am.  Dec.  505;  Phila- 
delphia etc.  R.  R.  Co.  V.  Cowell,  28 
Pa.  St.  329;  70  Am.  Dec.  128;  contra: 
Bossoau  V.  O'Brien,  4  Bisa.  395;  Ward 
V.  Williams,  2G  111.  477;  79  Am.  Dec. 
385;  Wiiite  v.  Langdon,  30  Vt.  599; 
Ladd  V.  Ilildebrandt,  27  Wis.  135;  9 
Am.  Rep.  445. 

'Miller  v.  Excelsior  Stone  Co.,  1 
111.  App.  773;  Robinson  v.  Chapline, 
9  Iowa,  91;  Walters  v.  Munroe,   17 


Md.  150;  77  Am.  Dec.  328;  Dupont  v. 
Wetherman,  10  Cal.  35*. 

*  Peck  I',  llitchey,  60  Mo.  1 14;  Walk- 
er 7'.  Walker,  7  liaxt.  200;  Western 
etc.  R.  R.  Co.  V.  McElwee,  G  Hcisk. 
208;  Richmond  Mfg.  Co.  v.  Stark,  4 
Maaon,  296;  Vianna  v.  Barclay,  3  Cow. 
281;  Curry  v.  Hale,  15  W.  Va.  367; 
Brcdiu  V.  Dubarry,  14  Surg.  &  R.  .30; 
Bonncau  v.  Poydras,  2  Robt.  1;  Lar- 
tinguo  V.  Peet,  5  Robt.  91.  Of  course 
he  must  have  knowledge  of  the  act: 
Walters  v.  Munroe,  17  Md.  150;  77 
Am.  Dec.  328. 

^  Gibson  v.  Norway  Savings  Bank, 
69  Me.  579;  Woodbury  v.  Learned,  5 
Minn.  339;  Kotchum  v.  Vcrdell,  42 
Ga.  534;  Hall  v.  Harper,  17  111.  82; 
Ballston  Spa  Bank  v.  Marine  Bank, 
16  Wia,  123;  Williams  v.  Stone,  6 
Cold.  203;  Richmond  Mfg.  Co.  v. 
Starks,  4  Mason,  290;  Lyndeborough 
Glass  Co.  V.  Glass  Mfg.  Co.,  Ill  Mass. 
315;  Wilkina  v.  HoUing-sworth,  6 
Wheat.  241;  Forresticr  i\  Boardman, 
1  Story,  43;  Edio  v.  Ashbaugh,  44 
Iowa,  519;  Gold  Mining  Co.  v.  Nat. 
Bank,  96  U.  S.  640;  Walnutt  Bank  v. 
Farmers'  Co.,  16  Wis.  629;  Darst  v.'- 
Gale,  8S  111.  136;  Browu  v.  La  Crosse 


§41 


PRINCIPAL   AND   AGENT. 


46 


tho  principal  is  awnro  of  all  tho  material  facta  of  tho 
case.'  In  Bryant  v.  Moore ,^  it  is  said:  "There  is  no  doubt 
that  if  one  person  knows  that  another  has  acted  as  his 
agent  without  authority,  or  has  exceeded  his  authority  as 
agent,  and  with  such  knowledge  accepts  money,  property, 
or  security,  or  avails  himself  of  advantages  derived  from 
tho  act,  ho  will  bo  regarded  as  having  ratified  it.  This 
will  not  bo  the  case  when  tho  knowledge  that  tho  person 
has  exceeded  his  authority  is  not  received  by  tho  em- 
ployer so  early  as  to  enable  him,  before  a  material  change 
of  circumstances,  to  repudiate  tho  whole  transaction  with- 
out essential  injury.  If,  for  instance,  a  merchant  should 
authorize  a  broker  by  a  written  memorandum  to  purchase 
certain  goods  at  a  price  named,  and  tho  broker  should 
exhibit  it  to  the  seller,  and  yd  should  exceed  the  price, 
and  this  should  be  made  known  to  tho  merchant  when 
he  received  the  goods,  if  he  should  retain  or  sell  them, 
he  would  ratify  the  bargain  made  by  tho  broker,  and  be 
obliged  to  pay  the  agreed  price.  But  if  ho  had  received 
the  goods  "without  knowledge  that  they  had  been  pur- 
chased at  an  advanced  price,  he  would  not  be  obliged  to 
restore  them  or  pay  such  advanced  price  if  he  could  not, 
when  informed  of  it,  repudiate  the  bargain  without  suffer- 
ing loss.  In  such  case  he  would  not  be  in  fault.  The 
seller  would  be,  and  he  should  bear  tho  loss.  When  the 
plaintiff  in  this  case  was  first  informed  that  his  agent  had 
exceeded  his  authority,  he  had  lost  the  services  of  the 
oxen  for  two  months  and  a  half;  and  the  agent  was  pres- 
ent and  denied  that  he  had  made  the  warranty.  The 
defendant  appears  to  have  been  sensible  that  the  plaintiff 


City  Gas  Co.,  21  Wis.  61;  MundorfiF 
V.  Wickersham,  63  Pa.  St.  87;  3  Am. 
Rep.  531;  Perry  v.  Mulligan,  58  Ga. 
479;  Pike  v.  Douglass,  28  Ark.  59; 
Sartwell  v.  Frost,  122  Mass.  184;  Og- 
den  V.  Marchand,  29  La.  Ann.  61; 
Gulick  V.  Grover,  33  N.  J.  L.  463;  97 
Am.  Dec.  728. 
^  Pennsylvania  etc.  B.  R.  Co.  v.  Dan- 


dridge,  8  Gill  &  J.  248;  29  Am.  Dec. 
543;  Adams  Express  Co.  v.  xrego,  35 
Md.  69;  Busby  v.  North  American  Ins. 
Co.,  40  Md.  588;  17  Am.  Rep.  634; 
Thacher  v.  Pray,  113  Mass.  291;  18 
Am.  Rep.  480;  Smith  v.  Kidd,  68 
N.  Y.  130;  23  Am.  Rep.  137. 
>  26  Me.  84;  45  Am.  Dec.  96. 


46 

of  tho 

0  doubt 

1  as  his 
ority  us 
roporty, 
ed  from 
t.  This 
)  person 
tho  cm- 

chango 

■)n  with- 

t  should 

lurchase 

■  should 

0  price, 

nt  when 

11  them, 

,  and  be 

received 

en   pur- 

liged  to 

|uld  not, 

t  suffer- 

The 

en  the 

nt  had 

of  the 

,8  pres- 

The 

ilaintiff 

^m.  Dec. 
I'lrego,  35 
Irican  Ins. 

iep.  634; 
291;   18 

£idd,   68 


47 


RATIFICATION. 


§41 


would  then  suffer  loss  by  a  rescission  of  the  contract,  and 
to  have  offered  compensation  therefor.  AVhcthcr  tho  of- 
fer was  ft  reasonable  one  or  not  is  immaterial,  for  tho 
plaintiff  under  sucii  circumstances  was  not  oblig(Hl  to 
rescind.  lie  does  not  appear  to  have  made  any  move- 
ment in  tho  first  instance  to  effect  tho  exchange,  or  to 
have  desired  it,  or  to  have  been  in  fault,  when  first  in- 
formed of  tho  warranty.  The  defendant  could  not  at  that 
time  prescribe  tho  terms  upon  which  tho  contract  should 
bo  rescinded,  or  insist  upon  it."  Accepting  a  guaranty 
of  a  premium  note  by  a  person  who  had  become  assignee 
of  tho  policy,  with  the  consent  of  tho  company  signified 
by  tho  signature  of  the  secretary  only,  is  a  ratification  of 
his  authority  to  signify  their  assent.*  One  who  uses  a 
carriage,  hired  in  his  name  by  another  without  previous 
authority  or  subsequent  ratification,  without  reasonable 
cause  to  beliovo  that  tho  carriage  was  hired  on  his  ac- 
count, or  that  he  was  looked  to  for  pay  for  its  use,  is  not 
liable  for  its  use,  although  the  owner  had  no  notice  that 
tho  hirer  procured  it  on  his  own  account."  Suing  tho 
purchaser,  for  example,  for  tho  debt  or  on  the  contract,"* 
^or  suing  tho  agent  for  the  money  received,*  or  defending 
'  a  suit  brought  to  recover  land  acquired  through  tho 
agent,®  is  a  ratification.  Bringing  a  writ  of  entry  is  a 
ratification  of  a  previous  entry  on  tho  land  made  by 
only  one  of  two  agents  appointed  for  that  purpose."    An 


*  New  England  Ins.  Co.  v.  De  Wolf, 
8  Pick.  50. 

^  Adams  v.  Bourne,  9  Gray,  100. 

'Copelandv.  Ins.  Co.,  G  Pick.  198; 
Dodge  V.  Lambert,  2  Bosw.  570;  Ham 
V.  Boody,  20  N.  H.  411;  51  Am.  Dec. 
235;  Partridge  v.  White,  56  Me.  5G4; 
Drennan  v.  Walker,  21  Ark.  539; 
Harris  v.  Miner,  21  Ark.  539;  Payne 
V.  Smith,  12  N.  H.  34;  Beidmau  v. 
Godell,  56  Iowa,  592;  or  adopting  an 
action  founded  on  the  agent's  act: 
Town  of  Grafton  v.  Fallansbee,  16 
N.  H.  450;  41  Am.  Dec.  736;  so  it  may 
be  ratified  by  an  admissioa  ia  aa  an- 


swer in  chancery:  Stoncy  ?'.  Shultz, 
1  Hill  Ch.  405;  27  Am.  Dec.  429. 
But  sec  Coolcy  i-.  Pcrrine,  41  N.  J.  L. 
322;  Carew  v.  Lillenthal,  50  Ala.  44; 
Peters  v.  Ballister,  3  Pick.  495. 

*  Story  on  Agency,  sec.  259;  Zinor. 
Verdelle,  D  La.  51;  Bank  of  Beloit  v. 
Beale,  43  N.  Y.  473;  Frank  v.  Jenkins, 
22  Ohio  St.  526;  Shiras  v.  Morris,  3 
Cow.  60;  President  f.  Barry,  17  Mass. 
97;  Kcyser  v.  Wells,  00 Ind.  201.  But 
see  Leo  v.  West,  47  Ga.  311. 

*  Lathrop  r.  Commercial  Bank,  8 
Dana,  113;  33  Am.  Dec.  481. 

*  Sutton  Pariah  v.  Cole,  3  Pick.  232. 


§41 


PRINCIPAL   AND   AGENT. 


48 


action  of  assumpsit  for  the  proceeds  of  an  unauthorized 
sale,  which  was  discontinued  before  trial  because  the  rem- 
edy was  erroneous,  was  h"'ld  no  ratification  of  the  sale, 
to  bar  an  action  of  trover  for  the  same  cause.^  Where  a 
principal  expressly  repudiates  the  unauthcrized  act  of  his 
agent,  delay  in  bringing  a  necessary  suitcftnnot  be  deemed 
a  ratification.^ 


Illustrations.  —  Cases  in  Which  Ratification  was  Im- 
plied.—  A  husband,  to  secure  a  debt  of  his  own,  mortgaged 
his  wife's  property.  The  mortgngee,  in  the  presence  of  the 
wife,  threatened  to  foreclose,  and  demanded  fresh  security. 
The  wife  replied:  "What  more  do  you  want?  You  have  a 
mortgage  on  all  the  personal  property  already."  Held,  a  rati- 
fication of  the  husband's  act:  Merrill  v.  Parker,  112  jNIass.  250. 
A  principal,  on  bL^lng  informed  of  a  purchase  by  his  agent,  com- 
plained of  the  manner  in  which  it  had  been  made,  but  did  not 
deny  the  agent's  authority.  Held,  that  he  had  admitted  it:  John- 
son V.  Jones,  4  Barb.  309.  The  parties  named  in  a  submission 
to  arbitration  signed  by  attorneys  appeared  and  testified.  Had, 
that  this  was  a  ratification  by  them  of  the  submission:  Blakely 
V.  Graham,  111  Mass.  8.  An  attorney  wiihout  authority  re- 
ceived a  l)ond  in  settlement  of  a  debt.  The  subsequent  silence 
of  the  client  raises  a  presumption  of  his  ratification:  Maddux  v. 
Bcaven,  o9  Md.  485.  An  agent  without  authority  compromises 
a  debt  due  his  principal.  The  princip-xl,  knowing  of  the  fact, 
says  nothing.  Ho  will  be  bound  by  the  agent's  act:  Armstrong 
v.  Gilchrist,  2  Johns.  Cas.  424.  An  agent  sells  his  principal's 
goods  to  his  own  firm.  This  is  beyond  his  authority,  but  the 
principal  by  acquiescing  in  it  will  be  held  to  have  ratified  it: 
Francis  v.  Kerker,  85  111.  190.  F.  sold  S.'s  hops  to  P.,  pretend- 
ing he  had  authority.  P.  soon  after  told  S.  of  it,  when  S.,  in- 
stead of  disavowing  F.'s  authority,  requested  P.  to  help  him  to 
recover  the  money  P.  had  paid  him.  Held,  that  this  was  a 
ratification  of  F.'s  act:  Pitts  v.  Shubcrt,  11  La.  28G;  "0  Am. 
Dec.  718."  An  under-agent  of  a  minin^  company  leased  a 
right  to  mine  in  a  certain  range.  The  company  afterwards 
accepted  the  rents.     This  was  a  ratification  of  the  agent's  un- 


1  Peters  V.   B^Uistier,  3  Pick.  495. 

*  McCluro  V.  h  vartsun,  14  Leigh,  495. 

'  "If  tlio  ]ilaiutiL''  iatem'ed  to  dis- 
avow the  sale  by  F.,  le  oug'-,t  to  have 
done  so  iniinediatuly  on  iiis  arrival 
He  ought  not  to  have  played  <"ast  and 
loose,  and  iuduced  the  defendant  to 
forego  the  immediate  pursuit  of  F. 


No  principle  is  better  settled  than 
that  he  who  is  notified  that  a  contract 
has  becfi  made  for  him,  and  subject  to 
his  ratification,  by  a  person  who  pre- 
tended to  have  autho'-ity  for  that  pur- 
pose is  ijresumed  to  ratify  it,  unless 
immediately  on  being  informed  thereof 
be  repudiated  it." 


48 


49 


RATIFICATION. 


§41 


S.,  in- 
him  to 
was  a 
pO  Am. 
Used  a 
[rwards 
lit' 8  un- 

■ud    than 

1  contract 

libject  to 

flio  pre- 

hat  \)ur- 

unless 

. thereof 


authorized  act:  Chamhcrlin  v.  Colllnson,  45  Iowa,  429;  Cham- 
berlln  v.  Robertson,  31  Iowa,  408.     A  release  of  a  mortgage  was 
made  by  an  agent  without  authority.     The  i)rincipal  altorwards 
accepted  the  consideration.     The  release  was  held  binding  on 
him:   Tooker  \.  »S7oau,  oO  N.  J.  Eq.  304.     An  agent  sold  notes 
without  authority,  but  the  principal  afterwards  i:ottled  with  him 
and  took  his  note,    //c/c/,  a  ratification  of  his  act:  Turner  \\  Wil- 
coo:,  54  Ga.  593;   Bcall  v.  January,  G2  Mo.  434;   Cushman  v. 
Loher,  2  Mass.  106.     A  lease  of  land  was  made  in  an  agent's 
name.     It  was  occupied  liy  the  corporation  for  which  he  pro- 
fessed to  act.     Held,  a  ratification:  (7ff/7i'  v.  Gordon,  121  Mass. 
330.    Goods  were  purcliased  by  the  president  of  a  gas  company 
and  used  in  the  construction  of  t!ie  works.     In  an  action  for  a 
meclianic's  lien  the  company  set  up  tliat  the  president  had  no 
authority  to  make  the  purchase.    It  was  held  that  they  had  rati- 
iied  the  act  by  using  the  goods:  Brown  v.  La  Crosse  City  Gas  Co., 
21  Wis.  51.     A  lease  of  lands  was  made  by  an  unauthorized 
agent.    Tlio  owner  accepted  the  rent  as  it  bccnie  due.    Held,  a 
ratification:  McDowell  v.  Siwjison,  3  Walts,  129;  27  Am.  Dec.  338. 
W.'s  agent  in  procuring  M.'s  note  signed  a  receipt  in  the  name  of 
W.  containing  an  undertaking  tliat  the  note  should  be  paid  at 
maturity.    He  was  nut  autliorized  to  sign  such  a  receipt,  but  W. 
used  the  note  in  his  business,  and  M.  luul  to  pay  it  at  maturity. 
Held,  that  W.  was  liable  on  the  contract  contained  in  the  receipt: 
Mnm'i'-ff  V.  Wlrhersham,  03  Pa.  St.  37;  3  Am.   Kep.  531.     M. 
shipped  cotton  to  his  factii-,  with  instructions  not  to  sell  it  at 
less  than  a  certain  price,      ''he  factor  sold  it  at  less,  and  imme- 
diately informed  M.,  who  made  no  objection  but  drew  the  pro- 
ceeds.   Held,  that  M.  had  ratified  the  act  of  the  factor,  and  could 
not  sue  him  for  the  loss:  Meyer  v.  Morgan,  51  Miss.  2^ ;  24  Am. 
Kep.  G17.    C,  as  agent  of  N.,  excH'uted  an  agreement,  required  to 
be  in  writing  l)y  the  statute  of  frauds,  and  tooiv  I  ack  a  counterpart 
signed  by  tlie  other  party.     An  acceptance  -jf  this  counterpart 
by  N.  from  C.  without  objection  was  held  to  bo  a  ratification  of 
C.'s  acts,  and  X.  was  bound  by  the  contract:  Shaw  v.  Nudd,  8 
Pick.  9.    A,  the  agent  of  an  insurance  company  to  solicit  risks, 
obtained  for  V>  a  policy  of  insurance  from  said  company,  paying 
for  it  a  cash  premium,  and  executing  and  depositing  a  i)remium 
note  in  the  name  of  B.     The  policy  recited  that  1>  had  paid  a 
cash  premium  and  given  a  deposit  note  of  like  amount;  P>  re- 
ceived tlie  policy  without  reading  it,  and  had  no  knowledge  of  tho 
execution  of  the  note  by  the  agent.     Hdd,  that  the  acceptance 
of  the  poliey  by  B.  was  a  ratification  of  the  act  of  the  agent  in 
executing  the  note;   and   that  the  fact  kiiown  to  P.,  that  tho 
agent  was  the  agent  of  the  company  to  solicit  risks,  would  not 
l)revent   his  actmg  for   P  in   executing   the   premium  notes: 
Monitor  Ins.  Co.  v.  Buffam,  115  Mass.  343.     A,  in   a  foreign 

Vol.  I.— 4 


§41 


PRINCIPAL   AND   AGENT. 


50 


port,  sold  property  belonging  to  B  without  authority,  and  wrote 
to  B  ^vhat  ho  had  done,  and  that  C,  the  bearer  of  the  letter, 
•would  settle  with  him  by  paying  him  the  amount  of  the  sales. 
C,  on  arriving,  wrote  to  B  that  he  would  pay  when  in  receipt 
of  expected  funds.  B  replied  that  although  the  sale  was  unau- 
thorized, yet  ho  was  not  disposed  to  make  difficulty  on  the  sub- 
ject, but  expected  immediate  payment,  and  drew  bills  on  C, 
which  were,  however,  protested  for  non-payment.  Held,  that 
the  sale  was  ratified,  and  that  B  could  not  maintain  replevin 
against  the  purchaser  for  the  goods:  Clement  v.  Jones,  12  Mass. 
60.  An  agreement  in  writing,  not  sealed,  whereby  P.,  A.,  and 
two  others,  "  a  building  cuujmittee,"  in  consideration  that  M. 
would  construct  a  building  for  a  medical  college  by  a  '  mo 
specified  and  furnish  materials  therefor,  agreed  to  pay  him 
certain  amounts  according  to  the  monthly  estimates  of  an  archi- 
tect named,  was  signed  by  all  the  parties  in  person,  except  P., 
whose  name  in  his  abt;enno.  but  by  liis  authority,  was  signed  by 
A.,  without  adding  anything  to  show  that  it  was  not  affixed  by 
P.'s  own  hand.  P.,  on  being  told  what  had  been  done,  said  all 
was  right,  and  afterwards  did  all  he  could  to  insure  the  com- 
pletion of  the  building.  After  M.  had  commenced  an  action 
against  the  four  members  of  the  committee  to  recover  for  work 
done  and  materials  furnished  under  this  agreement,  all  the 
parties  executed  a  second  agreement,  under  seal,  reciting  that 
they  had  made  the  first,  and  that  a  third  person  bad  agreed  to 
advance  a  sum  of  money,  to  be  secured  by  mortgage  on  the 
building,  for  the  purpose  of  insuring  its  completion,  and  stipu- 
lating that  M.  should  do  certain  additional  work  on  the  build- 
ing, and  have  it  finished  by  a  certain  time;  that  the  sum  so 
advanced  should  be  applied,  first,  to  pay  for  work  thereafter 
done  by  M.  on  the  building,  and  the  remainder,  if  any,  to  pay 
for  work  and  materials  already  furnished;  and  that  nothing 
contained  in  this  agreement  should  release  or  discharge  the 
defendants  from  any  debt  already  incurred  under  the  original 
agreement,  or  be  in  any  respect  a  waiver  of  that  agreement. 
Held,  that  P.'s  conduct,  subsequent  to  the  affixing  of  his  name 
by  A.  to  the  first  agreement,  was  a  ratification  or  adoption  of 
A.'s  act,  and  also  rendered  him  liable  as  a  party  to  the  agree- 
ment, on  the  ground  of  an  estoppel  in  pais:  Mcrrifield  v.  Par- 
ritt,  11  Cush.  590.  The  cashier  of  a  bank  who  paid  a  check  to 
D.,  and  four  days  afterwards  discovered  reason  to  believe  that 
it  was  forged,  caused  it  to  be  presented  by  a  messenger,  with  a 
demand  for  indemnity,  at  D.'s  office,  where  a  clerk  received  it  in 
D.'s  absence,  and  filled  out  and  gave  in  exchange  for  it  a  check 
of  like  amount,  left  signed  in  blank  by  D.  When  the  messen- 
ger returned  and  delivered  this  check  to  the  cashier,  D.  was 
present,  conversed  on  the   subject,   took  the   check   into  his 


50 

nd  TTtote 
ic  letter, 
;he  sales, 
n  receipt 
as  unau- 
the  sub- 
lls  on  C, 
leld,  that 
replevin 
12  Mass. 
,  A.,  and 
that  M. 
y  a  t  mo 
pay  liim 
an  archi- 
xcept  P., 
Jgned  by 
ffixcd  by 
,  said  all 
the  com- 
m  action 
for  work 
,  all  the 
ting  that 
igreed  to 
e  on  the 
:id  stipu- 
le build- 
sum  so 
lereafter 
',  to  pay 
nothing 
irge  the 
I  original 
i-eement. 
iis  name 
jption  of 
agree- 
V.  Par- 
fheck  to 
;ve  that 
with  a 
rod  it  in 
check 
lossen- 
D.  was 
ito  his 


51 


RATIFICATION. 


§41 


hands,  said  somcthi,.g  about  the  other  check,  and  cxprr-sed 
no  dissent  or  objection  to  what  was  being  done,  supposing  that 
his  check  was  issued  by  his  brother,  who  had  authority  to  issue 
checks  for  him  in  his  absence.     Later  in  the  same  day  D.  de- 
nied   his   clerk's   authority,  tendered   bark   the   other   check, 
stopped   the  payment  of  his  own,  and   demanded  its  return, 
which  was  refused.     In  an  action  by  the  bank  against  him  on 
this  check,  held,  that  t'le  surrender  of  the  other  check  was  a 
sudicicnt  consideration  for  the  issue  of  the  check  in  suit;  that 
it  was  competent  for  the  jury  to  find,  on  tlio  evidence,  that  D., 
at  the  interview  with  the  cashier,  understood  the  transaction, 
and  ratified  the  issue  of  his  check,  and  that  on  such  a  finding 
it  was  incompetent  for  him  to  revoke  the  ratification,  and  im- 
material whether  he  supposed  that  his  check  was  issued  by  one 
person  or  another:  Charles  River  Bank  v.  Darin,  100  Mass.  41o. 
K.  supplied  glass  for  a  meeting-house  by  tlie  order  of  V.,  and 
charged  it  to  "N.,  one  of  the  committee  for  building  the  meet- 
ihg-house,"  of  whom  there  were  tl'.ree.     V.  paid  for  it  by  his 
private  note,  and  took  a  receipted  bill  made  out  to  himself,  and 
rendered  an  account  to  the  parish,  charging  the  sum  as  paid 
by  him,  and  exhibiting  the  receipt  as  a  voucher,  which  account 
w;,s  allowed.     The  note  not  being  paid.  K.  sued  the  parish  for 
the  t'lass.     Held,  ti  at  the  jury  might  properly  find  that  the 
parish  had  not  ratified  the  act  of  V.  in  purchasing  on   their 
credit:  Kupfcr  v.  Aurfusta  Parish,  12  Mass.  185.     A  minor  son 
exchanged  his  father's  horse  for  another  against  his  father's  ex- 
press commands;  the  father,  however,  kepi  and  used  the  horse 
some  weeks,  and  met  the  defendant  without  saying  anything  in 
disapproval  of  the  exchanj.'e.    held,  that  he  had  ratified  it,  and 
could  not  recover  back  the  other  horse:  Ilcdl  v.  Harper,  17  111.  82. 
An  agent  borrows  money  for  liis  principal  without  authority,  but 
the  money  goes  to  the  use  of  the  principal,  who  afterwards  rec- 
ognizes the  loan  by  telling  the  agenr  that  he  li^ould  pay  it.    Ucld, 
that  the  principal  is  liable  to  the  lender:  Shiras  v.  Morrifi,  ^>  Cow. 
GO.     After  notice  of  all  that  the  indorser ,  to  Avhom  notes  had 
been  intrusted  by  a  bank  for  collection,  did  in  the  premises,  the 
bank  accepted  part  of  the  proceeds  froir.  him.     Held,  that  it 
thereby  ratified  his  acts  and  became  bound  by  them:  Brilen- 
heeher  v.  Lowell,  32  Barb.  9.     M.  by  mistake  sold  wheat  belong- 
ing to  0.,  together  with  other  wheat  belonging  to  P.,  and  re- 
mitted the  pioceeds  of  both  lots  to  P.  as  his  property,  and  O., 
with  knowledge  of  the  facts,  afterwards  took  part  of  the  monry 
from  P.,  and  P.'s  agreement  to  pay  the  balance.     HehL  that  O. 
thereby  raHfied  the  sale:  Pierec  v.  O'Keefe,  11  Wis.  IHO.    A  per- 
son, assuming  to  act  as  agent  for  another,  exchanged  a  horse 
belonging  to  the  latter  for  another  horse,  and  the  owner  refused 
to  sanction  the  exchange,  but  before   reclaiming   his   horse, 


§41 


PRINCIPAL   AND   AGENT. 


52 


participated  in  the  purchase  of  the  horse  received  in  exchange 
from  the  party  wlio  had  thus  obtained  possession  of  him.  Ildd, 
that  it  amounted  to  a  ratification:  Hatch  v.  Taylor,  10  N.  II. 
538.  An  unincorporated  company  made  assessments  for  carry- 
ing into  effect  a  contract  made  by  an  oflicer  of  the  company  on 
behalf  cf  the  company,  and  afterwards  appointed  an  agent  to 
negotiate  an  alteration  of  the  contract  with  the  other  party. 
Held,  that  they  thereby  ratified  the  contract,  and  could  not 
deny  the  oflicer's  authority  to  bind  the  company  by  contract: 
Sldnner  v.  Dayton,  11)  Johns.  513;  10  Atn.  Rep.  28G.  A  partner, 
on  being  shown  a  note,  executed  in  the  partnership  name  by  a 
clerk,  corrects  the  date,  saying  it  is  all  right  and  that  ho  will 
have  to  pay  it.  Held,  that  he  ratifies  its  execution  and  adnjits 
his  liability:  Harper  v.  Dcvcne,  10  La.  Ann.  724.  A  real  estate 
agent  rented  certain  premises  for  two  years  at  a  fixed  annual 
rental,  although  he  had  no  authority  from  his  principal  to  rent 
them  for  more  than  one  year.  The  tenant  retained  possession 
for  the  two  years,  and  paid  the  rent  agreed  on,  which  was  re- 
ceived by  the  landlord.  Held,  that  the  jury  were  at  liberty  to 
infer,  under  the  circumstances,  that  the  agent's  contract  had 
been  ratified  by  his  principal:  Reynolds  v.  Davison,  34  Md.  GG2. 
A  debtor  gave  his  creditor  to  understand  that  the  latter  might 
have  a  third  party's  note  in  jjayment  of  the  debt,  but  not  as  col- 
lateral. In  the  debtor's  absence  the  creditor  made  an  arrange- 
ment, in  good  faith,  with  the  debtor's  book-keeper,  to  take  the 
note  as  collateral.  Held,  that  the  debtor  would  be  bound  by 
this  arrangement,  although  the  book-keeper  was  nnautliorizcd 
to  make  i^,  unless  the  debtor,  upon  being  fully  informed  of  what 
the  book-keeper  had  done,  manifested  to  the  creditor  his  dis- 
satisfaction within  a  reasonable  time:  Bxirlimjton  etc.  Co.  v. 
Greene,  22  Iowa,  508.  A  factor  was  authorized  to  sell  goods  at 
a  limited  price,  and  he  afterwards  sold  them  below  that  price, 
and  sent  an  account  to  his  principal  of  the  sales  and  prices,  and 
authorized  him  to  draw  for  the  balance  of  account;  and  the 
principal  received  the  account  and  drew  for  the  balance,  and 
made  no  objection,  in  his  letters  or  otherwise,  to  the  conduct  of 
th)  factor  in  the  sales.  Held,  that  his  conduct  amounted  to  a 
ratification  of  the  factor's  proceedings:  Richmond  Mfg.  Co.  v. 
Starks,  4  Mason,  296.  An  agent  employed  to  buy  goods,  to  be 
paid  for  at  a  future  day,  paid  for  them  out  of  his  own  money, 
for  the  purpose  of  obtaining  the  discount  allowed  by  the  seller. 
The  principal,  with  knowledge  of  these  facts,  directed  the  agent 
to  clear  the  goods  at  the  custom-house,  which,  in  the  ordinary 
course  of  business,  would  be  done  after  payment  of  the  price  by 
the  agent  for  his  principal.  Held,  a  ratification  or  an  adoption 
of  the  previous  payment  of  the  price,  and  that  the  agent  might  sue 
the  principal  for  the  price  as  money  paid  to  Lis  use  at  his  request: 


52 


53 


RATIFICATION. 


§41 


in  exchange 
f  lum.    Held, 
llor,  10  N.  II. 
nts  for  carry- 
company  on 
1  an  agent  to 
other  party, 
id  could  not 
by  contract: 
.     A  partner, 
ip  name  by  a 
that  he  will 
[1  and  admits 
A  real  estate 
fixed  annual 
ncipal  to  rent 
3d  possession 
fhich  was  rc- 
3  at  liberty  to 
contract  had 
I,  34  Md.  GG2. 
latter  might 
lut  not  as  col- 
0  an  arrangc- 
r,  to  take  the 
be  bound  by 
unauthorized 
rmod  of  what 
ditor  his  dis- 
n  etc.   Co.  V. 
sell  goods  at 
>\v  that  price, 
|d  prices,  and 
t;  and  the 
[balance,  and 
le  conduct  of 
Inountcd  to  a 
Mfg.  Co.  V. 
goods,  to  be 
own  monc}', 
the  seller. 
'd  the  agent 
he  ordinary 
Ithe  price  by 
an  adoption 
pt  might  sue 
his  request: 


Haidcyx.  Scntance,  11  Week.  Rep.  311;  7  L.  T.,  N.  S,  745  (C.  P.). 
In  plaintiff's  absence,  his  clerk  received  of  his  debtor  a  draft, 
and  accepted  the  same,  to  be  applied,  when  paid,  on  the  del)t- 
or's  account,  and  after  the  draft  fell  due  the  plaintifl' wrote  the 
debtor  respecting  it,  not  repudiating  the  act  of  the  clerk,  and 
on  subsequently  seeing  the  debtor,  offered  to  return  the  unpaid 
draft.  Held,  that  these  facts  furnished  evidence  from  which  a 
jury  might  infer  a  ratification  by  plaintiff  of  the  act  of  the 
clerk:  JcnnUon  v.  Parker,  7  Mich.  355.  The  owner  of  a  vessel, 
on  being  informed  by  a  broker,  at  his  place  of  rc.sid(Mice,  that 
he  had  procured  such  vessel  to  bo  chartered  at  certain  rates  in 
a  distant  city,  did  not  disafiirm  the  contract,  either  to  such 
broker,  or  the  charterer.  Held,  that  the  jury  might  find  a  rati- 
fication: Saveland  v.  Green,  40  Wis.  4;)1.  A  horse  was  left 
with  a  servant  for  safe-keeping.  The  servant  exchanged  the 
horse  for  a  maro;  and  the  master,  knowing  all  the  circum- 
stances connected  with  the  transaction,  took  the  marc,  and 
ki'pt  and  used  her  for  some  time.  Held,  to  amount  to  a  rati- 
fication of  the  act  of  the  servant:  Evans  v.  Burhner,  1  Hcisk. 
201.  An  agent  sold  land  without  authority,  but  the  prin''ii)al 
made  no  objection  for  four  years,  during  which  time  the  pur- 
chasers had  improved  the  land,  and  during  three  years  of 
T\'hich  the  agent  had  resided  in  the  same  town  with  his  princi- 
pal, when  he,  at  length,  absconded  without  having  paid  his 
principal  any  of  the  purchase-money.  Held,  that  tliere  was  a 
ratification  of  the  sale:  Alexander  v.  Jones,  G4  Iowa,  207. 

Illustuations  Continued.  —  Cases  in  Which  IIatification 
WAS  NOT  Implied.  —  A  presented  to  the  officers  of  a  bank  for 
payment  bills  of  the  bank  from  a  genuine  plate,  but  witli  one 
forged  signature.  They  hesitated  for  some  time  whether  to  re- 
ctivc  them,  but  before  A  left,  returned  them  to  him,  being  still 
iii  doubt  whether  they  were  counterfeit  or  not.  Held,  thai  there 
was  no  ratification  of  the  forged  signature,  so  as  to  make  the 
bank  liable:  Salem  Bayikx.  Gloucester  Bank,  17  Mass.  1;  'J  Am. 
Dec.  111.  One  without  authority  sold  the  plaintiiT's  liorse  to 
the  defendant,  receiving  in  payment  a  bank  cheek,  which  ho 
indorsed  and  gave  the  plaintifi'  in  i)ayment  of  a  debt  ho  owed 
him.  The  plaintiff,  in  ignorance  of  the  sale,  collected  the 
check,  and  applied  the  proceeds  to  the  payment  of  that  debt. 
Iv,  an  action  to  recover  the  value  of  the  horse,  Iwld,  that  the 
plaintin''s  receipt  and  collection  of  the  check  were  not  a  ratifi- 
cation of  the  sale,  and  that  ho  had  a  right  to  ai)propriate  the 
cliock  to  the  extinguishment  of  the  debt,  in  payment  of  which 
it  was  given  him:  Thacherv.  Pray,  113  Mass.  2U1;  IS  Am.  Hep. 
480.  B.  subscribed  for  stock  in  tlie  testator's  name  duritig  the 
life  of  tlie  latter,  but  without  his  authority.  Held,  that  th(;  tes- 
tator's declaration  that  he  had  stock  of  the  kind  and  amount 


§41 


PRINCIPAL  AND  AGENT. 


54 


Bubscribed  for  did  not  amount  to  a  ratification  of  B.'s  act:  Rut' 
land  R.  R.  Co.  v.  Lincoln,  29  Vt.  206.  A  surveyor  of  higlnvays 
in  repairing  a  road  exceeded  the  authority  legally  conferred 
upon  him  by  the  town,  and  the  town,  without  knowledge  of  the 
excess  of  authority,  accepted  an  order  drawn  upon  them  for  the 
whole  amount  of  the  work.  Held,  that  this  did  not  constitute 
a  ratification  of  the  unauthorized  acta  of  the  surveyor:  Mnrrcll 
V.  Dixfield,  30  Me.  157.  A  makes  an  unauthorized  sale  of  IVs 
goods.  Held,  that  the  receipt  of  money  by  B  from  A  on  account 
of  such  goods  will  not  be  a  ratification  of  the  sale,  provided  B 
would  have  the  right  v "  lout  ratifying  the  sale  to  receive  the 
money:  White  v.  Sandim,  32  Me.  188.  An  agent  was  sent  by 
A  with  a  note  in  her  favor  against  B,  with  authority  only  to 
receive  a  sum  of  money  thereon,  and  return  the  note.  lie 
received  the  money,  and  made  an  arrangement  with  B,  in  pur- 
Buance  of  which  he  gave  up  the  note  and  received  certain  other 
papers,  and  carried  the  money  and  papers  to  A,  who  "  took  the 
money  and  was  displeased  with  the  papers,  saying  she  was 
cheated  out  of  her  money."  Held,  that  this  was  not  a  ratifica- 
tion of  the  acts  of  the  agent:  Crookcr  v.  Applcton,  25  Mo.  131. 
The  holder  of  a  note  tc  which  A's  brother  had  forged  A's  name 
asked  A  whether  he  had  authorized  the  signature.  A  answered 
evasively,  intimating,  however,  that  he  had  not,  but  assuring 
the  holder  that  the  note  would  be  paid.  Held,  not  a  ratification: 
Smith  V.  Tramcl,  68  Iowa,  488. 


54 


55 


DETERMINATION   OF   AUTHORITY. 


§42 


CHAPTER  VII. 

DETERMINATION  OR  DISSOLUTION  OF  AUTHORITY. 

§  42.  Modes  of  diasolving  agency. 

§  43.  Perforiiianco  of  object  —  Lapse  of  time. 

§  44.  Revociitiou  l>y  act  of  priucipaL 

§  45.  Revocation  by  act  of  agent. 

§  4G.  Revocation  \>y  death  of  principal. 

§  47.  Revocation  by  death  of  agent. 

§  48.  Revocation  by  baidiruptcy  of  principal. 

§  49.  Revocation  by  bankruptcy  of  ageat. 

§  50.  Revocation  by  niai  •  '.ago  of  principal.  ',. 

%  51.  Revocation  by  inaatxity  of  ijrincipal. 

§  52.  Revocation  by  inisanity  of  agent. 

8  5".  Revocation  by  destruction  of  subject-matter. 

?  54.  Revocation  by  war. 

§  55.  When  revocation  takes  efifect. 

§  42.  Modes  of  Dissolving  Agency. — The  agency  may 
be  terminated  in  tliree  ways:  1.  By  agreement  of  the 
parties;  2.  By  the  act  of  one  party;  3.  By  operation  of 
law.  The  dissolution  by  agreement  may  be  (a)  by  per- 
formance of  the  object  of  the  agency,  or  by  (h)  efikix  of 
time.  The  dissolution  by  the  act  of  a  party  may  be  (c)  by 
revocation  by  the  principal,  or  (d)  by  renunciation  by  the 
agent.  The  dissolution  by  operation  of  law  may  bo  (c)  by 
the  death  of  the  principal,  (/)  by  the  death  of  the  agent, 
(g)  by  the  bankruptcy  of  the  principal,  (h)  by  the  bank- 
ruptcy of  the  agent,  (i)  by  marriage,  (j)  by  the  insanity 
of  the  principal,  (L)  by  the  insanity  of  the  agent,  (/)  by 
the  destruction  of  the  subject-matter  of  the  agency.  Au 
agent  of  a  partnership  is  not  justified  in  continuing  to 
perform  his  duties  as  such,  after  being  notified  of  a  change 
in  the  firm  by  the  admission  of  new  partners,  without  a 
renewed  authority  from  the  new  firm.* 

»  Callaaau  v.  Van  Vleck,  3G  Barb.  324. 


§43 


PRINCIPAL  AND   AGENT. 


66 


§  43.  Performance  of  Object — Lapse  of  Time.  — Whcro 
by  an  express  agreement  the  agency  is  limitetl  to  a  defi- 
nite object  or  for  a  definite  time,  the  performance  of  the 
object  or  the  expiration  of  the  time  dissolves  the  agency 
in  due  course.'  A  power  of  attorney  from  a  bank  will 
not  be  invalidated  by  the  expiration  of  the  term  of  office 
of  the  directors  who  executed  it.''  Where  an  agent  is  em- 
ployed to  secure  a  debt  of  his  principal,  which  he  docs  by 
obtaining  from  the  debtor  notes  payable  to  said  debtor, 
and  with  his  indorsement  on  them,  his  agency  does  not 
cease  while  he  still  holds  the  notes,  and  his  acts  have  not 
been  approved  by  his  principal.'  The  parting  by  a  prin- 
cipal witli  his  right  in  the  subject-matter  of  the  agency, 
before  the  attorney  in  fact  has  exercised  the  power,  is,  in 
law,  a  revocation  of  the  power  conferred.'*  A  land-owner 
may  employ  several  different  agents  to  act  for  him  in  the 
sale  of  the  same  tract,  and  a  sale  by  one  will  operate  as  a 
revocation  of  tho  authority  of  the  others,®  A  power  con- 
ferred upon  an  agent  to  negotiate  bonds  of  the  principal, 
if  silent  as  to  a  like  power  previously  given,  does  not  oper- 
ate as  a  revocation  of  the  earlier  power.  Two  persons 
may  be  employed  separately  to  negotiate  the  sale  or 
hypothecation  of  bonds,  and  either  may  thus  dispose  of 
them.  If  a  disposition  be  made  by  one,  of  course  the 
other  will  be  unable  to  exercise  the  power  with  which  he 
was  clothed;  but  until  a  sale  or  hypothecation  is  made, 
either  may  make  it.^ 

death  of  the  principal,  applies  to  mere 
nakcil  powers  over  wliich  tho  principal 
has  absolute  control,  and  not  to  powers 
coupled  with  an  interest,  or  such  as  are 
made  upon  sufficient  consideration  or 
for  the  mutual  henefit  of  the  parties  ": 
Wassoll  ?'.  Reardon,  11  Ark.  70o;  54 
Am.  Dec.  245. 

^  Northampton  Bank  v.  Pcpoon,  11 
Mas-  288. 

3  Wallace  v.  Goold,  91  111.  15. 

*  Gilbert  v.  Holmes,  04  111.  548. 

^  Ahem  r.  Baker.  .*U  Minn.  98. 

"  Hatch  I.  Codding  ton,  95  U.  S.  48. 


»  Blackburn  v.  Scholes,  2  Camp.  343; 
Moore  ?'.  Stone,  40  Iowa,  259;  Walker 
r.  Derby,  5  Biss.  l.Tl;  Burton  v.  Great 
Northern  R.  R.  Co.,  9  Ex.  507;  Asp- 
din  V.  Aspdin,  5  Q.  B.  G71;  Reid  v. 
Latham,  40  Conn.  454;  Schlater  v. 
Winpenny,  75  Pa.  St.  321;  Moore  v. 
Stone,  iO  Iowa,  259;  Bradford  i:  Bush, 
10  Ala.  380;  Smith  v.  Rice,  1  Bail. 
C4S;  Foster  v.  Calhoun,  Dud.  (S.  C.) 
75.  "Lapse  of  time  at  most  only  fur- 
niihes  presumptive  e%'idence  of  a  revo- 
cation liy  the  agent  of  his  power  by 
renunciation;  l)ut  this,  like  all  other 
modes  of  revocation,  except  that  of  the 


66 


57 


DETERMINATION  OF  ArTHORlTY. 


§44 


Illustrations. — A  appointed  B  his  agent  to  sell  machines  for 
him,  the  agreement  providing  that  A  would  furnish  B  such 
number  of  machines  as  A  might  be  able  to  sell  as  his  agent  prior 
to  October  1,  1867.     //cW,  that  the  agency  continued  only  to 
October  1st:  Gundlach  v.  Firhcr,  59  111.  172.     The  agent  of  the 
owner  of  a  play  to  effect  a  sale  thereof,  held,  to  have  no  iK)wer  to 
Kcll  after  a  sale  of  the  play  to  a  person  by  his  subagcnt:  W<iU<irk 
V.  D(tly,  1  N.  Y.  Week.  Dig.  198.     A  power  of  attorney  was 
executed   to   A   by   B's  widow  and    heirs,  empowering   A    to 
complete  a  contract  made  by  B.     Held,  that  it  was  not  re- 
voked by  a  grant  of  administration  to  her  two  days  afterwards: 
Jnncs  V.  Commercial  Bank,  78   Ky.  413.     S.  employed    M.  to 
sell   a  tract  of  land,  agreeing,  if  ^I.  would  fitul  a  purchaser 
at  a  fixed   price,  to  pay  him  five  hundred  dollars,  which  M. 
did.     Held,  that  as  soon  as  the  agent  j)rocured  the  purchaser 
his  agency  ceased,  and  his  taking  a  retainer  from  the  purchaser 
to  see  that  the  papers  were  properly  prepared  and  executed  pre- 
sented no  ground  for  defeating  a  recoveiy  of  the  price  agreed  to 
be  paid  to  him:  Shorl  v.  Millard,  G8  111.  292.     An  interlocutory 
decree   against  an  insurance  company  appointing  a  receiver 
with  power  to  continue  the  business  of  the  company  in  the  re- 
ceipt of  premiums  and  the  payment  of  the  necessary  expenses 
of  the  business,  and  enjoining  the  company,  its  oirieers  and 
agents  from    receiving  and   disposing  of  the  property  of  the 
company,  except  to  deliver  it  to  the  receiver,  held,  not  to  re- 
voke or  annul  the  authority  of  an  agent  of  the  company  to 
receive  payment  of  a  premium  on  a  policy  issued  by  the  com- 
l)any;  and  a  person  who  pays  a  premium  to  such  agent  after 
the  issuing  of  the  decree,  but  before  either  of  them  knew  of  it, 
cannot  maintain  an  action  against  him  to  recover  it  back  upon 
a  declaration  alleging  that,  at  the  time  of  such  payment,  the  de- 
fendant had  no  authority  to  receive  it:  Rice  v-  Barnard,  127 
^lass.  241. 


0. 

i348. 
98. 


§  44.  Revocatioii  by  Act  of  Principal.  —  In  general, 
the  principal  may  a''  any  time  before  its  performance  re- 
voke the  authority  of  his  agent  at  his  pleasure.*  A  power 
of  attorney  which  does  not  specify  the  time  at  whicli  the 


'  Peacock  ? 
4:)t:  Cdllia  V. 
B!:ick  -tone  V. 
Slid;  W.'lh  V 
Trust  r.  Rupoor, 
ricUler  ?•.    State, 


Cummings,  46  Pa.  St. 

Landis,  4G  Pa.  St.  420; 

Euttcrniore,  53  Pa.  St. 

Hatch,  43  N.  H.  247; 

If)   How.    Pr.   570; 

18  lud.  260;  Gib- 


S.  48. 


bom  r.  Gibbous,  4  Harr.  lO.j;  Jacobs 
V.  WailielJ,  23  La.  Aun.  395;  Brooli- 


shire  v.  Voncannon,  6  Ired.  231; 
Brown  v.  Pforr,  38  Cal.  ."juO;  Lewis  v. 
Sawyer,  44  Me.  3.32;  Siinoiiton  ;'. 
Minneapolis  Bank,  24  Minn.  210;  (tate.s 
V.  Davenport,  29  Barb.  11)0;  Evans  r. 
Fearne,  10  Ala.  089;  ,50  Am.  Dec.  197; 
Phillips  V.  Howell,  60  Ga.  411;  Walker 
V.  Deuuisou,  80  111.  142. 


§4d 


PRINCIPAL  AND   AGENT. 


58 


agency  is  to  terminate  leaves  it  discretionary  with  tho 
principal  to  diseliiirgo  tlio  agent  at  pleasure.  The  agent 
cannot,  therefore,  maintain  an  action  against  his  princi- 
pal in  damages  for  a  breach  of  contract  in  having  dis- 
cliarged  him  at  any  particular  time,  if  good  cause  is 
shown.'  A  contract  to  employ  an  agent  for  a  year,  if  ho 
"  could  fill  tho  place  satisfactorily,"  may  be  terminated 
by  the  employer  when,  in  his  judgment,  tho  agent  fails  to 
meet  that  requirement  of  tho  contract.^  An  agent's  author- 
ity to  collect  money  for  his  principal  is  not  revoked  by  tho 
mere  appointment  of  another  agent  w^ith  like  authority, 
and  a  payment  by  the  debtor  to  the  first  agent,  after  receiv- 
ing notice  of  the  appointment  of  the  second,  will  discharge 
the  debt,  if  there  is  no  other  evidence  of  a  revocation  of 
the  first  agent's  authority.'  The  demand  of  a  note  sent 
to  a  bank,  as  agent,  for  collection,  terminates  the  agency, 
and  a  refusal  to  return  it  will  be  evidence  of  a  conver- 
sion.* On  delivery  of  money  by  a  debtor  to  a  third  per- 
son, to  be  paid  to  his  creditor,  such  person  becomes  the 
agent  of  the  debtor,  who  may  revoke  his  direction  at  any 
time  before  the  creditor  assents  to  it.  Any  disposition  by 
the  debtor  inconsistent  with  the  appropriation  first  in- 
tended, such  as  an  assignment  for  the  benefit  of  creditors, 
will  be  a  revocation.  Tho  creditor's  assent  to  the  deposit 
with  the  agent  may  be  presumed  from  his  knowledge,  but 
his  knowledge  will  not  bo  presumed.^  A  transfer  of  tho 
authority  of  one  court  to  another  by  statute  will  not  re- 
voke an  authority  given  by  the  first  court  to  a  committee 
to  make  a  highway.®  After  revocation  of  an  agent's  au- 
thority, the  principal  is  not  bound,  as  between  himself  and 
the  agent,  to  notify  the  latter  of  his  dissent  from  acts  done 
by  such  agent  in  pursuance  of  the  original  authority.^ 


'  Jacobs  ?'.Warfield,  23  La.  Ann.  395. 
■•^  Tyler  v.  Ames,  G  Lans.  2S0. 
«  Davol  t'.  Quimby,  11  Allen,  208. 
*  Potter    V.    Merchants'   Bank,    28 
N.  Y.  641;  86  Am.  Dec.  273. 


'  Simonton  v.  Minneapolis  Bank,  24 
Minn.  216. 
•Brown  v.  Somerset,  11  Mass.  221. 
'  KeUy  r.  Phelps,  57  Wia.  425. 


I 


58 


59 


DETERMINATION    OF  AUTnORITY. 


§44 


ith  tho 

0  agent 
princi- 
ng  (lis- 
lauso  is 
,r,  if  ho 
ninated 

fails  to 
author- 

1  by  tho 
thority, 
*  rccoiv- 
ischargo 
ation  of 
ote  sent 
agency, 
conver- 

ird  per- 
mes  tho 
1  at  any 
ition  by 
rst  in- 
editors, 
deposit 
ge,  but 
of  the 
not  fe- 
ll mitteo 
t's  au- 
elf  and 
s  done 

[Bank,  24 

Ms.  221. 
25. 


But  the  authority  is  not  revocable  when  (ho  authority 
is  coupled  with  an  interest.*  For  instance,  "a  factor  for 
sale  has  an  authority  as  such,  in  tho  absence  of  all  special 
orders,  to  sell;  and  when  ho  afterwards  comes  under  ad- 
vances he  thereby  acquires  an  interest,  and  having  thus 
an  authority  and  an  interest,  the  authority  becomes  there- 
by irrevocable Where    an  agreement   is    entered 

into  on  a  suflicient  consideration,  whereby  an  authority 
is  given  for  the  purpose  of  securing  some  bonellt  to  tho 
donee  of  the  authority,  such  an  authority  is  irrevocable. 
That  is  what  is  usually  meant  by  an  authority  coupled 
with  an  interest,  and  which  is  commonlv  said  to  bo  ir- 
revocable."'"  Or  if  the  power  has  been  given  for  a  valuable 
consideration,'  tho  consideration  failing,  tho  powt;r  be- 
comes rcvo  able.*  And  the  consideration  or  interest 
must  bo  something  beyond  tho  mere  compensation  out  of 
the  proceeds  or  for  the  services  to  be  rendered.'' 

A  power  of  attorney  to  collect  a  debt,  to  secure  previous 
advances  by  the  agent,  is  irrevocable,  but,  so  far  as  tho 
agent  is  concerned,  only  to  the  amount  of  those  advances." 
A  power  of  attorney  to  confess  a  judgment  is  not  revoca- 


'  Hartley's  Appeal,  53  Pa.  St.  212; 
82  Ain.  Dec.  758;  Smyth  v.  Craig,  3 
Watt  J  &  S.  14;  Walker  ?•.  Demiison, 
8()  111.  142;  Bomiey  v.  Smith,  17  111. 
5:51;  (Gilbert  r.  Holmes,  Gl  111.  549; 
Mii:isliel(l  r.  Mansfickl,  G  Conii.  559; 
10  Am.  Dec.  7(J;  (_loi)>lmaii  v.  liowden, 
5t  Mc.  4-24;  Hutchias  v.  Hobbanl,  34 
N.  Y.  ?A;  Hunt  v.  Rousmanier,  8 
Wheat.  174  (3eo  Tharp  i\  Brcnncinan, 
41  Iiiwa,  251,  at  to  what  ia  not  such  an 
iiitereit);  Kiiapi)  r.  Alvortl,  10  Paige, 
205;  40  Am.  Dec.  241;  Beeeher  v. 
Bennett,  11  Barl).  3S0.  That  the  par- 
tie.-)  are  partners  does  not  raise  the 
inference  of  a:i  interest  within  the 
above  rule:  Travcr.s  r.  Crane,  15  Cal. 
1-';  Creagur  v.  Link,  7  Md.  2G7. 

-  WilL',  C.  J.,  in  Smart  i'  Sanders, 
5  Coin.  B.  S95.  A  power  of  attorney 
to  collect  and  distribute  money  ia  not 
revocable  after  its  part  execution  of 
the  colleutioa  of  the  money:  Watson 


V.  B:igaley,  12  Pa.  St.  1G4;  51  Am. 
Dee.  595.  As  to  revocation  of  as- 
siguiiient  for  benefit  of  creilitors,  yee 
Oakley  r.  Hobbard,  1  Piiin.  G74;  '14 
Am.  Dec.  4'J5,  ami  note  427;  Scull  ?•. 
Reeves  3  N.  J.  Eq.  8;  29  Am.  Dee. 
703.  A  power  to  coTifeas  judgmcat 
given  by  defendant  to  ]ilaintifl".s  attor- 
ney u  Hut  revocable:  WasocU  i:  Rear- 
don,  11  Ark.  705;  54  Am.  Dec.  'J  15. 

■'  Hunt  V.  Rousmauier,  8  Wheat. 
174. 

*  E.x  parte  Smither,  1  Dea.  413. 

•'  Blaekstone  t'.Buttermorc,  5:'  Pa.  St. 
2Gi);  Walker  r.  Denui.son,  80  111.  142; 
Barr  v.  Schroetler,  32  Cal.  GOO;  Hart- 
ley's Appeal,  53  Pa.  St.  312;  82  Am. 
Dec.  758;  Darrow  v.  St.  George,  8  Co^ 
592;  State  v.  Walker,  88  Mo.  27. 
coiitnt,  Merry  r.  Lynch,  68  Mo.  94. 

"  Marziou  v.  Pioehe,  8  Cal.  522; 
United  States  v.  Jarvis,  Dav.  274; 
Spear  v.  Gardner,  IG  La.  Ann.  383. 


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§44 


PRINCIPAL  AND   AGENT. 


60 


ble  by  the  act  of  the  party  giving  it.*  Equity  will  restrain 
the  revocation  of  a  power  of  attorney,  coupled  with  an 
interest,  upon  unequivocal  proofs,  and  enable  the  attorney 
to  execute  the  trusts.*  A  power  to  sell  and  receive  the 
proceeds  above  a  certain  sum  by  way  of  commission  is 
not  a  power  coupled  with  an  interest  which  cannot  be  re- 
voked.' And  even  if  the  appointment  states  that  it  is 
irrevocable,  this  does  not  prevent  its  revocation  by  the 
principal,  unless  it  is  founded  on  a  consideration,  or  the 
agent  has  an  interest  in  its  execution.*  And  though 
the  agent  is  appointed  under  seal,  his  authority  may  be 
revoked  by  parol.*  And  even  without  a  formal  declara- 
tion, the  revocation  of  the  authority  of  the  agent  may  be 
implied  from  circumstances;*  as  for  example,  appointing 
another  person  to  do  the  same  act.'  But  giving  an  addi- 
tional power  to  one  of  two  agents  does  not  revoke  the 
authority  of  the  other.* 

Illustratioxs.  —  A  gives  B  an  order,  but  countermands  it 
before  it  is  acted  on.  Held,  that  he  is  not  responsible  for  what 
B  docs  under  it:  Tneler  v.  Laicrcncc,  56  Vt.  467.  The  owner  of 
land  containing  iron  ore  authorized  an  agent  in  writing  to  sell 
the  land,  the  agent  agreeing  to  transport  specimens  of  the  ore 
to  England,  and  to  receive  as  compensation  *'an  undivided  one 
fourth  in  the  i)roceed8  of  sale,  when  sold  as  aforesaid."  Ilcldf 
that  the  agent's  authority  was  not  coupled  with  an  interest, 


'  Kimligt'.  March,  15  Ind.  248. 

-  Poitcn  r.  Rasctte,  5  Cal.  407;  Hyn- 
Bon  I'.  Noland,  14  Ark.  710;  Barr  v. 
SclirocJc"',  32  CI.  009;  Boimey  v. 
.S:ni:h,  '7  111.  5."1;  Hutcliins  r.  Heb- 
bard,  oi  N.  Y.  24;  Brookshire  v.  Voa- 
can.ioi,  0  Ircd.  231;  Wliecler  r. 
K:ia<rjf%  8  Ohio,  109;  Hartley's  Ap- 
peair33  I'a.  St.  212;  82  Am.  Dec.  758; 
Blackstono  v.  Buttorniorc,  53  Pa.  St. 

2;'.o. 

^  Simpisoa  r.  Carson.  11  Or.  3G1. 

*  Knapp  V.  Alvord,  10  Paige,  205; 
40  Am.  Dec.  241 ;  ^larHeld  i\  Douglas, 
1  Sand.  300;  McGregor  t».  Gardner, 
14  Iowa,  32();  Blackstono  v.  Butter- 
more,  53  Pa.  St.  200;  Walker  v.  Dea- 
nison,  80  111.  142. 

&  Brook^hire  v.  Brooksbire,  8  Ired. 


74;  47  Am.  Dec.  341;  Picklen-.  State, 
18  Ind.  20G. 

•  Wallace  v.  Goold,  91  111.  15;  Reid 
r.  Latham,  40  Conn.  452;  Copeland  v. 
Mercantile  Ins.  Co.,  6  Pick.  108. 

^  Morgan  v.  Stell,  5  Binn.  305;  Cope- 
land  V.  Ins.  Co.,  0  Pick.  198;  contra, 
Davol  V.  Quimby,  11  Allen,  208. 

«  Cushman  v.  Glover,  11  111.  GOO;  52 
Am.  Dec.  401.  A  person  sends  to  a 
bank  a  note  for  collection.  He  after- 
wards demands  it  back.  This  is  a 
revocation:  Potter  v.  Merchants'  B'k, 
28  N.  Y.  041;  86  Am.  Dec.  273.  An 
;';;ent  is  employed  to  sell  some  prop- 
erty. He  afterwards  sells  it  himself. 
This  is  a  revocation:  Torre  v.  Thiele, 
25  La.  Ann.  418. 


61 


DETERMIV.^TION   OP  AUTHORITY. 


§44 


leid 

V. 


\;  52 
a 
Ifter- 
jis  a 
iB'k, 
An 
■rop- 
%elf. 
lele. 


and  was  revocable  at  any  time  before  sale:  Chamhers  v.  l^cny,  73 
Ala.  372.    A  person  who  had  promised  an  agent  a  certain  sum,  if 
he  found  a  purchaser  for  his  land  within  a  month,  revoked  the 
agent's  authority.     B.,'forc  the  cxpiratio:i  of  the  raontli,  but 
after  the  revor-ation,  the  agent  found  a  purcliascr.     Ildl^  that 
he  could  not  recover  the  sum  promised:  Drown  v.  Pfoor,  38  Cal. 
550.     B.  delivered  his  note,  with  S.  as  security,  to  his  creditor, 
who  had  demanded  payment,  to  get  it  discounted  and  pay  him- 
self from  thu  proceeds;  the  creditor  took  the  note,  and  said  he 
would  get  it  discounted  if  he  could,  but  refused  to  promise  not 
to  sue.    IM'J,  that  the  creditor  took  a  power  coupled  v*'ith  an 
interest  which  could  not   be  revoked:    Whcclcr  v.  Slocumh,  Vo 
Pick.  L'l.     One's  appointment  as  general  agent  of  a  life  insur- 
ance  company,  hddy  to   import   a   revocation   of  his   ppecirl 
agency  thereof;  Rapier  v.  La.  Equit.  Li/e  Ins.  Co.,  57  Ala.  101. 
Money  is  paid  by  A  into  the  hands  of  B  to  remain  at  the  dis- 
posal of  C.     Held,  that  the  right  to  that  money  continues  in  A 
until  B  gives  and  C  takes  credit  for  it,  or  B  actually  pays  it  to 
C;    up  to  this  period  B  is  the  agent  of  A  only,  and  A  may 
countermard  the  authority  to  make  payment:  Howard  Collcfic 
v.  Pace,  15  Ga.  486.     A  power  to  sell  a  vessel  is  given  to  P. 
Afterwards  the  principal  gives  a  letter  to  P.  and  A.,  committing 
the  vessel  and  cargo  to  their  care,  and  adding,  "we  wish  the 
vessel  to  be  sold  if  it  can  be  done  at  cuch  price  as  you  think 
reasonable."    Held,  that  P.  cannot  sell  without  A.'s  concurrence: 
Copeland  v.  McrrantUe  Ins.  ('<»..  G  Pick.  198.     A  person  puts  his 
property  in  the  hands  of  two  or  more  brokers  to  sell,     lie  noti- 
fies one  of  them  of  his  change  of  purpose,  and  iiroceeds  to  im- 
prove his  property  in  a  maimer  ineonsistent  with  a  desire  to  sell. 
Held,  not  a  revocation  of  autliority  as  to  the  others:   Lloi/d  v. 
Mathews,  51  N.  Y.  124.    In  a  suit  for  specific  performance,  it  ap- 
peared tliat  A,  as  agent  of  B,  sold  land  to  C,  and  took  his  notes. 
Afterwards  B  appointed  D  his  agent  to  sell  the  land;  C  there- 
upo:i  agreed  to  give  up  his  first  contract,  and  buy  of  I)  for  a 
larger  sum,  and  afterwards  C  paid  the  original  notes  to  A  in 
whose  hands  they  had  remained.     Held,  that  C  had  notice  of 
the  revocation  of  the  first  agency  by  the  creation  of  the  second, 
and  that  the  payment  to  A,  which  never  came  to  the  vendor, 
did  not  entitle  the  vendee  to  maintain  the  suit:  Chirk  v.  Mul- 
Icnb;  11  Ind.  532.     A  and  B  agreed,  "in  consideration  of  the 
services  and  payments  to  be  mutually  rendered."  that  for  seven 
years,  or  as  long  as  A  should  continue  to  carry  on  business  at  the 
town  of  Liverpool,  A  should  be  the  sole  agent  there  for  the  sale 
of  B's  coals,  and  that  B  would  not  emplo"  any  other  agent  there 
for  that  purjwse.     There  were  stipulations  in  the  agreement 
that  B  shouki  have  the  entire  control  over  the  prices  for  which, 
and  the  credits  at  which,  the  coals  were  to  be  sold;  and  that,  if 


§45 


PRINCIPAL   AND   AGENT. 


62 


A  could  not  sell  a  certain  amount  per  year,  or  B  could  not  sup- 
ply a  certain  amount  per  year,  cither  party  might,  on  notice, 
put  an  end  to  the  agreement.  At  the  end  of  four  years  B  sold 
the  colliery  itself.  In  an  action  by  A  for  damages  for  breach 
of  the  agreement  thereby  occasioned,  held,  that  the  action 
was  not  maintainable;  for  that  the  agreement  did  not  bind  the 
colliery  owner  to  keep  his  colliery,  or  to  do  more  than  employ 
the  agent  in  the  sale  of  such  coals  as  he  sent  to  Liverpool: 
Rhodes  V.  Forwood,  1  L.  R.  App.  Cas.  25G;  24  Week.  Rep.  1078; 
24  L.  T.,  N.  S.,  890  (II.  L.);  reversing  33  L.  T.,  N.  S.,  314;  31 
L.  T.,  N.  S.,  61. 


§  45.  By  Act  of  Agent.  — An  agency  may  be  dissolved 
by  the  renunciation  of  the  agent.*  But  if  the  agency  has 
been  undertaken  for  a  valuable  consideration,  the  agent 
will  be  liable  for  such  damages  as  the  principal  may  suffer 
thereby;^  and  the  same  is  true  of  a  gratuitous  under- 
taking which  has  been  partly  performed.'  An  agent  who 
is  wanting  in  fidelity  forfeits  his  right  to  his  place,  what- 
ever may  bo  the  nature  of  his  default,  and  whether  it  is 
or  is  not  a  source  of  injury  to  his  principal.*  The  change 
of  the  name  of  a  firm  does  not  operate  to  annul  an  agency 
conferred  upon  the  same  persons  under  another  name.* 

An  agent  had  authority  to  sell  and  tried  to  sell  a  slave,  but 
failed,  and  then  attempted  to  run  off,  dispose  of,  and  conceal 
the  negro.  Held,  to  be  an  absolute  abandonment  and  renun- 
ciation of  hi3  agency:  Case  v.  Jennings,  17  Tex.  GGl.  An  agent, 
under  a  contract  as  a  book  canvasser,  wrote  to  his  principal 
that  he  had  determined  to  sell  out  and  give  up  the  business, 
and  that  if  the  principal  wanted  it,  to  come  or  send.  Held, 
that  the  principal,  after  having  made  a  fair  attempt  to  settle, 
and  having  reason  to  suspect  the  agent's  good  faith,  was  justi- 
fied in  treating  the  agency  as  abandoned,  and  in  appointing 


'Case  V.  Jennings,  17  Tex.  661; 
Barrows  v.  Cushway,  37  Mich.  481; 
Conrcy  v.  Brandcgec,  2  La.  Ann.  132; 
Coffin  V.  Lanilis,  5  Phila.  176.  So  the 
niisconJuct  of  the  agent  may  dissolve 
the  agency:  Heudeidou  v.  Hydraulic 
Works,  9  Phila.  100;  Wharton  on 
Ag'-ncv,  sec.  108. 

•■'  Gill  V.  Miildleton.  105  Mass.  479; 
7  Ain.  Rep.  548;  White  v.  Smith,  6 


Lans.  5;  Benden  v.  Manning,  2  N.  H. 
289;  Thome  v.  Deas,  4  Johns.  84;  Bar- 
rows V.  Cushway,  37  Mich.  481;  tliat 
the  agent  must  give  the  principal  rca- 
sonaUo  notice:  United  States  v.  Jarvis, 
Davica,  274. 
'  Evans  on  Agencj',  80. 

*  Henderson  v.  Hydraulic  Works,  9 
Phila.  100. 

*  Billingsley  r.  Dawson,  27  Iowa,  2 10. 


62 


I 


63 


DETERMINATION  OP  AUTHORITY. 


§46 


another  aj^ent,  and  that  a  sale  of  the  list  of  subscribers  after- 
wards by  the  former  agent,  or  an  attcMupton  his  part  to  release 
them,  was  invalid:  Sloddart  v.  Kcij,  G2  How.  Pr.  137. 


§  46.  By  Death  of  Principal.— The  death  of  the  prin- 
cipal revokes  the  agent's  authority^  unless  the  power  is 
coupled  with  an  interest.'  But  a  power  even  coupled 
with  an  interest,  if  expressly  conditioned  to  be  executed 
during  the  principal's  life,  ceases  at  his  death,'  The  au- 
thority of  a  subagent,  where  it  emanates  from  the  prin- 
cipal, is  not  affected  by  the  death  of  the  agent,  from 
whom  he  received  the  appointment.''  An  authority  dele- 
gated to  an  attorney,  from  three  trustees  having  a  power 
coupled  with  an  interest,  and  from  the  survivors  and  sur- 
vivor of  them,  to  sell  and  convey  lands,  is  not  revoked  by 
the  death  of  one  of  the  trustees.  Such  delegation  being 
joini  and  several,  the  attorney  is  invested  with  the  full 


I 


2N.  H. 
84;  Bar- 
Si;  that 
lipal  rca- 
,  Jarvis, 


rorks,  9 


bwa. 


^  Lincoln  v.  Emerson,  lOS  Mass.  87; 
Davis  P.  Windsor  Savings  Bank,  4G 
Vt.  728;  Hunt  v.  Rousinanier,  8 
Wheat.  174;  Lewis  v.  Kerr,  17  Iowa, 
83;  ^fimm  v.  Stewart,  7  Tex.  178; 
Gale  V.  Tappan,  12  N.  H.  145;  37  Am. 
Dec.  195;  Cleveland  v.  Williams,  29 
Tex.  204;  94  Am.  Dec.  274;  Coney  v. 
Saunders,  28  Ga.  511;  Saltmarsh  v. 
Smith,  32  Ala.  407;  Salt  r.  Galloway. 
4  Pet.  335;  Yerrington  v.  Greene,  7 
K.  I.  689;  84  Am.  Dec.  578;  Jenkins 
r.  Atkins,  1  Humph.  2D4;  .34  Am. 
Dec.  649;  Huston  v.  Cantrcl,  1 1  Leigh, 
13G;  Michigan  ins.  Co.  v.  Leavenworth, 
30  Vt.  1 1 ;  McDonald  v.  Black,  20  Ohio, 
185;  55  Am.  Dec.  448;  Eastonv.  Ellis, 
1  Handy,  70;  Wilson  v.  Edmonds,  24 
N.  H.  517;  Boone  v.  Clark.  3  Cranch 
C.  C.  389;  Bank  of  Washington  v. 
rierson,  2  Wash.  C.  C.  685;  Scruggs 
V.  Drover,  31  Ala.  274;  McGriff  v. 
Torter,  5  Fla.  373;  Smith  v.  Smith,  1 
Jones,  135;  59  Am.  Dec.  581;  Clay- 
ton t\  Merritt,  52  Miss.  353.  The 
rulu  is  the  same  vhero  the  death  is 
not  certainly  known,  but  is  presumed 
from  long  absence:  Primm  v.  Stew- 
art, 7  Tex.  178. 

-  Merry  v.  Lynch,  68  Me.  94;  Bon- 
n  y  r.  Smith,  17  IlL  531;  Knapp  v. 


Alvord,  10  Paige,  205;  40  Am.  Dec. 
241;  Gilbert  v.  Holmes,  64  111.  548; 
Hunt  V.  Rousmanier,  8  Wheat.  171; 
Hockett  V.  J(mes,  70  Ind.  227;  Leavitt 
V.  Fidher,  4  Duer,  1;  Houghtaling  v. 
Marvin.  7  Barb.  412;  Wdsoa  r.  Stew- 
art, 5  Pa.  L.  J.  450;  Bergin  v.  Ben- 
nett, 1  Caines  Cas.  1;  2  Am.  Dec.  281; 
Yates  n  Prow,  11  Ark.  58;  Cleveland 
V.  Williams,  29  iex.  204;  94  Am.  Dec. 
274. 

*  Staples  V.  Bradbury,  8  Greenl,  181; 

23  Am.  Dec.  494.  The  rule  that  tlie 
death  of  an  agent  acting  under  a  let- 
ter of  attorney,  containing  a  power  of 
substitution,  acts  as  a  revocation  of 
the  authority  of  an  agent  substituted 
by  him  under  the  power,  —  applied  in 
case  of  the  death  of  one  empowered  to 
buy  and  sell  stocks  who  had  substi- 
tuted his  son  to  act  for  him:  Luhigh 
Coal  etc.  Co.  v.  Molir,  83  Pa.  St.  2-28; 

24  Am.  Rep.  101. 

«  Smith  r.  White,  5  Dana,  376.  In 
Carriger  v.  Wliittington,  26  Mo.  311, 
72  Am.  Dec.  212,  the  representatives 
of  a  deceased  principal  were  held  en- 
titled to  recover  of  an  agent  purchase- 
money  received  by  him  on  an  author- 
ized sale  made  by  him,  but  after  the 
principal's  death  unknown  to  hiin. 


§46 


PRINCIPAL  AND  AGENT. 


64 


powers  of  the  surviving  trustees,  so  as  to  pass  both  the 
beneficial  and  the  legal  estates.*  The  rule  that  the  acts 
of  an  agent,  after  the  death  of  his  principal,  are  void,  only 
applies  to  acts  which  must  bo  done  in  the  name  of  tho 
principal,  and  not  to  those  which  the  agent  may  do  in 
his  own  name.  Thus  tho  executor  of  A  cannot  recover 
from  B  money  received  by  the  latter,  in  discharge  of 
notes  given  by  C,  tho  agent  of  A  to  secure  advances  mado 
by  B  to  C,  as  ^'uch  agent,  A's  death  having  taken  place 
unknown  to  both  parties,  before  tho  advances  were  r.ade.'' 
And  where,  by  indorsement  for  collection,  authority  is 
given  to  an  agent  to  sue  in  his  own  name  on  negotiablo 
paper,  the  legal  title  in  trust  is  transferred,  and  the  au- 
thority to  collect  is  not  revoked  by  the  death  of  the  prin- 
cipal and  owner.'  So  tho  dissolution  of  a  partnership 
revokes  an  agency,^  >  t  not  a  mere  change  in  tho  firm 
name.* 

Illustrations.  — Defendant  was  given  certain  notes  to  collect, 
which  did  not  mature  till  after  the  giver's  death.  Held,  that  his 
authonty  terminatod  with  the  death,  and  that  he  was  not  liable 
for  failure  to  collect,  though  during  the  delay  the  makers  became 
insolvent:  Darr  v.  Darr,  59  Iowa,  81.  The  power  of  an  agent, 
under  an  agreement  to  sell  a  lot  of  bricks,  pay  a  certain  lien 
for  making,  etc.,  and  certain  notes  he  held  against  tho  princi- 
pal, and  r(!turn  him  the  overplus  of  the  proceeds,  held,  not  to 
bo  extinguished  by  the  death  of  the  principal,  and  to  entitle 
the  agent  to  pay  his  own  notes  in  full,  although  other  creditors 
of  tho  estate  received  only  a  percentage:  Merry  v.  Lynch,  68  Jle. 
94.  A  retainer  under  a  contract  to  endeavor  to  sell  goods  on 
behalf  of  the  owner,  on  the  terms  of  receiving  a  stipulated  sum 
in  the  event  of  the  sale,  but  nothing  in  tiie  case  of  failure, 
held,  revocable  by  the  employer  before  sale,  even  after  en- 
deavors have  been  made,  and  is  revoked  in  law  by  his  death 
after  such  endeavors;  so  that  even  if  his  personal  rcpresentativo 
confirms  the  sale  under  such  contract,  he  will  not  (unless  ho 
knows  of  and  confirms  the  terms  of  the  contract),  be  liable  to 
pay  the  stipulated  sum:  Campanari  v.  Woodburn,  15 Com.  B.  400. 


>  Wilson  f.  Stewart,  5  Pa.  L.  J. 450. 
•^  Dick  V.  Page,  17  Mo.  234;  57  Am. 
Dec.  'JG7. 
»  Moore  v.  Hall,  48  Mich.  143. 


*  Schlater  v.  Winpenny,  75  Pa.  St. 
321. 

^  Billingsley  v.  Dawsou,  27  Iowa, 
210. 


64 


G5 


DETERMINATION   OP  AUTHORITY. 


§4: 


[•ollect, 

lat  his 

liable 

iccanie 

agent, 

n  lien 

rinci- 

Inot  to 

ntitlo 

ditors 

8  I\re. 

ds  on 

Buin 

|iilure, 

r  cn- 

idcath 

Itativo 

?ss  he 

Ic  to 

400. 

:'a.  St. 

I  Iowa, 


R.  B.,  having  been  Btabbcd  by  L.,  requested  his  brother  E.  B. 
to  employ  counsel  and  prosecute  L.  for  tlie  ofiense,  and  told 
him  that,  whether  ho  lived  or  died,  he  should  bo  paid.  R.  B. 
died;  and  after  his  dtatli  E.  B.  employed  counsel  and  prose- 
cuted L.,  and  paid  therefor  '$175,  to  recover  which  sum  he 
brought  his  action  against  R.  B.'s  administrator.  Ilehl,  that 
R.  B.  dying  before  E.  B.  had  acted  on  his  request,  the  request 
was  revoked  by  his  death:  Jnncs  \.  Bcall,  19  Ga.  171.  A  de- 
livered a  note  to  B  and  C,  atLorneys,  for  collection,  taking  tlieir 
receipt  therefor.  After  B's  death,  the  note  was  collected  by  C, 
the  surviving  partner.  Suit  against  C  and  the  administra- 
tor of  B  to  recover  the  money  collected.  Held,  that  the  re- 
lation between  the  parties,  which  was  that  of  principal  and 
agent,  was  terminated  on  the  death  of  B,  and  his  estate  cannot 
be  charged  for  the  subsequent  misconduct  of  C:  Johnson  v. 
Wilcox,  25  Ind.  182.  A,  wishing  to  go  abroad  for  his  health, 
gives  B  control  of  his  property,  with  a  power  of  attorney  au- 
thorizing him  to  take  the  entire  management  of  the  business. 
and  if  necessary  sell  the  property  to  pay  certain  notes  indorsed 
by  B.  Held,  that  the  power  of  sale  being  coupled  with  B's  in- 
terest as  indorser  may  be  exercised  after  A's  death:  Knapp  v. 
Alvord,  10  Paige,  205;  40  Am.  Dec.  241. 

§  47.  By  Doath  of  Agent. — And  the  death  of  the  agent 
terminates  the  agency,*  but  does  not  afifect  the  authority 
of  a  eubagent.^  But  the  death  of  an  agent  acting  under 
a  power  of  attorney  giving  a  right  of  substitution  re- 
vokes the  authority  of  a  subf.gcnt  appointed  under  such 
power.'  And  where  the  ageiit  is  a  partnership,  the  death 
of  one  partner  terminates  the  agency;*  the  rule  being 
that  where  a  power  is  given  to  two  the  death  of  one  re- 
vokes it.^  Where  a  commission  vests  power  in  two  with- 
out words  of  survivorship,  and  one  of  them  dies,  unless 
there  is  a  subsequent  recognition  by  the  principal  of  the 
survivor  as  agent  his  acts  will  not  bind  the  principal.*' 

>  Merrick's  Estate,  8  Watts  &  S.     nena,  3  Watt?  &  S.  79;  Watt  v.  Watt, 
402;  Page  v.  Allison,  1  Brev.  495;  2    2  Barb.  Ch.  371. 


Am.  Dec.  632;  City  Council  v.  Dun- 
can, 3  Brev.  386;  Jackson  Ins.  Co.  v. 
Partee,  9  Heisk.  296;  Jmlson  v.  Love, 
35  Cal.  463. 

'^  Smith  V.  White,  5  Dana,  376. 

«  Lehigh  Coal  Co.  v.  Mohr,  8:}  Pa.  St. 
228;  24  Am.  Bep.  161;  Peries  v.  Ayci- 
Vol.  I. -6 


*  Martino  i'.  International  Firo  Ins. 
Co.,  5:«  N.  Y.  337;  13  Am.  Rep.  529. 

*  Hartford  Ins.  Co.  v.  Wilcox,  57  III. 
180. 

®  Hartford  Firo  Ins.  Co.  v.  Wilcox, 
67  111.  180. 


y^S^3 


§8  48,-50 


PRINCIPAL  AND   AGENT. 


66 


Illustrations. — Onomemberof  a  firm,  who  were  agents  of  an 
insurance  company,  died.  UdH^  that  the  agency  was  thereby 
terminated,  and  that  receipts  subsequently  given  to  the  insured, 
signed  by  the  survivor  as  survivor,  were  notice  to  him  of  the 
termination,  so  that  subsequent  payments  on  such  receipts  were 
not  made  to  the  company's  agent:  Mnrtine  v.  Jntcmntionnl  Life 
Aastir.  Soc,  62  Barb.  181;  53  N.  Y.  339;  13  Am.  Rep.  539.  By 
a  contract  between  a  planter  and  a  factor  or  commission  mer- 
chant, the  latter  binds  himself  to  furnish  supplies  for  the  work- 
ing of  the  plantation  and  to  receive  and  sell  the  products  of 
the  place  for  the  benefit  of  the  planter.  Held,  a  contract  of 
agency;  and  terminated  by  the  death  of  the  agent:  Shiff  v. 
Leaseps,  22  La.  Ann.  185. 

§  48.  By  Bankruptcy  of  Principal. — The  authority  of 
the  agent  ceases  on  the  bankruptcy  of  the  principal;  he 
has  no  authority  after  that  to  receive  or  pay  the  princi- 
pal's money.*  It  is  otherwise,  however,  as  to  property  or 
rights  which  do  not  pass  from  the  bankrupt  by  the  bank- 
ruptcy, but  continue  to  remain  in  him;*  and  also  where 
the  power  is  coupled  with  an  interest.' 

§  49.  By  Bankruptcy  of  Agent. — And  likewise  the 
bankruptcy  of  the  agent  dissolves  the  agency,*  except  as 
to  the  execution  of  formal  acts  which  pass  no  interest.* 

§  60.  By  Marriage  of  Principal. — The  marriage  of 
the  principal  revokes  the  agency;"  but  the  marriage  of 
the  agent  does  not.'  Where  a  woman  retains  the  right 
to  administer  her  paraphernal  property  without  her  hus- 
band's assistance,  her  marriage  will  not  revoke  the  pow- 


*  Evans  on  Agency,  89;  In  re  Dan- 
iels, 13  Nat.  Bank.  Reg.  4G;  Parker  v. 
Smith,  16  East,  382;  Ogden  v.  Gilliug- 
ham.  Bald.  38. 

'  Story  on  Agency,  sec.  482;  Whar- 
ton on  Agency,  sec.  98. 
'  Story  on  Agency,  sec.  483. 

*  Audenried  v.  Betteley,  8  Allen, 
302;  Hudson  v.  Granger,  5  Barn.  & 
Aid.  27. 

^  Story  on  Agency,  sec.  48G;  Evaus 
on  Agency,  92. 

*  Henderson  v.  Ford,  46  Tex.  628. 
This  was  the  case  of  a  power  of  attor- 


ney by  a  single  man  to  sell  his  home. 
It  was  held  revoked  l>y  his  marriage: 
McCan  v.  O'Fcrrall.  8  ("lirk  &  F.  30; 
Charnley  v.  Winstanl  y,  5  East,  266; 
Wamhale  v.  Foote,  2  Dak.  1.  These 
were  cases  of  authorities  given  by 
/ernes  sole.  But  where  the  power  is 
coupled  with  an  interest,  the  marriage 
of  the  principal  {/erne  aok)  does  not 
revoke  it:  Eneu  v.  Clark,  2  Pa.  St. 
234;  44  Am.  Dec.  191. 

'  Story  on  Agency,  sec.  486;  Whar- 
ton on  Agency,  sec.  109. 


C7 


DETERMINATION   OF  AUTHORITY. 


§§  51,- 


53 


ers  of  on  agent  previously  intrusted  with  its  adiniuis- 
tration.* 

§  61.  By  Insanity  of  Principal.  —  The  insanity  of  the 
principal,  preventing  him  from  making  a  valid  contract, 
will  operate  as  a  revocation  of  the  agency .'^  It  must  clearly 
appear,  however,  that  the  insanity  was  of  this  kind  before 
an  agency  will  be  judicially  declared  revoked  for  this 
cause.  And  as  to  persons  who  have  dealt  with  the  agent 
in  ignorance  of  the  principal's  insanity,  the  transactions 
will  be  upheld."  Also  where  the  power  is  coupled  with  an 
interest  it  will  not  bo  revoked  by  the  principal's  insanity.* 

§62.  By  Insaiiity  of  Agent.  —  The  insanity  of  the 
agent  must  revoke  the  authority,  as  it  cannot  be  pre- 
sumed that  the  principal  intended  to  be  represented  by 
one  unable  even  to  contract  for  himself.' 

§  63.  By  Destruction  of  Snbject-matter.  —  The  au- 
thority of  the  agent  is  determined  whenever  the  subject- 
matter  of  the  agency  or  the  principal's  power  over  it 
is  at  an  end.*  A  guardian,  for  example,  may  appoint  an 
agent  to  act  for  his  ward;  but  on  the  coming  of  age  of  the 
ward  the  authority  would  bo  revoked.'  And  thus,  "  if  the 
agent  is  commissioned  to  sell  a  ship  which  is  subsequently 
destroyed  by  fire,  or  a  race-horse  which  dies,  in  all  these 
cases  his  authority  is  at  an  end."*  An  assignment  of  a 
judgment  is  a  revocation  of  the  authority  of  the  plaintiff's 
attorney  to  control  it.' 


>  Reynolds  w.  Rowley,  2  La.  Ann.  890. 

'-  Motley  V.  Head,  43  Vt.  6.33;  Willis 
V.  Manhattan  Co.,  2  Hall,  493;  Davis 
V.  Lane,  40  N.  H.  156;  Matthiessen  v. 
McMahon,  38  N.  J.  L.  537;  Hill  v. 
Day.  .34  N.  J.  Eq.  150. 

^  Davis  V.  Lane,  10  N.  H.  156;  Drew 
V.  Nunn,  L.  R.  42  Q.  B.  D.  661. 

*  Matthiessen  v.  McMahon,  38 
N.  J.  L.  536. 

^  Story  on  Agency,  sec.  487;  Evans 
on  Agency,  100. 


•Gilbert  v.  Holmes,  64  111.  548; 
Walker  v.  Dennison,  86  111.  142;  Bis- 
sell  V.  Terry,  69  111.  184.  The  inabil- 
ity of  a  corporation  to  continue  in 
business  is  no  excuse  for  its  breach  of 
a  contract  with  an  agent  to  servo  it  for 
a  specified  time:  Lewis  v.  Atlas  Ins. 
Co.,  61  Mo.  534. 

'  Wharton  on  Agency,  sec.  100. 

*  Evans  on  Agency,  100. 

•  Trumbull  v.  Nicholson,  27  111.  149. 


§§  51,  55 


PRINCIPAL  AND   AOEXT. 


Illustrations.  —  Tho  inhabitants  of  a  town  authorized  tho 
treasurer  to  borrow  money  to  pay  a  certain  tax.  The  tax  was 
subsequently  reported  without  tho  loan.  Tho  authority  of  tho 
agent  to  borrow  ceased  thereon:  Denoit  v.  Conway,  10  Allen, 
5l^8.  A  person  employs  several  agents  to  sell  his  land.  One  of 
them  sells  the  land.  This  is  a  revocation  of  tho  authority  of 
tho  others:  Ahem  v.  Baker,  34  Minn.  98.  One  was  appointed, 
under  a  statute,  an  agent  of  the  state  to  collect  certain  claims 
against  the  United  States,  and  was  to  bo  compensated  out  of 
tho  amount  collected.  Held,  that  his  appointment  was  revoked 
by  a  repeal  of  tho  statute:  State  v.  Walker,  88  Mo.  279. 

§  54.  By  War. — War  between  the  country  of  the  prin- 
cipal and  that  of  tho  agent  terminates  tho  agency,  accord- 
ing to  some  cases;  while  according  to  others,  it  does  not.* 
But  tho  captivity  of  a  prisoner  of  war  cannot  affect  a  power 
given,  when  he  was  free,  to  an  agent.^ 

Illt^strations.  —  A  citizen  of  Mississippi,  shortly  before  the 
fall  of  New  Orleans,  committed  to  an  agent  there  to  sell  certain 
bills  of  exchange,  which,  six  days  after  tho  fall,  ho  sold  for  confed- 
erate money.  Held,  that  tho  agent's  authority  was  not  revoked 
by  the  surrender  of  the  city:  Murrcll  v.  Jones,  40  Miss.  5G5.  Tho 
owner  of  a  farm  in  Mississippi  removed  to  Texas  during  tho 
late  war,  and  left  an  agent  to  supervise  and  carry  on  his  farm. 
Held,  that  such  agency  was  not  terminated  by  the  federal  occu- 
pancy of  the  territory  in  which  the  farm  was  situated,  and  that 
a  contract  entered  into  between  such  agent  and  the  federal  au- 
thorities to  carry  on  tho  farm,  and  work  freedmen  thereon,  did 
not  terminate  the  agency,  or  give  the  agent  any  power  to  de- 
feat the  interest  of  his  principal  by  claiming  the  proceeds  of 
the  farm;  but  what  he  did  on  the  farm  he  did  as  agent,  and 
the  products  of  the  farm  belonged  to  the  principal:  Shelby  v. 
OJutt,  51  Miss.  128. 

§  55.  When  Revocation  Takes  Effect. — The  revoca- 
tion by  the  act  of  the  principal  takes  effect   as  to  the 


>  Blackwcll  r.  Willard,  65  N.  C.  555; 
6  Am.  Rep.  7-19;  Howell  r.  Gordon,  40 
Ga.  302;  Conic v  v.  Burson,  1  Ilcisk. 
145;  Ins.  Co.  v.  Davis,  95  U.  S.  425; 
contra,  Mj,iouey  v.  Stephens,  11  Ileisk. 
738;  Jones  v.   Ilarrw,    10   Hoisk.   98; 


Darling  V.  Lewis,  11  Heisk.  125;  Rob- 
inson V.  International  Ins.  Co.,  42 
N.  Y.  547;  1  Am.  Rep.  490;  Manhat- 
tan Lifo  Ins.  Co.  V.  Warwick,  20  Gratt. 
014;  3  Am.  Dec.  218. 
'  Popo  V.  Cliafee,  14  Rich.  Eq.  69. 


69 


DETERMINATI'  N   OP  AUTnORITY. 


§55 


agent  from  the  moment  ho  receives  notification  of  it/ 
and  us  to  third  persons  only  from  the  time  when  it  is 
made  known  to  them.^  Acts  of  an  agent,  done  after 
the  revocation  of  his  agency,  bind  both  his  principal 
and  himself,  so  far  as  they  regard  third  persons  who 
liavo  had  no  notice  of  the  revocation.'  Notice  by  the 
principal  to  third  persons  of  the  contents  of  a  written 
agreement  with  the  agent  terminating  the  agency  is 
sufficient  notice  of  its  termination.*  But  where  the 
agent  is  a  special  one  having  authority  to  do  only  a 
particular  act,  notice  to  third  parties  of  the  revoca- 
tion is  not  necessary.'  Third  persons  have  no  just  right 
to  conclude  that  a  new  agency  had  been  established 
after  tiiey  have  been  notified  by  the  principal  that  the 
former  agency  had  ceased,  from  the  fact  that  the  agent 
was  conducting  business  as  formerly.'  As  to  the  time 
when  the  revocation  by  the  death  of  the  principal  takes 
effect,  the  rule,  as  established  by  the  great  weight  of  au- 
tliority  is,  that  the  revocation  is  instantaneous,  both  as  to 
the  agent  and  third  parties,  on  the  death  of  the  principal, 
even  as  to  acts  of  the  agent  before  he  obtains  knowledge 
of  the  decease.'    In  a  few  states,  however,  the  more  rca- 


'  Story  on  Agency,  sec.  470;  Neile 
r.  Uuitcil  btatcs,  7  Ct.  of  CI.  535; 
Joiio3  V.  llodgkins,  Gl  Me.  480;  Rob- 
ertjoa  v.  Clond,  47  Miss.  203. 

•'  Rico  i>.  Barnard,  127  Mass.  241; 
JIovcT  r.  Hebncr,  %  111.  400;  Bras- 
wull  r.  Ins.  Co.,  75  N.  C.  8;  Ulrich  v. 
McCormick,  CG  Ind.  243;  Claflin  v. 
Lealieim,  GO  N.  Y.  301;  McNeilly 
V.  Coutiuental  Ins.  Co.,  6G  N.  Y.  23; 
R!>l)ertsou  v.  Cloud,  47  Miss.  208; 
Heard  V.  Kirk,  11  N.  H.  397;  Wright 
V.  llcrrick,  128  Mass.  240;  Hatch  v. 
Co'dington,  95  U.  S.  48;  Barkley  v. 
K.  Co.,  71  N.  Y.  205;  Rice  v.  Isham, 
4  AUl).  App.  37;  Morgan  v.  Still,  5 
Biuii,  305;  Tier  r.  Lampson,  35  Vt. 
171);  82  Am.  Dec.  634;  Diver.sy  v.  Kcl- 
]•  '.  It  111.  114;  92  Am.  Dec.  154; 
Capen  v.  Pacific  Mut.  Ins.  Co.,  25 N.  J. 
L.  07;  G4  Am.  Dec.  412;  Van  Dusea  v. 


Star  etc.  Mining  Co.,  36  Cal.  571;  93 
Am.  Dec.  209. 

'  Lamothev.  St.  Louis  etc.  R.  R.Co., 
17  Mo.  204;  Hancock  r.  Byrne,  5  Dana, 
514;  Beard  v.  Kirk,  11  N.  H.  398; 
Harris  v.  Cuddy,  21  La.  Ann.  388. 

*  Van  Dusen  v.  Mining  Co.,  3G  Cal. 
571;  95  Am.  Doc.  209. 

'  Watts  V.  Kavanaugh,  35  Vt.  34. 

®  Van  Dusen  r.  Misiing  Co.,  36  CaL 
571;  95  Am.  Dec.  210. 

'  Clayton  v.  Murritt,  52  Miss.  .3.53; 
Riggs  V.  Caye,  2  Humph.  ,350;  .37  Am. 
Dec.  559;  Galer.  Tappan,  12  iV.  H.  145; 
37  Am.  Dec.  194;  Harper  r.  Little,  2 
Me.  14;  11  Am.  Dec.  25;  Snout  v. 
Iberry,  10  Mees.  &  W.  1 ;  (lalt  v.  Gal- 
loway, 4  Pet.  .3.32;  Clark  r.  Courtney, 
5  Pet.  319;  Ferris  v.  Irvin<;,  28  Cal. 
645;  Cleveland  j-.WillianiH,  20Tox.  204; 
94  Am.  Doc.  274;  Scruggs  r.  Diver,  31 


■ 


55 


PRINCIPAL  AND   AOKNT. 


If 


Bonablo  rulo  is  adopted  that  acts  bona  fide  executed  by  tlio 
agent  before  notice  of  his  death,  and  which  do  not  rcquiro 
to  be  done  in  the  principal's  name,  are  valid  in  favor  of 
innocent  parties.* 

Illustrations.  —  A  letter  written  by  his  principal  revoking 
the  agency  is  received  by  the  agent  on  Wednest'ay.  It  was 
written  on  Monday.  The  dissolution  of  the  agency  dates  from 
Wednesday, even  though  it  wafi  raaile  1  on  Monday:  Rnbertson  v. 
Cloud,  47  Mass.  208.  An  agent's  authority  has  been  withdrawn, 
but  parties  owing  the  principal  pay  their  debts  to  the  agent,  not 
knowing  of  the  revocation.  The  payments  bind  tho  principal: 
Parker  v.  Locomotive  Works.  122  Mass.  484;  Insurance  Co.  v.  Mc- 
Cain, 90  U.  S.  84.  A  had  long  been  in  business  for  himself,  and 
his  name  was  on  his  sign.  Ho  was  old,  and  his  sons  carried  on 
tho  business.  A  selling  agent  booked  the  sons'  order  as  an  order 
from  A,  and  then  altered  it  at  the  sons'  request,  they  saying 
that  if  A  left  the  firm  before  the  goods  were  shipped  thoy  would 
give  notice.  They  gave  no  notice.  Held,  that  A  was  liable  for 
the  goods:  Focllinger  v.  Leh,  110  Ind.  238.  The  defendants, 
a  steamboat  company,  had  employed  A  as  steward  on  o.io  of 
their  boats,  and  A  had,  while  so  employed,  purchased  supplies 
for  the  boat  of  tho  plaintiffs  and  others,  by  authority  of  the  de- 
fendants and  on  their  credit.  The  defendants  afterwards  ceased 
to  employ  A  as  steward,  and  advertised  for  proposals  for  con- 
tracts to  board  their  officers  and  crews  at  a  fixed  price  per  week, 
and  to  furnish  the  passengers'  table,  the  contractors  to  furnish 
all  the  supplies  at  their  own  expense,  and  entered  into  such  a 
contract  with  A  for  one  of  their  boats,  and  into  a  similar  con- 
tract with  B  for  another  boat.  The  defendants  gave  no  notice 
to  the  plaintiffs  of  the  change  in  the  manner  of  victualing  their 
boat,  and  did  not  advertise  such  change,  except  by  advertising 
for  proposals  as  above.  A  and  B  afterwards,  without  the  knowl- 
edge of  the  defendants,  purchased  supplies  for  their  respective 
boats  of  the  plaintiffs,  who  were  ignorant  of  their  contracts  with 
the  defendants,  and  the  goods  so  purchased  were,  by  the  direc- 


Ala.  274;  Gleaaon  v.  Dorlil,  4  Met.  .3.33; 
Nicliolst'.  Ch.apman,  9  Wend.  452;  Jen- 
kins V.  Atkins,  1  Humpl..  294;  34  Am. 
Dec.  G48;  Davia  v.  Windsor  Bank,  46 
Vt.  728. 

'  Cassidy  v.  McKenzie,  4  Watts  &  S. 
282;  39  Am.  Dec.  70;  Wilson  v.  Stew- 
art. 5  Pa.  L.  J.  450:  Dick  v.  Page,  17 
Mo.  234;  57  Am.  Dec.  267;  Cariger  v. 
Wellington,  26  Mo.  204;  Ish  v.  Crane, 
8  Ohio  St.  520;  and  see  Bank  of  New 


York  V.  Vanderhorst,  32  N.  Y.  553. 
See  an  able  article  sustaining  this 
view,  G  Cent.  L.  J.  383.  By  stetute 
in  several  states,  payments  made  to  an 
agent  in  ignorance  of  tho  principal's 
death  are  valid:  R.  C.  Md.  1878,  art. 
44,  sec.  31;  La.  R.  C.  (Voorhies), 
1875,  arts.  3032,  3033;  Ga.  R.  S.  1875; 
see  Coney  v.  Saunders,  28  Ga.  611; 
Cal.  Civ.  Code,  sec.  2356. 


71 


DETERMINATION    OF  AUTnOlUTY. 


55 


tion  of  A  and  B,  charged  to  tlio  dofcndnnts.  ITcUl,  that  iindor 
tlio  ruhi  that  where  a  genoral  anthoity  has  been  conferred  on 
an  agent,  itH  revocation  take.s  off  ct  as  to  third  persons  only 
after  notiee,  and  it  is  the  (hity  of  th'^  prineipal  to  notify  thoso 
p-rsons  who  have  hud  dealings  with  the  ngent;  the  defendants 
v.ere  liable  for  the  goods  ])urehased  by  A,  but  not  for  those  pur- 
chased by  B:  Fellows  v.  ILirtfnnl  Steamboat  Co.,  38  Conn. 
197.  Two  ngents  of  different  principals  agreed  to  settle  the 
indebtedness  of  each  agent  to  his  principal  by  a  transfer  of 
account,  and  by  a  payment  by  one  agent  to  the  other  of  the 
diilercnce  in  cash.  Before  the  agreement  was  executed,  tho 
agency  of  the  one  who  was  to  pay  was  revoked.  Held,  that 
tho  nrran!:?ement  thus  camo  to  an  end,  and  could  not  bo  en- 
forced by  the  principal:  Providence  Gaa  turner  Co.  v.  Jjarney,  14 
R.  I.  18. 


f 


■■■■i 


56 


PRINCIPAL  AND   AGENT. 


72 


2.   Thf  Authority  Conferred. 


CHAPTER  VIII. 


THE  NATURE  AND  EXTENT  OF  THE  AUTHORITY. 


§  5G.     Gktneral  and  special  agency. 

§  57.     Authority  may  bo  iniplied. 

§  53.     Authority  is  restricted  to  character  in  which  it  is  given. 

§  59.     Acta  must  bo  for  principal's  benefit. 

§  GO.     Construction  of  agent's  authority  in  general. 

§  Gl.  What  acta  arc  or  are  not  within  particular  phrases  —  "  Accountable  "  — 
•'All  matters" — "Attend  to  business" — "Borrow" — "Business 
and  financial  agent" — "Buy  and  sell" — "Canvass" — "Cost"  — 
"  Cite  and  appear  "  —  "  Claims  and  eflfecta." 

§  G2.     Particular  powers  (continued)  -  -  "Collect  "  —  "  Deliver  "  —  "Deposit " 

—  "Draw,  indorse,    and    accept  bills" — "Execute" — "Give   dis- 
charges "  —  "  Hire  "  —  "Indorse." 

§  63.  Particular  powers  (continued)  —  "  Invest "  —  "  Lands  "  —  "  Lay  out "  — 
"Loan  "  —  "  Make  deeds  and  sales  "  —  " Manage  "  —  " Mortgage "  — 
"  Obtain  securities  "  —  "  Place  "  —  "  Procure  a  purchaser. " 

§  64.  Particular  powers  (continued)  —  "  Purchase  "  —  "  Rent  and  care  for  "  — 
"Receive  checks "  —  "Release." 

§  65.  Particular  powers  (continued)  —  "Sell "  —  " Sell  and  convey  "  —  "Sell 
at  retail. " 

§  66.  Particular  powers  (continued)  —  "  Settle  "  —  "  Ship  "—  "  Sign  name  "  — 
"  Solicit "  —  "  Subscribe  "  —  "  Sue  "  —  "Take  care  of  "  —  "  Transact. " 

§67.     What    powers  implied  under  particular   circumstances — Advertising 

—  Admissions  —  Arbitrate  —  Assign  —  Auction  —  Board    at    hotel  — 
Borrow  —  Cancel  —  Compromise  —  Collect  —  Confess  judgment. 

§  68.     WTiat  powers  implied   (continued)  —  Employing    agents  —  Employing 

counsel  —  Exchange  or  barter  —  Deliver  —  Foreclose  mortgage. 
§69.     What  powers  implied   (continued) — Give  credit  —  Guaranty  —  Hiring 

horses  —  Indorsing  —  Lease  —  Legacy  —  License  —  Loan. 
§  70.     Wli.-it  powers  implied  (continued)  —  Making  accommodation  notes  —  Or 

deed  —  Negotiable  paper  —  Mortgage  —  Pledge  —  Purchase. 
§  71.     What  powers  implied  (continued)  — Receive  payment 
§  72.     What  powers  implied  (continued)  —  Renting  store  —  Rescind  contract. 
§73.     What  powers  implied  (continued)  —  To  sell  —  Settle  —  Suretyship— 

Tender  —  Transfer — Voluntary  conveyance. 
§  74.    What  powers  implied  (continued)  —  Waiver  —  Warranty. 
§  75.     Carrier's  agents. 
8  76.    Railroad  servants. 


73 


NATURE  AND  EXTENT  OF  AUTHORITY. 


56 


§  56.  General  and  Special  Agency.  —  Agents  are  cither 
general  agents  or  special  agents.  A  special  agency  exists 
wliore  the  authority  is  to  do  a  single  act.  A  general 
agency  exists  where  the  authority  is  to  do  all  acts  in  any 
particular  trade  or  calling.  Lord  EUeuborough  laid  down 
this  distinction  in  a  case  decided  by  him  in  1812/  where 
he  said  that  a  general  authority  imports  an  authority 
which  is  derived  from  a  multitude  of  instances,  while  a 
special  or  particular  authority  is  confined  to  a  particular 
instance,  and  this  distinction  is  followed  in  a  multitude 
of  adjudications.''  An  agent  may  bo  both  a  general  and 
special  agent,  —  general,  for  example,  as  to  the  manner  of 
buying  and  selling,  and  special  as  to  the  kind  of  property 
to  be  purchased.'  In  cases  of  a  special  agency,  limited  to 
one  transaction,  the  law  raises  no  inference  that  the 
agency  continues  or  extends  to  other  matters  occurring 
years  after.*  An  authority  to  an  agent  to  buy  a  single 
article  of  merchandise  by  one  contract,  or  to  buy  several 
articles  from  a  person  named,  is  a  special  agency;  while 
authority  to  make  purchases  from  any  persons  with  whom 
the  agent  may  choose  to  deal,  or  to  make  an  indefinite 
number  of  purchase^',  not  having  in  view  a  single  trans- 


•  Whitehead  v.  lacket,  15  East,  408. 

*  Martia  v.  Farusworth,  49  N.  Y. 
Wo;  Beals  v.  Allen,  18  Johns.  36.3;  9 
All.  Dec.  221;  Rossiter  r.  Rossiter,  8 
AVeiul.  494;  24  Am.  Dec.  62;  Reynolds 
r.  Kcuyon,  43  Barb.  583;  Andrews  v. 
Kncjlanl,  6  ('ow.  .354;  Dart  v.  Her- 
cules, 57  111.  44(5;  Baxter  v.  Lament, 
«'J  111.  234;  Fatman  v.  Leet,  41  Ind. 
l.);5;  Cruzan  v.  Smith,  41  Ind.  288; 
P.ilmer  i>.  Cheney,  35  Iowa,  281;  Wil- 
lard  V.  Buckingham,  36  Conn.  .395; 
Lad. I  r.  Town  of  Franklin,  37  Conn. 
rc,;  Gulick  V.  Grover,  33  N.  J.  L.  463; 
97  Am.  Dee.  728;  Butler  v.  Maples,  9 
Wall.  766;  Uolding  ti.  Merchant,  43 
Ala.  705;  Atlantic  etc.  R.  R.  Co.  v. 
ll'isiier,  18  Kan.  458;  Loudon  Sav- 
ings Society  v.  Hagerstown  Bank,  36 
Ta.  St.  498;  78  Am.  Dec.  390;  West- 
tiol  I  Bank  v.  Cornein,  37  N.  Y.  320; 
y]  Am.  Dec.  573.     "  A  j.  .son  who  is 


authorized  by  his  principal  to  execnto 
a  particular  deed,  or  to  sign  a  particu- 
lar contract,  or  to  purchase  a  particular 
parcel  of  merchandi<^,  is  a  special 
agent.  But  a  person  who  is  author- 
ized by  his  principal  to  execute  all 
defds,  sign  all  contrar'ts,  or  purchase 
all  goods  required  in  a  particular 
trade,  business,  or  employment,  is  a 
general  agent  in  that  trade,  business, 
or  employment":  Story  on  Agency, 
sec.  17;  Anderson  r.  Coonley,  21 
Wend.  279;  Walker  v.  Skipwith, 
Meigs,  502;  33  Am.  Dec.  161 ;  Tomlin- 
son  V.  Callct,  3  Blackf.  436;  Loudon 
Savings  Bank  v.  Hagerstown  Bank,  36 
Pa.  St.  498;  78  Am.  Dec.  390;  Cruzan 
».  Smith,  41  Ind.  288;  Lobdell  v.  Baker, 
1  Met.  193;  35  Am.  Dec.  358. 

^  Jeflfrey  v.  Bigelow,  13  Wend.  518; 
28  Am.  Dec.  476. 

*  Reed  v.  Baggott,  5  111.  App.  257. 


56 


PRINCIPAL  AND  AGENT. 


action,  but  a  number  of  separate  transactions,  consti- 
tutes a  general  agency.^  An  authority  to  bid  in  certain 
property  at  sheriff's  sale,  for  the  principal,  at  a  specified 
sum,  is  a  special  agency;  and  the  party  thus  authorized, 
if  he  bid  a  larger  sum  in  his  own  name,  makes  himself 
responsible  as  a  purchaser,  but  not  his  principal.^  For 
the  acts  of  a  general  agent  within  the  general  scope  of 
his  authority  the  principal  is  bound,  even  though  they 
may  be  in  violation  of  his  instructions;^  while,  ou  the 
other  hand,  the  principal  is  not  bound  by  the  unauthor- 
ized acts  of  a  special  agent,*  for  persons  dealing  with  a 
special  agent  are  bound  to  ascertain  the  extent  of  his 
authority.^ 


1  Butler  r.  Maples,  9  Wall.  766. 

»  Matter  of  Dripps,  4  Pa.  L.  J.  87. 

»  Abbott  u.  Rose,  62  Me.  194;  16  Am. 
Bep.  4'J7;  Bryant  r.  Moore,  20  Me.  84 j 
45  Am.  Dtc.  66;  Adams  Express  Co. 
V.  Sclilessinger,  75  Pa.  St.  240;  Furnas 
V.  Frankman,  6  Neb.  429;  Anderson  v. 
State,  22  Ohio  St.  305;  Adams  Mining 
Co.  V.  Senter,  26  Mich.  73;  Palmer  v. 
Cheney,  35  Iowa,  281;  Savage  v.  Rex, 
9  N.  H.  263;  Farmers'  Bank  v.  Butch- 
ers'B'k,  16  N.  Y.  148;Cruzan  y.  Smith. 
41  Ind.  288;  Grafins  v.  Land  Co.,  3 
Fhila.  447;  Loudon  etc.  Co.  v.  Hagera- 
town  Bank,  30  Pa.  St.  503;  78  Am. 
Dec.  390;  Daylight  Burner  Co.  v.  Od- 
lin,  51  N.  H.  56;  12  Am.  Rep.  45; 
Merchants'  Bank  r.  Griswold,  72  N.  Y. 
472;  28  Am.  Rep.  159;  Eilenberger  v. 
Insurance  Co.,  89  Pa.  St.  404;  City 
Bank  v.  Kent,  57  Ga.  283;  Commercial 
Bank  v.  Cortright,  22  Wend.  348;  34 
Am.  Dec.  317;  Mallojr  v.  Barrett,  1 
E.  D.  Smith,  243;  Rossiter  v.  Rossiter, 
8  Wend.  494;  24  Am.  Dec.  62;  Topham 
V.  Roclie,  2  Hill,  307;  27  Am.  Dec.  387; 
Scott  r.  McGrath,  7  Barb.  55;  Chase  v. 
New  York  Cent.  R.  R.  Co.,  20  N.  Y. 
528;  Ayer  v.  Tilden,  15  Gray,  182;  77 
Am.  Dec.  355;  McClure  v.  Richardson, 
Rice,  215;  33  Am.  Dec.  105;  Hackney 
V.  Insurance  Co.,  4  Pa.  St.  187;  Bry- 
ant r.  Moore,  20  Me.  84;  45  Am.  Dec. 
90;  Barber  v.  Hall,  26  Vt.  112;  60 
Am.  Dec.  301;  Choteau  r.  Leech,  18 
Pa.  St.  224;  57  Am.  Dec.  602;  Kinealy 
V.   Burd,   9  Mo.   359;  Carmichael  v. 


Buck,  10  Rich.  352;  70  Am.  Dec.  226. 
See  City  of  St.  Louis  v.  Gorman,  29 
Mo.  693;  77  Am.  Dec.  586. 

*  Baxter  v.  Lament,  60  111.  237; 
Blackwell  v.  Ketcham,  53  Ind.  184; 
National  Iron  Co.  v.  Bruner,  19  N.  J. 
Eq.  331;  Sharp  v.  Brandon  15  Wend. 
598;  Clark  r.  Polk  Co.,  19  Iowa,  252; 
Ladd  V.  Franklin,  37  Conn.  62;  Ban- 
orgee  v.  Hovey,  5  Mass.  11;  4  Am. 
Dec.  17;  Pursley  v.  Morrison,  7  Ind. 
356;  63  Am.  Dec.  424;  Thomas  v.  At- 
kinson, 38  Ind.  256;  Holcraft  v.  Hol- 
bert,  16  Ind.  258;  Dozier  v.  Freeman, 
47  Miss.  647;  Craycraft  v.  Selvage,  10 
Bush,  696;  Weiso's  Appeal,  72  Pa.  St. 
351;  Berry  v.  Barnes,  23  Ark.  414; 
Whiteside  v.  United  States,  93  U.  S. 
147;  Lewis  v.  Commissioners,  12  Kan. 
286;  Bryant  v.  Moore,  26  Me.  84;  43 
Am.  Dec.  90;  Floyd  Acceptance  Cases, 
7  Wall.  000;  Sillimanr.  Fredericksburg 
R.  R.  Co.,  27  Gratt.  120;  Callender  v. 
Golaon,  37  La.  Ann.  31 1 ;  Munn  v.  Com- 
mission Co.,  15  Johns.  44;  8  Am.  Dec. 
219;  Thompson  v.  Stewart,  3  Conn. 
171;  8  Am.  Dec.  108;  Reals  u.  Allen,  18 
Johns.  303;  9  Am.  Dec.  221;  Godloe  v. 
Godley,  13  Smedes  &  M.  233;  51  Am. 
Dec.  159;  McCoy  v.  McKowen,  26 
Miss.  487;  59  Am.  Dec.  264;  Sprague 
V.  Iram,  34  Vt.  155. 

'  Id. ;  Lumpkin  v.  Wilson,  5  Heisk. 
555;  Thornton  v.  Bryden,  31  111.  200; 
Schenmelpenich  v.  Bayard,  1  Pet.  264; 
Thacher  v.  Kancher,  2  Cal.  698;  Bell 
o.  Offutt,  10  Bush,  632;  Earp  v.  Rich- 


76 


NATURE  AND  EXTENT  OF  AUTHORITY. 


56 


But  what  is  a  special  authority  as  between  principal 
and  agent  may  have  all  the  effects  of  a  general  authority 
as  to  third  persons,  the  rule  being  that  while  the  princi- 
pal is  not  bound  by  the  act  of  a  special  agent  beyond  his 
authority, — third  persons,  in  dealing  with  such  an  agent, 
being  bound  to  ascertain  the  limits  of  his  authority, — yet 
where  he  has  held  out  the  ageut  as  having  u  larger  author- 
ity than  he  really  possesses,  he  will  be  estopped  from  set- 
ting up  the  actual  terms  of  his  authority/  Partners  who 
have  authorized  their  agent  by  written  power  of  attorney 
to  draw  bills  of  exchange  against  them,  and  paid  such 
bills  when  drawn,  thus  inducing  the  public  to  believe 
him  their  agent,  cannot  avoid  payment  of  a  bill  drawn 
by  him  on  the  ground  that  it  was  unauthorized  by  them? 
Although  a  private  agent  may  bind  his  principal  by  acts 
in  violation  of  his  special  instructions,  if  they  are  within 
the  scope  of  a  general  authority,  the  rule  is  otherwise 
when  applied  to  the  acts  of  an  officer  of  a  public  corpora- 
tion, the  reason  being  that  in  the  former  case  the  extent  of 
the  authority  is  necessarily  known  only  to  the  principal 
and  agent,  while  in  the  latter  it  is  a  matter  of  roford  in 
the  books  of  the  corporation  or  the  public  laws;'  Where 
the  authority  purports  to  be  derived  from  a  written  in- 
strument, or  the  contract  is  expressly  made  "as  agent," 
it  devolves  upon  the  other  party  to  see  that  the  agent  has 


ardson,  8J^N.  C.  5;  Baxter  v.  Latnont, 
63  111.  ii37;  Reed  v.  Welsh,  5  Heisk. 
555;  g'-.ow  V.  Porrv,  9  Pick.  512;  Lob- 
dell  V.  B-ker,  1  Met.  103;  35  Am.  Dec. 
358;  New  York  Iron  ^lino  v.  Bank, 
39  Mich.  C4t;  Stewart  v.  \Voo;Iward, 
51)  V't.  78;  23  Ain.  Rop.  488;  Williams 
j\  Birbeck,  Hoff.  Ch.  Si}-?;  llarrisoa  r. 
Fire  Ins.  Co.,  9  Allen,  233;  Brown  v. 
Johnson,  12  Smedes  &  M.  398;  51  Am. 
Dec.  1  IS;  Baring  v.  Pierce,  5  Watts  & 
S.  548;  40  Am.  Dec.  534;  Briggs  v. 
Lar;,'c,  30  Pa.  St.  291 ;  Reitz  v.  Martin, 
12  Ind.  308;  74  Am.  Doc.  215. 

'  Goldiiig  r.  Merchant,  43  Ala.  705; 
Cocke  r.  Ca:i:pbell,  13  Ala.  286;  Kellvw. 
Tall  B.ook  Coal  Co.,  4  Huo,  201;  Cos- 


grove  V.  Ogden,  49  N.  Y.  255;  10  Am. 
Rep.  3G1 ;  Morton  r.  .Scnll,  2:{  Ark.  289; 
Cruzan  v.  Smith,  41  Ind.  288;  Nelson  r. 
Cowing,  G  Hill,  330;  Hunter  /•.  Jame- 
son, 6  Ired.  "52;  Gallup  r.  Ledner,  1 
H'ln,  282;  Kerslake  ?•.  Schonurnaker,  1 
Hun,  430;  St.  Loiiii  etc.  R.  R.  Co.  r. 
Parker,  59  HI.  39;  Nixou  r.  lirown,  57 
N.  H.  34;  Merchants'  Bank  r.  Central 
Bank,  1  Ga.  418;  44  Am.  Dec.  0o5; 
Towlo  ?•.  Leavitt.  23  N.  H.  •''.OO;  55 
Am.  Dec.  195;  Lister  v.  Allen,  31  Md. 
543;  103  Am.  Dec.  78. 

»  Caldwell  V.  Neil,  21  La.  Ann.  342; 
99  Am.  Dec.  738. 

*  Mayor  of  Ualtinore  v.  Reynolds, 
20  Md.  1;  83  Am.  Dec.  535. 


§56 


PRINCIPAL   AND   AGENT. 


76 


not  transcended  his  written  instructions.*  But  aliter,  aa 
to  private  instructions  given  by  the  principal  to  the 
ageut.^  A  stranger  to  a  contract,  executed  upon  one  part 
by  an  agent,  cannot  impeach  it  on  the  ground  that  the 
agent  exceeded  his  authority.  The  contract  is  not  void 
for  that  reason.'  Thus  whcro  an  owner  of  land  gave  a 
power  of  attorney  to  lay  it  out  in  lots,  and  to  sell  it  for  the 
best  price,  so  that  no  lot  should  sell  for  less  than  a  pro- 
portionate share  of  twelve  hundred  pounds  for  the  whole 
tract,  and  the  agent  sold  the  whole  tract  for  twelve  hun- 
dred pounds,  it  was  held  that  a  stranger  could  not  inval- 
idate the  sale.^  A  contract  having  been  made  by  an  agent 
who  had  full  authority  is  not  affected  by  his  inaccurate 
report  of  its  terms  to  his  principal.** 

Illustrations.  —  By  the  rules  of  a  railroad  (unknown  to  the 
passenger),  a  baggage-master  is  forbidden  to  take  articles  of 
merchandise  on  passenger  trains.  A  baggage-master  takes  a  car- 
pet on  a  train.    The  railroad  is  bound:  Minter  v.  Railroad  Co., 


'  Atwood  V.  Munnings,  7  Barn.  &  C. 
278;  Towle  v.  Leavitt,  23  N.  H.  8G0;  55 
Am.  Doc.  195;  Scheiimelfenich  v.  Bay- 
ar<l,  1  Pet.  2li4;  Andrews  v.  Kneeland,  6 
Cow.  3ot;  North  River  Bankv.  Aymar, 
3  Hill,  2(j2;  Munn  v.  Commission  Co., 
15  Johnj.  44;  8  Am.  Dec.  219;  Beach 
V.  Vandurwater,  1  Sand.  2G5;  Dozier 
V.  Freeman,  47  Miss.  G47;  Payne  v. 
Potter,  9  Iowa,  549;  Morris  v.  Wat- 
sou,  15  Minn.  212;  Hunt  r.  Chapin,  6 
Luis.  139;  Baxter  v.  Lament,  GO  111. 
237;  Stainback  v.  Read,  11  Gratt.  281; 
62  Am.  Dec.  648;  De  Voss  v.  City  of 
Richmond,  18  (Jratt.  363;  98  Am. 
Doc.  G47.  "The  plaintiff's  testator 
taking  the  notes  in  suit  made  by  an 
agent,  professing  to  represent  the  de- 
fondant  a::  his  principal,  is  presumed 
to  have  known  the  terms  of  the  power 
under  which  the  agent  assumed  to 
act.  He  was  bound  to  ascertain  and 
know  the  character  and  extent  of  the 
agency,  ami  the  words  of  the  instru- 
ment by  which  it  was  created,  before 
giving  credit  to  the  agent.  If  the 
testator  dealt  with  the  agent  without 
learning  the  extent  of  the  powers  dele- 
gated to  him,  he  did  so  at  bis  peril, 


and  must  abide  by  the  consequences, 
if  the  agent  acted  without  or  in  excess 
of  his  authority  ":  Craighead  v.  Peter- 
son, 72  N.  Y.  279;  28  Am.  Rep.  150. 

»  Allen  V.  Ogden,  1  Wash.  C.  C.  174; 
Gibson  t'.  Colt,  7  Johns.  393;  White  v. 
Fuller,  67  Barb.  267;  Rourkor.  Story, 
4  E.  D.  Smith,  54;  Reals  v.  Allen,  18 
Johns.  363;  9  Am.  Dec.  221;  Johnson 
V.  Jones,  4 13arb.  369;  Bryant  v.  Aloore, 
26  Me.  84;  45  Am.  Dec.  96;  Cross  v. 
Hdskins,  13  Vt.  636;  Hunter  v.  Jame- 
son, C  Ired.  252;  Bradford  v.  Bush, 
10  Ala.  386;  Hatch  v.  Taylor,  10 
N.  H.  538;  Cruzan  v.  Smith,' 41  Ind. 
288;  Munn  v.  Commission  Co.,  15 
Johns.  44;  8  Am.  Dec.  219;  Wither- 
ington  V.  Herring,  5  Bing.  442;  Lob- 
dell  V.  Baker,  1  Met.  193;  35  Am. 
Dec.  .358;  Robbins  v.  Magee.  76  Ind. 
381 ;  Higgins  v.  Armstrong,  9  Col.  38. 
But  see  Peters  v.  Ballister,  3  Pick. 
495. 

'  Jackson  t;.  Van  Dalfsen,  5  Johns. 
43. 

*  Jackson  v.  Van  Dalfsen,  5  Johns. 
43. 

*  Greeley -Bumham  Co.  v.  Capen,  23 
Mo.  App.  301. 


77 


NATURE   AND   EXTENT  OF   AUTHOIIITY. 


§5G 


41  Mo.  503;  97  Am.  Dec.  288.  A  general  agent  purchasctl  a 
larger  quantity  of  goods  than  the  principal  authorized.  The 
latter  is  bound:  Palmer  v.  Cheney,  35  Iowa,  281.  The  proprietor 
of  a  etage-coach  had  an  agent  in  a  certain  town  to  attend  to  all 
the  business  of  transporting  passengers.  The  agent  liad  secret 
instructions  to  forward  no  goods  except  baggage  or  at  the  risk 
of  the  owner.  A  person  who  sent  goods  in  ignorance  of  this 
instruction  could  not  be  aflected  by  it:  Walker  v.  Shipioith, 
Meigs,  502;  33  Am.  Dec.  IGl.'  A  live-stock  broker  is  authorized 
by  letter  from  A  to  buy  two  thousand  hogs  of  a  certain  descrip- 
tion and  i^rice,  to  be  delivered  at  a  certain  day  and  place. 
The  broker  is  a  special  agent,  and  has  authority  only  to  bind 
his  principal  as  specified  in  the  letter.  Bell  v.  Offait,  10  Bush, 
G32.  B,  expecting  to  be  absent  for  a  time,  gave  his  clerk  a 
power  of  attorney  to  draw  cliecks  in  his  name  on  liis  bank  for 
fifteen  days.  The  power  of  attorney  was  deposited  wiih  the 
bank.  After  the  fifteen  days  the  clerk  drew  and  was  paid  checks. 
Held,  that  the  bank  could  not  charge  tlicm  to  B:  Manvfarfurers* 
Nnt.  Bank  v.  Barnes,  G5  111.  09;  10  Am.  Rep.  570.  A  au- 
thorizes B  to  sign  his  name  to  a  note  for  a  certain  sum.  lie 
signs  it  for  a  larger  sum.  A  is  not  bound:  Blackvvll  v.  Ket- 
chxim,  53  Ind.  184.  An  agent  for  stage  company  is  authorized 
to  obtain  surgical  aid  for  an  injured  passenger.  Ilchl,  that 
the  obtaining  of  such  aid  for  an  injured  employee  is  beyond 
his  authority:  Shriver  v.  Stevens,  12  Pa.  St.  258.  Plaintiffs, 
having  received  a  check  of  a  third  person  payable  to  their 
order,  indorsed  it  to  the  order  of  the  cashier  of  the  defendant's 
bank,  put  it  in  an  envelope,  and  sent  it  by  a  messenger  for  de- 
posit. The  messenger  opened  the  envelope  and  presented  it  at 
the  bank  for  payment,  stating  that  the  plaintiffs  desired  the 
money.  The  bank  paid  the  messenger,  and  he  absconded  with 
the    money.     Held,   that  the   bank   was   liable:  BrUtol  Knife 


'  "  It  will  bo  seen  from  this  defini- 
tion of  a  general  agency,"  sai<l  the 
court,  "  that  if  a  stage  contractor  puts 
a  man  in  his  phme  to  transact  all  his 
bu  nucm  of  a  particular  kind,  as  to  re- 
ceive aail  f(>r\vanl  passengers  and  bag- 
gage in  the  stage,  and  to  receive  pay- 
in  jut  therefor,  at  any  particular  stand 
or  stage-ofFioo,  such  person  is  the 
g  neral  agent  of  the  contractor  or 
owner  of  the  stage.  In  such  case, 
though  the  owner  of  the  stage  may 
limit  the  agent  by  a  private  order  or 
direction,  still  he  is  bound  for  all  his 
agjat's  acts,  though  not  conformable 
to  his  direction,  if  within  the  scope  of 
his  employment,  unless  this  limita- 
tion upon  the  power  of  the  agent  be 


known  to  the  party  dealing  with  him: 
Paley  on  Agency,  1G3.  It  ii  not  there- 
fore a  limitation,  by  private  instruc- 
tions to  the  agent,  that  constitutes  a 
special  agency.  That  is  a  matter  be- 
tween the  principal  and  agent  alone, 
unless  it  be  disclosed  to  the  party 
dealing  with  the  agent.  If  the  ag'uit 
has  not  acted  in  conformity  to  his 
commission,  he  is  responsible  to  his 
principal.  By  placing  the  party  in 
the  situation  of  a  general  agent,  the 
principal  has  been  instrumental  in  pro- 
ducing the  injury  throu;,'h  his  agent's 
misconduct,  and  ho  ought  to  suQcr  for 
it,  rather  than  a  stranger  who  is 
equally  innocent  with  hi^nself." 


56 


PRINCIPAL  AND   AGENT. 


78 


Co.  V.  First  Nat.  Banlc,  41  Conn.  421;  19  Am.  Rop.  519.' 
An  employee  in  a  Btore  employed,  with  the  knowledge  of  Iho 
firm,  an  expressman  to  make  deliveries.  Held,  that  the  firm 
was  liable  for  his  eervices:  Pardridgc  v.  La  Pries,  84  111.  51. 


'  "  Tlio  whole  case,"  saiil  Loomis,  J., 
*'  resolves  itself  iatoa  mere  qucatioa  of 
agency.  Had  the  messenger  who  de- 
livered the  check  at  the  bank  authority 
from  the  plaintiflfs  to  receive  money 
thereon?  lb  is  conceded  that  there 
was  uo  authority  in  fact.  The  only 
authority  of  the  messenger,  ia  fact, 
was  to  deliver  to  the  bank  the  sealed 
envelope  containing  the  check  and 
deposit  ticket,  have  the  check  cred- 
ited to  the  plaintiffs,  and  get  the 
bank-book.  He  was  not  in  any  sense 
a  general  agent,  he  had  never  done 
any  bvisineas  for  the  plaintiffs  of  any 
kind,  and  was  an  entire  stranger  to 
the  oiRcerj  of  the  bank.  He  was  only 
a  special  agent,  and  that,  too,  of  ux- 
ceedingly  limited  authority,  and  here 
the  familiar  and  elementary  rule  of  law 
applies,  '  that  au  agent  constituted  for 
a  particular  purpose,  and  under  a  lim- 
ited power,  cannot  bind  his  principal 
if  he  exceeds  that  power.  Whoever 
deals  with  au  agent  constituted  for  a 
special  purpose,  deals  at  his  peril  when 
the  agent  passes  the  precise  limits  of 
his  power.'  We  would  not,  however, 
adhere  so  closely  to  the  literal  terms 
of  this  rule  as  to  do  injustice  to  inno- 
cent third  parties,  who  have  acted  on 
the  contidenco  of  an  apparent  author- 
ity for  which  the  principal  is  justly 
responsible.  But  in  order  to  bind  the 
principal,  he  must,  by  his  words  or 
acts,  have  fully  authorized  the  third 
party  to  believe  that  the  agent  had 
autliority;  and  in  applying  this  rule 
to  business  transactions,  care  must  be 
used  to  distinguish  clearly  between 
the  act  of  tlie  principal  and  the  mere 
act  of  the  agent.  If  the  agent  by  his 
act  assumes  an  appearance  of  author- 
ity which  induces  a  third  party  to  be- 
lieve he  has,  in  fact,  authority,  it  ia 
not  sufficient.  It  is  the  principal's 
own  act  only  that  gives  to  the  agent 
an  appearance  of  authority  which  be- 
comes binding  on  him.  If,  then,  we 
look  at  the  act  of  the  plaintiffs,  with- 
out reference  to  what  the  messenger 
wrongfully  assumed,  wo  find  that  all 
the  plaintiffs  did  was  to  indorse  the 
check  payable  to  the  order  of  the  cash- 


ier, and  put  it,  together  with  a  deposit 
ticket,  in  a  sealed  envelope  a;ul  hand 
it  to  the  messenger  to  carry  to  t!ie 
bank.  These  acts  of  the  plaintiffs  do 
not,  it  seems  to  us,  imply  any  author- 
ity in  the  messenger  to  collect  the 
money  on  the  check.  If  the  seabd 
envelope,  containing  the  chuck  and 
deposit  ticket,  had  been  presented  to 
the  bank  in  the  same  shape  as  delivered 
to  the  messenger,  it  wi>uld  'lave  been 
clear  that  only  a  deposit  was  intended. 
It  may  be  suggested  that  the  presen- 
tation by  the  messenger  of  the  naked 
check  at  the  bank  ought  to  bo  consid- 
ered as  authorized  by  the  principal 
for  tho  purpose  of  fixing  the  liability. 
We  do  not  so  regard  it.  Suppose  the 
envelope  had  inclosed  a  written  re- 
quest, r(  ative  to  the  matter,  intended 
for  pre.  -ntation  to  the  cashier,  and 
tlie  messenger  had  broken  tho  seal  and 
destroyed  the  writing,  and  had  pre- 
sented the  check  by  itself,  would  wo 
{'udge  the  principal  in  such  case  simply 
ly  the  fact  that  the  special  agent  was 
authorized  to  present  tl'.o  check?  If 
so,  there  would  be  no  safety  in  cm- 
ploying  a  messenger  to  do  the  simplest 
errand.  But  if  we  concede,  for  the 
sake  of  argument,  that  the  authority 
given  to  the  messenger  was  to  present 
the  check  by  itself  to  tho  bank,  we  do 
not  think  an  authority  to  receive  tho 
money  can  fairly  bo  implied  under  the 
circumstances  of  this  case.  Tiie  cir- 
cumstances here  do  not  enlarge  the 
apparent  scope  of  the  agent's  author- 
ity, but  greatly  contract  it.  The  form 
of  indorsement.  •?•";'  to  the  order  of 
the  cash.ei,",'  n-.'iatural,    if    the 

plaintiffsi  ir  •  '=  •  -.o  have  the  bank 
pay  tho  nior  n-  ;  :he  messenger.  Tho 
object  of  tt.)3 '  iol  indorsement  was, 
undoubtedly,  prevent   the    bank 

from  paying  the  check  to  any  one  ex- 
cept the  plaintiffs,  and  everybody  ex- 
cept tho  bank  itself  would  be  pre- 
cluded from  collecting  it  in  that  form; 
and,  under  such  circumstances,  we 
think  the  presentation  of  this  check 
at  the  bank  by  a  perfect  stranger,  who 
called  for  the  currency  on  it,  ought  to 
have  aroused  auspicion." 


78 


lie  cir- 
|gc  the 
luthor- 
le  form 
(ler  of 
if    tho 
bank 
Tho 
I'o  was, 
bank 
bne  ex- 
|dy  ex- 
pre- 
form; 
fcs,   we 
I  check 
r,  who 
Ightto 


79 


NATURE  AND  EXTENT  OF  AUTHORITY. 


§5^ 


"i 


The  owner  of  property  permits  hie  agent  in  possession  to  repre- 
sent himself  as  tho  owner  of  it,  whereby  he  obtains  credit  and 
makes  debts,  to  satisfy  which  a  levy  is  made  on  the  property. 
Held,  that  the  owner  is  estopped  to  deny  tho  liability  of  tho 
property:  White  v.  Morgan,  42  Iowa,  113.  A  mortgaged  his  farm 
and  crops  to  secure  advances,  and  placed  an  agent  in  charge  to 
make  the  crop  and  to  purchase  supplies,  to  whom  ho  gave  a 
power  of  attorney  to  mortgage  farm-stock  to  a  certain  amount, 
to  procure  provision,  seed,  etc.  The  agent,  finding  it  impossi- 
ble to  make  the  crop  without  more  money,  and  being  unable  to 
obtain  any  from  his  principal,  gave  a  second  mortgage  on  tho 
crop,  to  which,  instead  of  the  first,  he  applied  the  proceeds  of 
the  crop.  Held,  that  the  agent  acted  without  authority  through- 
out: Skagga  v.  Mxirchison,  63  Tex.  348.  The  chief  engineer  of 
a  railroad  company  assuming  to  act  for  the  company  employed 
A  to  render  engineering  services.  A  was  ignorant  of  any  lim- 
itations on  the  engineer's  powers.  Held,  that  the  company  was 
liable:  Gillis  v.  Railroad  Co.,  34  Minn.  301.  A  hotel  steward 
furnished  with  money  by  his  employer  to  buy  supplies  kept 
back  part  of  the  money.  The  seller  gave  credit,  not  to  the 
steward,  but  to  his  employer.  Held,  that  the  employer  must 
bear  the  loss:  Goc,  f  v.  Meares,  13  Daly,  30.  A  resolution  of  a 
corporation  manufacturing  pig-iron  stated  that  "A  B  of  Chicago 
be  and  is  hereby  appointed  and  employed  by  this  company  as 
its  sole  agent  for  the  consignment  and  sale  of  its  entire  product, 
he  to  receive  a  commission."  Held,  that  A  B  was  entitled  as 
general  agent,  not  only  to  sell  iron  when  ready  for  the  market, 
but  also  to  contract  for  the  sale  and  future  delivery  of  iron  to  bo 
produced:  National  Furnace  Co.  v.  Keystone  Mfg.  Co.,  110  111, 
427.  A  father  authorized  his  son  to  accept  for  him  three  thou- 
sand dollars  at  not  less  than  thirty  days'  sight,  to  enable  him 
to  go  into  partnership  with  S.  The  son  accepted  S.'s  draft  in 
favor  of  N.  for  four  hundred  dollars  at  ninety  days,  in  payment 
of  a  debt  due  from  S.  to  N.  Held,  that  the  draft  Avas  unauthor- 
ized: Nixon  y.  Palmer,  8 'N.Y.SdS.  Defendant,  negotiating  with 
A  for  the  purchase  of  a  store,  said  that  he  should  need  a  clerk, 
and  authorized  A  to  hire  one  at  eleven  dollars  a  week.  A  hired 
a  clerk  at  that  rate  for  six  months.  Held,  that  in  hiring  for 
that  time  he  exceeded  his  authority:  Pasco  v.  Smith,  49  Conn. 
r)76.  The  defendants  sent  an  agent  to  employ  the  plaintiff,  who 
was  a  physician,  to  visit  a  boy  who  was  injured,  and  directed 
him  to  tell  the  plaintiff  that  they  would  pay  for  the  first  visit. 
The  agent  neglected  this,  and  employed  the  plaintiff  generally. 
The  plaintiff  attended  the  boy  on  the  defendant's  credit  till  he 
recovered.  Held,  that  the  defendants  were  liable  to  the  plain- 
tiff for  his  services:  Barber  v.  Britton,  2G  Vt.  112.  The  plain- 
tiff 6old  certain  goods  to  the  defendants  through  F.,  their  general 


I 


§56 


PRINCIPAL   AND   AOENT. 


80 


agent,  who  was  fully  authorized  to  make  the  purchase.  After- 
wards, upon  the  representation  of  F,  to  the  plaintiff  that  it  was 
necessary  to  send  a  receipted  bill  tO  the  defendants  in  order  to 
obtain  payment  of  it,  the  plaintiff  receipted  the  bill  of  the  goods 
and  delivered  it  to  F.  F.  presented  the  bill  thus  receipted  to  the 
defendants,  who  paid  the  amount  to  him,  they  having  no  knowl- 
edge of  the  circumstances  under  which  tho  receipt  was  given. 
The  money  so  received  by  F.  was  never  paid  to  the  plaintiff. 
Held,  in  an  action  of  assumpsit  brought  against  the  defendants 
for  tho  amount  of  tho  bill,  that  tho  plaintiff  was  entitled  to  re- 
cover. F.  being  the  general  agent  of  the  defendants  and  au- 
thorized to  purchase  the  goods,  he  was  acting  in  the  whole 
matter  within  the  scope  of  his  authority,  and  his  acts  and 
declarations  were  to  bo  considered  as  the  acts  and  declarations 
of  the  defendants,  and  his  knowledge  of  tho  circumstances 
under  which  the  receipt  was  given  as  their  knowledge.  It 
could  not  be  inferred  from  the  facts  that  the  plaintilf  had 
made  F.  his  own  agent  in  the  matter:  Willard  v.  Buckingham, 
'S(j  Conn.  395.  A  engaged  B  to  lease  a  certain  piece  of  land  for 
him  at  a  certain  rent  or  at  any  rent.  B  effected  the  lease,  but 
the  lessor,  being  unwilling  to  give  credit  to  A,  trusted  B,  and  B 
paid  tho  rent.  Held,  that  this  was  a  case  of  general  agency, 
that  the  payment  by  B  was  within  the  object  of  the  agency, 
and  that  A  Avas  liable  to  an  action  to  recover  the  money 
paid  without  demand:  Irions  v.  Cool,  11  Ired.  203.  M.  & 
Co.,  in  Boston,  wrote  letters  to  B.,  in  New  Orleans,  as  fol- 
lows: 1.  "You  may  have  opportunities  to  make  advances  on 
cotton  shipped  to  this  port,  and  we  should  bo  willing  to  accept 
again.4  shipments  to  us  the  necessary  papers  accompanying 
the  bilis  for  such  sums  as  in  your  judgment  may  be  safely  ad- 
vanced,'' 2.  '"We  do  not  want  cotton  under  limits.  Your 
advanceL'  ought  not  to  exceed  three  quarters  the  value.  Under 
these  rest  •ictions  you  may  go  on,  and  your  bills  shall  be  duly 
honored,  accompanied  by  bills  of  lading  and  orders  for  insur- 
ance.'' B.  showed  these  letters  to  C,  and  sold  to  him  bills 
^rawn  on  M.  &  Co.  in  favor  of  C.'s  principals,  and  paid,  with 
the  money  received  from  C,  for  cotton,  which  he  shipped  to  M. 
&  Co.  in  his  own  name.  No  bills  of  lading  or  orders  for  insur- 
ance accompanied  these  bills,  and  M.  &  Co.  refused  to  accept 
or  pay  them.  Held,  in  suits  by  the  payees  againet  M.  &  Co.  as 
acceptors  of  the  bills,  and  on  their  promise  to  accept  and  pay 
them,  that  they  were  not  liable;  that  B.'s  authority  was  limited 
and  special,  and  that  he  had  exceeded  it,  by  drawing  the  bills 
without  accompanying  them  with  bills  of  lading  and  orders  for 
insurance;  and  that  C.,  the  payee's  agent,  knowing  the  con- 
tents of  M.  &  Co.'s  letters  to  B.,  took  the  bills  on  his  personal 
confidence  in  B.,  and  not  on  the  obligation  of  M.  &  Co.  to  honor 


80 


81 


NATURE    AND    EXTENT   OP   AUTHORITY. 


§50 


races  on 

>  accept 

)anying 

cly  ad- 

Your 

Under 

0  duly 
insur- 

1  bills 
,  with 
toM. 

insur- 
I accept 

Co.  as 
Id  pay 
limited 
\g  bills 
lore  for 
con- 
Irsonal 
1 honor 


thorn:  Murdoch  v.  M'dls^  11  ^Ict.  5.  An  insurance  company 
appoints  an  agent  in  another  city,  and  agrees  that  he  shall 
receive  ten  per  cent  on  all  premiums  for  insurance  ofTect'jd 
by  him  on  their  behalf,  and  also  on  all  moneys  received  for 
sales  of  shares  of  the  stock  of  the  company,  matle  by  him, 
the  agency  to  bo  revocable  at  pleasure.  Held,  no  implied  au- 
thority to  the  agent  to  '-ind  the  company  /or  Llio  rent  of  an 
oflice  leased  by  him:  Brandcr  v.  (Juluviliia  Ins.  Co.,  2  Grant 
Cas.  470.  An  agent  for  an  insurance  conjpany  was  empowere:! 
merely  to  receive  written  applications  for  insurance,  to  transmit 
them  to  the  company,  and  if  they  decided  to  take  the  risk,  to 
receive  the  policy  executed  by  them,  and  to  issue  it  to  tlio  ap- 
plicant upon  receipt  from  him  of  the  premium.  IfcJiI,  not  (ho 
agent  of  the  company  for  the  making  of  applications;  and  i( 
employed  by  the  applicant,  or  permitted  to  act  for  him  in  draw- 
ing up  the  application,  ho  is  his  agent,  for  who.se  mistakes  of  fact 
conmitted  in  the  statements  or  answers  to  interrogatories  in  iho 
applications  he  is  responsible:  Wilson  v.  Conway  Fire  Lip..  Co.,  4 
R.  I.  141.  Three  tenants  in  common  were  erecting  a  building 
according  to  a  plan;  one  gave  a  power  of  attorney  to  his  agent, 
authorizing  him  to  "represent  the  principal's  interest  in  the  prop- 
erty, to  vote  as  to  the  administration  and  improvement,  and  to 
do  all  acts  relating  to  said  interest,  except  the  sale  or  hypotheca- 
tion thereof."  Held,  that  the  attorney  had  power  to  r.greo  to  a 
change  in  the  plan:  Ilastinga  v.  Hallecl;  13  Cal.  203.  Under 
a  power  authorizing  the  attorney  "to  superintend  my  real  and. 
personal  estate,  to  make  contracts,  and  generally  to  do  all 
things  that  concern  my  interest  in  any  way,  real  or  personal, 
whatever,"  etc.  Held,  that  the  attorney  was  empowered  to- 
make  a  contract  to  convey  real  estate,  and  therefore  to  make  a 
lease  with  a  right  to  purchase:  Dc  Ilutle  v.  Middrow,  IG  Cal.  505. 
A  person  having  engaged  an  architect  to  perform  the  usual 
labor  of  architects,  and  a  contractor  who  was  to  do  the  work 
and  furnish  the  materials,  placed  the  money  for  the  contrac- 
tor's pay  in  the  liands  of  the  architect,  to  be  paid  over  on  tho 
contractor's  order.  Held,  that  new  contractors  for  materials, 
dealing  with  tho  architect,  could  not  hold  tlio  principal:  Dnd^je 
v.  McDonnell,  14  Wis.  553.  A  power  of  attorney  gave  authority 
to  the  agent  to  sell  certain  lands  "  for  the  purpose  of  making 
actual  settlements  thereon,"  and  "  to  sign,  seal,  and  deliver  suf- 
ficient deeds,  conveying  the  land  in  fee-simple,  with  the  several 
covenants  and  a  general  warranty."  Held,  to  leave  it  to  the 
judgment  of  tho  attorney  to  determine  whether  the  purchasers 
buy  for  tho  purpose  specified  in  the  power,  and  if  there  is  no 
evidence  of  fraud  on  tho  part  of  the  purchaser  or  of  the  attorney, 
tho  conveyance  made  under  tho  power  will  bo  valid,  although  it 
should  afterwards  appear  that  the  land  was  purchased,  not  for 
Vol.  I. -6 


§57 


PllINCIPAL   AND    AGENT. 


82 


ih"  piirpr>5e  of  Bettlomont,  but  on  speculation:  Spofford  v.  ITohbs, 
29  Mc.  148;  48  Ani.  Dee.  521.  A  and  U,  partners,  gave  notice 
of  an  intended  distiolution  on  a  certain  day,  and  A  smd  C  gave 
notice  that  after  tluit  day  the  business  would  be  continued  by 
them.  In  the  mean  time  S.  sent  to  A  and  C  a  draft  drawn  by 
C,  payable  to  S.,  directing  thcni  to  place  it  to  his  credit,  and 
remit  the  proceeds.  A  and  13  received  the  letter,  and  i)laced 
tlie  amount  to  the  credit  of  S.  C  had  at  that  time  a  place  of 
business  in  A  and  B's  counting-room,  and  probably  bad  access 
to  their  l)ooks.  C  wrote  to  S.  that  tho  intended  partnership  wi\B 
deferred  to  enable  A  and  B  to  settle  their  concerns,  ''  and  that 
tho  same  attention  will  bo  paid  to  business  as  would  have  been 
by  the  intended  firm."  Soon  after  A  and  B  failed,  having 
made  no  remittances  to  S.  Held,  that  C  was  not  thereby  made 
tiio  agent  of  S.  to  see  that  A  and  B  made  such  remittance,  and 
that  lie  was  not  liable  to  S.  for  omitting  to  do  so:  Savage  v.  Merle,  5 
Pick.  83.  An  insurance  coripany  appointed  a  person  their  agent, 
and  gave  him  authority  to  receive  risks,  take  applications  and 
premiums,  and  premium  notes.  Held,  that  this  constituted 
him  general  agent  of  the  company,  for  the  transaction  of  that 
class  of  business,  and  that  bis  fraudulent  representations  relat- 
ing  to  procuring  insurance  and  premium  notes  bound  tho  com- 
pany: Derendorf  v.  Beardsley,  23  Barb.  65G.  The  owner  of  a 
line  of  stage-coaches  made  a  lease  of  the  coaches,  horses,  and 
stage  property  for  a  term  of  years,  the  lessee  undertaking  to 
carry  on  tho  business  at  his  own  risk  and  for  his  own  account, 
to  keep  all  the  property  in  repair,  and  to  replace  all  articles 
worn  out,  by  purchasing  others  in  the  name  of  the  lessor.  The 
lessee  accordingly  bought  harnesses  for  use  on  the  line,  on  his 
own  credit.  Held,  that  the  lessor  was  not  liable  for  the  price: 
Stiles  V.  Emerson,  17  Pick.  326.  A  sent  B  to  do  work  for  C, 
and  A's  book-keeper,  after  the  completion  of  the  work,  made 
out,  in  accordance  with  his  duty,  the  bill  therefor  on  one  of  A's 
printed  billheads,  which  he  placed  in  the  hands  of  B,  who  de- 
manded and  received  payment  for  the  work  from  C.  Upon  the 
billhead  was  printed  in  fine  type,  "All  moneys  to  bo  paid  to 
the  treasurer,  and  bills  to  be  receipted  by  him."  Held,  in  an 
action  by  A  against  C  to  recover  for  the  work,  that,  in  the  ab- 
sence of  evidence  that  C  saw  these  words,  there  was  evidence 
of  payment  to  go  to  the  jury:  Kinsman  v.  Kershaw,  119  Mass. 
140. 

§  57.  Authority  may  be  Implied. —  Therefore — as  to 
third  persons  —  the  authority  of  the  agent  need  not  be 
express,  but  may  be  implied  from  the  performance  with 
the  knowledge  of  the  principal  of  acts  of  a  similar  char- 


82 


83 


NATURE  AND  EXTENT  OF  AUTHORITY. 


§57 


.  Jlohhs, 
!  notice 

C  pavo 
UK'ti  by 
•invn  by 
lit,  and 

placed 
place  of 
I  access 
ihip  wr.8 
nd  that 
ive  been 

having 
jy  made 
ncc,  and 

lir  agent, 
ions  and 
istituted 
1  of  that 
)ns  rclat- 
the  com- 
ncr  of  a 
rscs,  and 
aking  to 
account, 
articles 
lor.    The 
ic,  on  his 
ic  price: 
Ik  for  C, 
k,  made 
ic  of  A's 
who  de- 
pon  the 
paid  to 
\ld,  in  an 
the  ab- 
vidcnce 
9  Mass. 


-as  to 

not  be 

Ice  with 

ir  char- 


acter.* The  presumption  is,  tliat  one  known  to  bo  an  agent 
is  acting  within  the  scope  of  his  authority.^  But  the  im- 
plied agency  extends  no  further  than  the  acts  of  u  like 
nature  to  those  acquiesced  in  by  the  principal.''  An  agent's 
authority  to  draw  checks  for  his  principal  will  be  presumed 
in  the  absence  of  counter-evidence,  where  the  proof 
shows  that  the  ngent  was  in  the  habit  of  signing  his 
principal's  name  Ic  checks,  which  was  permitted  by  hi3 
principal.*  Whero  a  person  i)ermits  another  to  assume 
the  apparent  ownership  or  right  of  disposing  of  property, 
it  will  be  presumed  that  the  apparent  authority  is  the  real 
authority.  "And  therefore,  it  may  be  laid  down  as  a 
general  rule  that  when  a  commodity  is  sent  in  such  a  way 
and  to  such  a  place  as  to  exhibit  an  apparent  purpose  of 
sale,  the  principal  will  be  bound  and  the  purchaser  will 
be  safe,  although  the  agent  may  have  acted  wrongfully 
and  against  his  orders  or  duty,  if  the  purchaser  has  no 
knowledge  thereof."**  Evidence  of  frequent  sales  by  one 
person,  of  the  property  of  another,  which  were  known  and 
not  objected  to,  is  competent  as  tending  to  show  that  they 
were  made  by  the  permission  of  the  owner,  and  his  knowl- 
edge of  such  sales  may,  in  the  absence  of  direct  evidence, 
be  infer  'ed  from  their  frequency  and   amount,  coupled 


'  Fricdlantler  v.  Cornell,  45  Tex.  585; 
Hazcltine  v.  Miller,  44  Me.  177;  Ed- 
wards V.  Tliomas,  CO  Mo.  4C8;  Cox  v. 
Hoffman,  4  Dev.  &  B.  180;  Thompson 
V.  Blauchar.l,  4  N.  Y.  303;  EJ-erton 
V.  Thomas,  U  N.  Y.  40.  "It  a  par- 
ticular mode  id  not  prescribed  by  the 
original  power,  that  which  t!io  agent 
may  adopt  the  principal  may,  l)y  ap- 
proving, sanctify,  and  give  to  it  eiia.d 
validity  us  if  it  had  made  a  part  of  the 
original  authority.  If,  in  consequence 
of  a  uotoriouj  agency,  the  agent  is  in 
t'ae  habit  of  drawing  bills,  and  the 
principal  in  the  habit  of  paying  them, 
this  is  such  <an  affirmance  of  hi.j  power 
to  draw  that  a  purchaser  of  his  bills 
has  a  right  to  expect  payment  of  them 


»  Brett  r.  Bassctt,  G3  low.i,  310. 

»Ciiidsey  V.  Porter,  21  Pa.  St.  390; 
Com;nLTci;d  Bank  v.  Norton.  1  11.11, 
501;  8trin';ha;n?\  Ins.  Co.,4  A'lb.  App. 
31^);  Plidadclp'.iiaetc.  II.  II  v  Weaver, 
31  Ml.  431 ;  Salem  Bank  v.  Clouce  .tcr 
Bank,  17  Mass.  1;  9  A:n.  Dee.  Ill; 
Wooil  V.  Mi;Caiu,  7  Ala.  SJO;  42  Am. 
Due.  {Jl'J.  0-10  who  has  scill  h:;j  ex- 
pres:i  Iniiinesj  cannot  bo  hel  I  ;i:i  ,wer- 
able  for  tlio  default  of  a:i  emj^jloyee 
truitc;!  uiuljr  the  belief  that  he  wiia 
actinjr  I'vir  s-.'.cli  former  owner;  Kicii  v. 
CranJiill,  1-12  Mass.  117. 

*C;oij  V.  People,  47  111.  152;  95 
Am.  Dec.  474. 

''  Story  on  Agency,  sec.  94;  Haze- 
well  V.  Coarsen,  45  N.  Y.  22;  Wliite 


by  the  principal,  and,  if  refused,  he  v.  Morg  .n,  42  Iowa,  113;  Doubled;iyw 
may  coerce  it":  Hooo  v.  Oxley,  1  Cress,  CJ  Barb.  181;  Pursley  v.  Mor- 
Wash.  (Va.)  19;  1  Am.  Dec.  425.  risen,  7  Ind.  356;  63  Am.  Dec.  424. 


8§  58,  59 


PRINCIPAL   AND   AGENT. 


84 


with  proof  of  nmplo  means  of  knowledge.*  In  an  action 
against  a  bailee  of  goods  for  not  delivering  them,  to  which 
the  defense  is,  that  ho  sent  them  to  the  plaintiffs  wife,  tho 
fact  that  tho  plaintiff  calls  his  wife  to  testify  that  she  never 
asked  that  they  might  be  sent  to  her  does  not  authorize 
the  inference  that  she  was  tho  plaintiff's  agent." 

Ilu'stratioxs.  —  Action  for  wood  Bold  to  A.  Tho  plaintifll 
Bold  the  wood  in  question  to  li,  who  was  then  engaged  in  man- 
ufacturing bricks  for  A  under  a  written  ngreenient,  by  which 
A  was  to  furnish  all  necessary  materials  for  making  tho  bricks, 
except  tho  clay;  tho  wood  was  delivered  at  tho  hrick-yard  oc- 
cupied by  B,  and  there  used  by  him  in  making  the  bricks  for 
A;  A  frequently  visited  tho  yard  while  tho  wood  was  being  so 
used,  and  in  fact  sold  a  part  of  the  bricks  after  they  luid  heon 
manufactured.  Held,  that  this  evidence  would  justify  a  finding 
for  the  plaintiff:  Emerson  v.  Patch,  123  Mass.  541.  Tho  plain- 
tiff entered  the  oflico  of  a  company  owning  a  line  of  foreign 
Bteaniors  and  dealing  in  foreign  drafts,  and  gave  a  sum  of  money 
in  bills  to  bo  exchanged  for  gold  to  a  person  there,  who,  deposit- 
ing ii  in  a  drawer  of  a  safe  that  contained  other  bills  ami  also 
gold,  and  making  an  entry  in  a  book,  gave  a  receipt  for  tho 
money  as  money  to  bo  exchanged  for  gold.  Held,  evidence 
Buflicient  to  be  submitted  to  the  jury  upon  account  for  money 
had  and  received  to  the  plaintiff's  use:  Newman  v.  British  and 
North  American  Steamship  Co.,  113  Mass.  362. 

§  58.  Authority  is  Restricted  to  Character  in  Which 
It  is  Given. — The  authority  is  always  restricted  to  tho 
character  in  which  it  is  given.  Thus  an  authority  to 
bind  another  in  his  representative  character  gives  no 
authority  to  bind  him  personally;^  a  power  generally 
gives  only  authority  to  act  in  tho  separate  individual 
business  of  the  principal.* 

§  59.  Acts  must  be  for  Principal's  Benefit. — A  general 
agent  has  no  authority  to  do  acts  not  for  the  benefit  of 
the  principal.* 


'  Bragg  V.  Boston  and  Worcester  R. 
R.,  9  Allen,  54. 

^Jenkins  v.  Bacon,  111  Mass.  337; 
15  Am.  Rop.  33. 

^  Evans  on  Agency,  111. 


*  Stainback  v.  Read,  11  Gratt.  281; 
62  Am.  Dec.  648. 

*  Staincr  v.  Tysen,  3  Hill,  279;  Stain- 
back  V.  Read,  11  Gratt.  281;  62  Am. 
Dec.  648;  Debouchet  v.  Goldsmith,  5 


85 


NATURE   AND   EXTENT   OP  AUTIIOUITY. 


60 


Illustrations.  —  A  general  Bupcrin^ondcnt  of  an  express 
company  had  general  uuthority  to  employ  and  discharge  agents, 
to  make  contraets,  and  exercise  a  general  supervision  ovrr  tlio 
hunint'ss  of  the  company.  JFrhl,  tliat  he  had  no  authority  to 
license  another  to  carry  on  a  husiness  in  competition  with  and 
injurious  to  the  express  company:  Adamn^a  Express  Co.  v.  Trego, 
35  Md.  47. 

§  60.    Construction  of  Agent's  Authority— In  General. 

—  As  to  tho  construction  of  an  agent's  authority  where  it 
irt  conferred  by  a  formal  instrument,  two  rules  liavo  been 
laid  down  by  Mr.  Evans  *  as  important:  1.  Tho  moaning 
of  general  words  in  an  instrument  will  bo  restricted  by 
the  context  and  construed  accordingly;^  2.  Tho  authority 
will  bo  construed  strictly  so  as  to  cxcludo  tho  exercise  of 
any  power  not  warranted  by  tho  actual  terms  thereof  or 
us  a  necessary  means  of  executing  tho  authority  with 
effect.*  A  written  authority  given  to  an  agent,  which  is 
ambiguous  and  capable  of  difl'crcnt  meanings,  will  be 
construed  in  favor  of  innocent  third  parties  dealing  with 
tho  agent  on  their  interpretation  of  the  autiiority.*     But 


Vcj.  211;  Stewart  v.  Woodward,  50 
\'c.  78;  "j:)  Am.  Rep.  488;  Wheeler  and 
Wihon  Mfg.  Co.  r.  Swan,  G5  Mo.  89; 
Lo::il)ar.l  r.  Winslow,  1  Kerr,  327; 
Do:'.:i  V.  King,  22  Ohio  St.  119;  Cal- 
hoiiu  r.  Thoinpaon,  50  Ala.  lUO;  28 
Ai:i.  Hep.  754.  An  authority  to 
draw,  i:ulorso,  and  accept  bills,  and 
nia'.L'j  aiul  indorse  notes,  <lous  not 
authorize  the  a'jent  to  draw  a  bill  for 
ill)  bon-'lit  in  the  principal's  name: 
North  Iliver  Bank  v.  Ayuier,  3  Hill. 
"J'J.  Nor  does  such  an  authority 
authorizj  the  agent  to  draw  and 
iiulcr.io  accommodation  notes  for  tho 
bjiiolit  of  third  persons:  Wallace  v. 
B.'a!ic'.i  Bank,  1  Ala.  5G5;  Gulick  v. 
(JiovLT.  33  N.  J.  L.  4G3;  97  Am.  Dec. 
72S;  Nordi  River  Bank  v.  Aymc, 
3  Hill,  2(i2.  An  authority  to  sell  per- 
gonal property  does  not  autliorizo  tho 
agent  to  Kell  or  pledge  it  to  his  own 
creditor  for  his  own  debt:  Stewart  v. 
Wdodwarii,  50  Vt.  78;  28  Am.  Rep. 
483;  Parsons  v.  Webb,  8  Me.  38;  22 
Am.  Dec.  220;  Holtoa  v.  Smith,  7 
N.  II.  44'J;  Victor  Machine  Co.  v. 
licller.  44  Wis.  205. 


'  Evans  on  Agency,  204. 

»  See  Geger  v.  Bollcs,  1  Thomp.  &  C. 
129;  Billings  v.  Morrow,  7  Cal.  171; 
08  Am.  Dec.  235;  Holstingcr  r.  N.it. 
Bank,  0  Abh.  Pr.,  N.  S.,  298;  Taylor 
V.  Harlow,  11  Barb.  235. 

*  See  Do  Rutte  v.  Muldrow,  10  Cal, 
505;  Berry  r.  Harriage,  39  Tex.  038; 
Nash  V.  Mitchell,  71  N.  Y.  199;  27 
Am.  Rep.  38;  Mills  r.  Carnly,  1  Bo.sw. 
104;  Wood  V.  Goodridgo,  0  Ciish.  117; 
52  Am.  Dec.  771.  Thus  a  power  to 
represent  the  principal's  intcre.st.s  in  a 
certain  locality  gives  no  right  to  tho 
agent  to  embark  in  a  new  and  diffi-rent 
business:  Campbell  v.  Hastings,  29 
Ark.  512.  But  a  power  to  "bargain 
and  sell,  grant,  release,  and  convey," 
silent  as  to  what  property,  will  bo 
construed  to  authorize  the  agent  to 
sell  and  convey  whatever  estate  tho 
grantor  then  owned:  Marr  v.  Given, 
23  Me.  55;  39  Am.  Dec.  COO. 

*  De  Tastal  v.  Cronsillet,  2  Wash. 
C.  C.  (32;  Loraine  v.  Cartwright,  3 
Wash.  C.  C.  151;  Cancier  v.  Kittcr,  4 
Wash.  C.  C.  551;  Mattocks  v.  Young, 
6C  Me.  459. 


GO 


PRINCIPAL  AND  AGENT. 


86 


where  the  instructions  are  clear,  the  agent  cannot  depart 
from  them.*  Where  the  authority  is  conferred  by  an  in- 
formal writing  or  arises  by  implication,  the  rules  are,^ — 1. 
The  writing  will  be  construed  so  as  to  give  authority  to 
do  only  such  acts  as  are  within  the  scope  of  the  matter  tc 
which  it  refers;  2.  When  the  authority  is  implied,  it  will 
include  all  the  necessary  and  usual  means  of  executing  it, 
and  all  the  means  justified  by  the  usages  of  trade.^ 

The  power  to  employ  all  the  usual  and  necessary  means 
to  execute  the  authority  with  efiect  is  an  incident  of  every 
agency.*     The  authority  of  the  agent  may  be  enlarged  or 


'  Cameron  v.  Durkheim,  55  N.  Y. 
425;  Corbott  v.  Underwood,  83  111. 
324;  25  Am.  Rep.  392;  Marficld  v. 
Douglas,  1  Sand.  360;  Bertram  v.  God- 
frey, 1  Knapp,  381;  Wanless  v.  Mc- 
Candless,  38  Iowa,  20;  Stollenwerck 
V.  Thacher,  115  Mass.  224;  Bliss  v. 
Clark,  IG  Gray,  60;  Bostock  v.  Jar- 
dine,  3  Hurl.  &  C.  700;  Baxter  v.  La- 
mont,  60111.  237;  Craighead  v.  Peter- 
son, 72  N.  Y.  279;  28  Am.  Rep.  150. 
Thus  an  agent  employed  to  hid  for  one 
tract  of  land  has  no  authority  to  bid 
for  another  and  diflferent  tract:  Brown 
V.  Johnson,  12  Smedes  &  M.  398;  51 
Am.  Dec.  118.  An  agent  authorized 
to  draw  a  bill  of  exchange  in  his  own 
name  cannot  draw  in  the  name  of  his 
principal:  Bank  of  Deer  Lodge  v.  Hope 
Mining  Co.,  3  Mont.  140;  35  Am.  Rep. 
458. 

*  Evans  on  Agency,  215. 

*  Benjamin  v.  Benjamin,  15  Conn. 
347;  39  Am.  Dec.  385;  Lawson  on 
Usages  and  Customs,  sees.  143  et 
eeq. 

*  Story  V.  Stewart,  9  Heisk.  137; 
Franklin  v.  Eze'l,  1  Sneed,  497;  Mc- 
Alpin  V.  Caasidy,  17  Tex.  449;  Farrar 
V.  Duncan,  29  La.  Ann.  126;  MerricL: 
r.  Wagner,  44  111.  206;  Brickenbeckei  v. 
Lowell,  32  Barb.  9;  Minor  v.  Mechan- 
ics' Bank,  I  Pet.  46;  Ahem  v.  Good- 
speed,  72  N.  Y.  108;  McBean  v.  Fox, 
1  Bradf.  177;  Peck  v.  Harriott,  G  Serg. 
&  11.  140;  9  Am.  Dec.  415;  Spraguo  v. 
Gulett,  9  Met.  91 ;  Fowler  v.  Bledsoe, 
8  Humph.  509;  Barns  v.  City  of  Han- 
nibal, 71  Mo.  449;  Lovejoy  v.  Middlesex 
R.  R.  Co.,  128  Mass.  480;  TarkhUl  v. 


Imlay,15  Wend.  431;  Leolardr.  Graves, 
3  Caines,  226;  Drummondr.  Words,  2 
Caiues,  360;  Forrester  v.  Boardman,  1 
Story,  43;  Harter  v.  Blanchard,  64 
Barb.  017;  Williams  v.  Getty,  31  Pa. 
St.  461;  72  Am.  Dec.  757;  Dawson 
V.  Granby,  2  Pick.  345;  Anderson  v. 
Coonelv,  21  Wend.  279;  William-.  <r. 
Seltz,  31  Pa.  St.  464;  72  Am.  Dec. 
757;  Tucker  v.  Woolsey,  64  Barb. 
142.  An  authority  given  to  an  agent 
to  transact  business  for  him  in  a  for- 
eign country  empowers  him  lo  transact 
it  according  to  the  forms  and  laws  of 
that  country:  Owings  v.  Hull.  9  Pet. 
607.  An  agent  to  travel  and  sell  steam- 
engines  has  implied  authority  to  hire 
horses:  Huntley  v.  Mathias,  90  N.  C. 
101;  42  Am.  Rep.  517.  A  traveling 
salesman  and  collective  agent  of  a  city 
house  hired  horses  and  carriages  in  the 
country  for  use  in  his  employers'  busi- 
ness, upon  their  credit.  He  neglected 
to  pay  for  them,  although  he  was  pro- 
vided with  money  to  do  so.  Hdd, 
that  the  principals  were  liable:  Bent- 
ley  r.  Doggett,  51  Wis.  224;  37  Am. 
Rep.  827.  "There  can  b^d  no  ques- 
tion," said  Taylor,  J.,  "that  from  the 
nature  of  the  business  required  to  be 
done  by  their  agent,  the  defendants 
held  out  to  those  who  might  have  oc- 
casion to  deal  with  him  that  he  had 
the  right  to  contract  for  the  use  of 
teams  and  carria/r'^^j  necessary  and  con- 
venient for  doing  such  business,  in  the 
name  of  his  principals,  if  he  saw  fit, 
in  the  way  such  service  is  usually  con- 
tracted for;  and  we  may  perhaps  take 
judicial  notice  that  sucli  service  is  uau- 


86 


87 


NATURE  AND  EXTENT  OP  AUTHORITY. 


§61 


narrowed  by  the  custom  of  the  country,  or  the  usages  of  the 
particular  trade  or  business  in  which  ho  acts.*  An  agent 
may  be  justified  under  extraordinary  circumstances  in  as- 
suming extraordinary  powers,  and  his  ac's,  fairly  done, 
will  bind  his  principal.'' 

§  61.    What  Acts  are  or  are  not  within  Particular 
Phrases— "Accountable"— "All  Matters"  — "Attend  to 


ally  contracted  for,  payment  to  be 
made  after  the  service  ia  performed. 
It  would  seem  to  follow  that,  as  the 
agent  had  the  power  to  bind  his  prin- 
cipal by  a  contract  for  such  service,  to 
be  paid  for  in  the  usual  way,  if  he  ne- 
glects or  refuses  to  pay  for  the  same 
after  the  service  is  performed  the 
principals  must  pay.  The  fault  of  the 
agent,  in  not  paying  out  of  the  money 
of  his  principals  in  his  hands,  cannot 
deprive  the  party  furnishing  the  ser- 
vice of  the  right  to  enforce  the  contract 
against  them,  he  being  ignorant  of  the 
restricted  authority  of  the  agent.  If 
the  party  furnishing  the  service  knew 
that  the  agent  had  been  furnished  by 
his  principal  with  the  money  to  pay 
for  the  service,  and  had  been  forbidden 
to  pledge  the  credit  of  his  principals 
for  such  service,  he  would  be  in  a  dif- 
ferent position.  Under  such  circum- 
stances, if  he  furnished  the  service  to 
the  agent,  he  would  be  held  to  have 
furnished  it  upon  the  sole  credit  of  the 
agent,  and  he  would  be  compelled  to 
look  to  '.  agent  alone  for  his  pay. 
We  think  the  rule  above  stated  as 
governing  the  case  is  fully  sustained 
by  the  fundamental  principles  of  law, 
which  govern  and  limit  the  powers  of 
agents  to  bind  their  principals  when 
dealing  with  third  persons.  Judge 
iStory  in  his  work  on  agency,  section 
127,  says:  '  'ihe  principal  is  bound  by 
all  acts  of  his  agent  within  the  scope 
of  the  authority  which  he  hoi  Is  him 
out  to  the  world  to  possess,  although 
he  may  have  given  him  more  limited, 
private  instructions  unknown  to  the 
persons  dealing  with  him.'  In  section 
133,  he  says:  'So  far  as  an  agent, 
whether  he  is  a  general  or  special 
agent,  is  in  any  case  held  out  to  the 
public  at  large,  or  to  third  persons 
dealing  with  him,  as  competent  to  con- 
tract for  and  bind  the  principal,  the 


latter  will  be  bound  by  the  acts  of  the 
agent,  notwithstanding  he  may  have 
deviated  from  his  secret  instructions.' 
And  again,  in  section  73,  in  speaking 
of  the  power  of  an  agent  acting  under 
a  written  authority,  ho  says:  '  la 
each  case  the  agent  ia  apparently 
clothed  with  full  authority  to  use  all 
such  usual  and  appropriate  means, 
unless  upon  the  face  of  the  instrument 
a  more  restrictive  authority  is  given, 
or  must  bo  inferred  to  exist.  In  each 
case,  therefore,  as  to  third  persons 
innocently  dealing  with  his  agent, 
the  principal  ought  equally  to  be 
bound  by  acts  of  the  agent  executing 
such  authority  by  any  of  those  means, 
although  he  may  have  given  to  the 
agent  separate,  private,  and  secret  in- 
structions of  a  more  limited  nature,  or 
the  agent  may  '?i  secretly  acting  in 
violation  of  his  duty.'  In  the  case  of 
Pickering  v.  Busk,  15  East,  38,  43, 
Lord.  Ellenborough,  speaking  of  the 
power  of  an  agent  to  bind  his  princi- 

Eal,  says:  'it  is  clear  that  he  may 
ind  his  principal,  within  the  limits  of 
the  authority  with  which  he  Las  been 
apparently  clothed  by  the  principal  ia 
respect  to  the  subject-matter,  and 
there  would  be  no  safety  in  mercantile 
transactions  if  he  could  not.'  Tlicse 
general  principles  have  been  illustrated 
and  applied  by  this  and  other  courts  in 
tin  following  cases:  Young  v.  Wright, 
4  Wis.  144;  Go  Am.  Dec.  303;  Whitney 
V.  State  Bank,  7  Wis.  020;  Long  v.  Ful- 
ler, 21  Wis.  121;  Houghton  v.  First 
National  Bank,  2G  Wis.  003;  7  Am. 
R^p.  107;  Kasson  v.  Noltner,  43  Wis. 
040;  Smith  v.  Tracy,  30  N.  Y.  7'J; 
Andrews  v.  Knccland,  0  Cow.  .IW." 

'  Lawoon  on  Usages  and  Customs, 
sees.  143  ct  seq. 

"  Foster  v.  Smith,  2  Cold.  474;  88 
Au).  Dec.  G04. 


§61 


VRINCIPAL   AND   AGENT. 


88 


Business  "  —  "  Borrow  "  —  "  Business  and  Financial 
Agent"— "Buy  and  Sell"— "Canvass"— "Cost"— "Cite 
and  Appear" — "Claims  and  Effects." — Where  W.,  as 
agent  for  A.,  sold,  but  did  not  transfer,  bank  stock  to  C, 
and  promised  C.  to  "be  accountable  for  such  dividends  as 
he  or  his  agent  should  receive"  before  transfer,  it  was  hold 
that  he  thereby  became  C.'s  agent  to  receive  such  divi- 
dends.* Where  the  owners  of  a  certain  tannery  appointed 
an  agent  to  act  for  them  in  "all  matters  and  busluuss  relat- 
ing to  the  tannery,"  it  was  held  that  he  was  not  thereby 
authorized  to  bind  his  principals  as  receiptors  to  an 
officer  for  horses,  etc.,  used  in  the  tannery,  which  had 
been  attached  as  the  property  of  a  third  person.^  Power 
to  "attend  to  business"  of  the  principal  does  not  authorize 
the  agent  to  sell  real  or  personal  property,  except  to  carry 
on  the  principal's  business;"  nor  does  a  power  to  "act  in 
all  my  business  as  if  I  were  present."*  An  authority  to 
"borrow"  includes  authority  to  give  the  lender  securities 
for  the  sum  borrowed.^  An  authority  to  act  as  the 
"business  and  financial  agent"  of  a  corporation  does  not 
authorize  the  execution  by  him  of  a  mortgage  on  a  loco- 
motive belonging  to  the  corporation.*  Where  a  person 
authorized  another  to  "buy  and  sell"  negroes  for  him,  it 
was  held  that  this  was  a  general  authority,  and  that  the 
agent  had  a  right  to  buy  for  cash  or  on  credit,  at  his  dis- 
cretion.' Authority  to  "canvass"  for  the  sale  of  sewing- 
machines  does  not  per  se  confer  on  the  agent  power  to 
bind  his  principal  by  buying  or  hiring  a  horse  to  aid  in 
carrying  on  the  business.  Nor  would  a  ratification  by 
the  principal  be  presumed  from  his  acceptance  of  the 
profits  of  the  services,  unless  he  had  knowledge  of  the 
sources    and    circumstances   thereof.*    An    authority   to 


'  Cropper  ^^  Adams,  8  Pick.  40. 

•■'  Weaton  r.  Alley,  49  Me.  94. 

»  Coquillard  v.  French,  19  Ind.  274. 

♦  Ashley    v.   Bird,    1    Mo.    G40;    14 
Am.  Dec.  .313. 

*  Hatch  V.  Coddington,  95  U.  S.  48. 


*  Luse  V.  Isthmus  Transit  R.  R.  Co. , 
6  Or.  125;  25  Am.  Rjp.  506. 

'  Ruffiu  I'.  Mebaue,  0  Ired.  Eq.  507. 

*  Howo  Machine  Co.  t'.  Ashley,  fiO 
Ala.  496. 


89 


NATURE   AND   EXTENT   OF   AUTHORITY. 


G2 


sell  for  '•'cash"  means  that  the  money  must  be  paid  when 
the  title  passes.*  An  authority  to  buy  for  cash  will  not 
sustain  a  purchase  on  credit."  A  power  of  attorney  which 
gives  tho  agent  the  authority  "to  cite  and  appear"  must 
bo  construed  as  conferring  upon  the  agent  tho  power  to 
prosecute  and  defend  suits  which  may  be  brought  by  or 
against  his  principal.  A  sale  of  property  under  a  judicial 
proceeding  carried  on  contradictorily  with  tho  agent 
who  holds  such  a  power  of  attorney  is  not  therefore  void 
for  want  of  authority  in  the  agent  to  represent  his  prin- 
cipal in  the  litigation.^  A  power  to  seU  "claims  and 
clFccts"  does  not  include  lands.'* 


§  62.  Particular  Powers  (Contimied)—" Collect"— 
"Deliver" — "Deposit" — "Draw,  Indorse,  and  Accept  Bills" 
—  "Execute" — "Give  Discharges" — "Eire" — "Indorse." 

— A  power  to  "collect  debts"  gives  authority  to  sue,  issuo 
execution,  and  direct  the  seizure  of  property;^  but  it  gives 
no  authority  to  releaso  them  without  payment."  He  may 
attach  the  debtor's  property/  or  (where  imprisonment 
for  debt  is  permitted)  arrest  him.®  An  agent  to  collect  a 
note  has  no  authority  to  sell  it,"  or  barter  tho  note  for 
negotiable  paper  or  real  property.*"  A  power  to  collect  a 
debt  gives  no  right  to  accept  negotiable  paper  in  payment 
or  as  collateral  security,"  nor  to  extend  the  time  of  pay- 


Iq.  507. 
Icy,  GO 


'  A  a>itliorizeil  B  to  sell  property  for 
cash.  B  on  tl)c  sale  took  a  check  pay- 
able the  next  tiny.  Ilehl,  not  withia 
\\\i  authority:  Hall  v.  Storrs,  7  Wis. 

-  Stodilard  v.  Mcllwain,  7  Rich.  525. 

"  Miller?;.  Marmiche,  24 La.  Ann.  30. 

*  Cordova  V.  Knowles,  37  Tex.  19. 

^  Joycj  V.  Duplessis,  15  La.  Ann. 
2f2;  77  Am.  Dec.  185;  Boyd  v.  Cor- 
ktt,  ?>1  .Mich.  52;  Bush  r.  Miller,  13 
Cirl).  4SI;  McMiiin  v.  Richtnieyer,  3 
Ilill.  2;5!;;  Hushlield  v.  Landman,  3 
E.  1).  Smith,  208;  Scott  v.  Elendorff, 
IJ  Joh'ia.  317. 

"^Mi-lvin  V.  Lamar  Lis.  Co.,  80  111. 
41;i;  22  Am.  Rtp.  199;  Henin;^  v. 
lloUcadorf,  74  N.  C.  588;   McIIany 


V.  Schenck,  88  111.  357;  Chilton  v. 
WiUford,  2  Wia.  1 ;  (30  Am.  Due.  ."99. 

'  Trento'i  Banking  Co.  v.  Ilavcr- 
stick,  11  N.  J.  L.  171;  Fairbanks  v. 
Stanley,  18  Mc.  2%. 

"  See  Stewart  i:  Biihllecnm,  2  N.  Y. 
103;  Gorha  n  v.  Gale,  7  Cow.  730;  17 
Am.  Dec.  549;  Erwiu  i\  Blake,  8  Pet. 
18. 

®  Rodgers  ?•.  Bass,  40  Tex.  505;  Haya 
V.  Lynn,  7  Watts,  524. 

^^  Smith  V.  John.'io:!,  71  Mo.  .^82. 

"  Wdoy  c.  Manhoo.l,  10  W.  Va.  20G; 
McCulloch  V.  McKce,  10  Pa.  St.  289; 
Matthews  v.  Hamilton,  23  111.  470; 
Corning  v.  Strong,  1  Inil.  327;  Ilazel- 
tino  V.  Milli,r,  44  Mo.  117;  Scoby  v. 
Branch,  59  Tcna.  GG. 


E^ 


§62 


PRINCIPAL  AND  AGENT. 


90 


ment,'  nor  to  take  property  instead  of  money .^  An  agent 
who  has  authority  to  collect  for  his  principal  a  note  pay- 
able in  money  cannot,  by  taking  without  authority  notes 
or  claims  on  a  third  party  in  payment,  discharge  the 
debtor.'  An  authority  to  carry  on  mills  for  the  owner, 
to  permit  parties  to  cut  timber  on  his  land  and  to  "col- 
lect" the  stumpage  therefor,  and  to  claim  indemnity  from 
trespassers,  does  not  imply  an  authority  in  the  agent  to 
embark  his  principal  in  lumbering  operations,  by  which 
ho  would  bo  obligated  to  pay  large  sums  of  money.*  Au- 
thority to  an  agent  in  general  terms  to  collect  or  secure  a 
claim  of  the  principal  is  not  an  authority  to  purchase  for 
the  principal  the  property  of  the  debtor  to  secure  the  claim. 
Such  i:)urchase  is  not  the  natural  or  usual  means  of  secur- 
ing the  debt.''  Securities  being  placed  in  the  hands  of  the 
agent  of  the  complainants  for  collection  merely,  he  has  no 
authority  to  bind  the  complainants  by  a  contract  to  as- 
sign the  securities  to  their  own  prejudice,  or  to  the  preju- 
dice of  their  assignors,  who  have  guaranteed  the  payment 
of  the  mortgage  debt."  An  attorney  holding  a  note  for 
collection  cannot  confer  title  by  indorsement  in  the  own- 
er's name,  and  delivery  without  the  owner's  consent,  even 
to  an  innocent  purchaser.^  One  who  employs  a  firm  of 
collecting  agents  in  response  to  an  advertising  card,  in 
which  they  announce  that  they  will  treat  his  debtors 
"with  delicacy,  so  as  not  to  offend  them,  or  with  such 
severity  as  to  show  that  no  trifling  is  intended,"  giving 


iRitch  V.  Smith,  82  N.  Y.  G27; 
Hutchiugs  V.  Mirigor,  41  N.  Y.  1C5. 

^Eiriiluirb  r.  Robinson,  10  Iiid.  8; 
Taylor  v.  Robinson,  liCal.  .300;  Ward 
V.  Evans,  2  LI.  Raym.  928;  Kirk  v. 
Hoatli,  2  Ind.  .",22;  Giayilon  v.  Pat- 
er.5o:i,  i:J  Iowa,  2oC>;  81  Am.  Dec.  432; 
Aulturan  ?'.  Leo,  411  Iowa,  404  (but 
6C0  Oliver  r.  Sterling,  20  Ohio  St.  3!)1); 
Wa^d  I'.  S'.nitli,  7  Wall.  451;  Rodgcrs 
V.  Bass,  'I'o  Tex.  505;  Lumpkin  r.  Wil- 
son, 5  Heisk.  555;  Martin  v.  United 
States,  2  T.  B.  Men.  80;  15  Am.  Dec. 


129,  where  it  was  said:  "Wo  know  of 
no  law  which  authorized  the  collector 
of  the  United  States  to  commute,  for 
whisky,  obligations  to  secure  its  reve- 
nue." 

»  Spence  v.  Rose,  28  W.  Va.  333. 

*  Hazeltine  v.  Miller,  44  Mc.  177. 

»  Taylor  v.  Robinson,  14  Cal.  39G. 

"  Stonington  Savings  Bank  v.  Davis, 
14  N.  J.  Eq.  286. 

'  Quigley  v.  Mexican  Southern  Bank, 
80  Mo.  289;  50  Am.  Rop.  503. 


a 
a 


91 


NATURE  AND  EXTENT  OF  AUTHORITY. 


8  62 


no  special  instructions,  authorizes  them  to  use  such 
means  as  they  see  fit  to  adopt  in  the  prosecution  of  his 
business  for  his  benefit,  and  is  responsible  therefor.^ 
Where  books  and  accounts  are  placed  in  the  agent's 
hands  "for  settlement,"  he  has  no  right  to  assign  them  to 
a  surety  of  the  principal  for  his  indemnity,"  nor  has  an 
agent  authorized  to  collect  a  debt.^  An  authority  to  "col- 
lect interest"  gives  no  authority  to  collect  the  principal.* 
The  employment  of  an  agent  to  "deliver  all  freights" 
necessarily  includes  the  authority  to  make  terms  in  re- 
gard to  the  delivery.®  An  agent  to  "deposit"  money  for 
another  in  a  savings  bank  is  not  authorized  to  receive  a 
debt  due  the  depositor.®  An  authority  to  "draw,  indorse, 
and  accept"  bills,  and  to  make  and  indorse  notes  nego- 
tiable r.t  ^  particular  bank  in  the  name  of  the  principal, 
does  not  authorize  the  agent  to  draw  a  bill  in  the  joint 
name  of  himself  and  his  principal,'  nor  to  draw  a  bill  in 
the  name  of  his  principal  on  a  person  having  no  funds  of 
the  principal  in  his  hands,^  or  to  overdraw  his  principal's 
account  at  a  bank.®  An  authority  given  by  several  to  in- 
dorse their  names  on  a  bill  drawn  in  favor  of  one  does 
not  warrant  several  and  successive  indorsements,  but  only 
a  joint  indorsement  of  and  for  them  all.^"  Where  a  com- 
pany authorized  an  agent  to  "execute  a  bond  and  bind 
their  real  estate,"  it  was  held  that  this  did  not  authorize 
him  to  pledge  personalty."  A  power  of  attorney  to  an 
agent  "to  grant,  bargain,  and  sell  land,  or  my  part  or 
parcel  thereof,  for  such  sum  or  price  and  on  such  terms 


I. 


^  Caswell  V.  Cross,  120  Mass.  545. 
«  Wood  V.  McCain,  7  Ala.  800;  42 
Am.  Dec.  612. 

*  Texada  v.  Beaman,  6  La.  84;  23 
Am.  Dec.  204. 

*  Smith  V.  Kidd,  68  N.  Y.  130;  23 
Am.  Rep.  157;  Doubcday  v.  Kress, 
59  N.  Y.  410;  10  Am.  Rep.  502;  Brew- 
ster V.  Carnes,  103  N.  Y.  550. 

*  Michigan  S.  etc.  R.  R.  Co.  v.  Day, 
20  111.  375;  71  Am.  Dec.  278. 


^  Butman  v.  Bacon,  8  Allen,  25. 

'  Stainback  v.  Read,  11  Gratt.  251; 
62  Am.  Dec.  018. 

8  Stainback  v.  Read,  11  Gratt.  281; 
02  Am.  Dec.  048;  Cragnead  v.  Piter- 
son,  10  Hun,  596. 

"Union  Bank  v.  Mott,  39  Barb. 
180. 

'0  Bank  of  United  St.  '-cs  v.  Beirne,  1 
Gratt.  234;  42  Am.  Deo.  551. 

"  Ravenel  v.  Lyles,  Spear  Eq.  281. 


§C3 


PRINCIPAL  AND  AGENT. 


92 


as  to  hira  shall  seem  meet,  and  for  me  and  in  my  name  to 
make,  execute,  acknowledge,  and  deliver  good  and  suffi- 
cient deeds  and  conveyances  for  the  same  with  or  with- 
out covenants  and  warranty,"  authorizes  him  to  sell  on 
reasonable  credit,  to  receive  the  purchase-money,  to  sell 
for  other  consideration  than  money,  and  to  sell  an  undi- 
vided interest.*  But  one  empowering  him,  among  other 
things,  "to  buy  and  sell  real  estate,  and  in  my  name  to  re- 
ceive and  execute  all  necessary  contracts  and  conveyances 
therefor,"  does  not  authorize  such  attorney  to  sell  and  con- 
vey lands  to  which,  as  the  proper  record  shows,  the  prin- 
cipal has  acquired  title  before  the  execution  of  the  power." 
An  attorney  authorized,  upon  the  receipt  of  certain  debts 
secured  by  a  mortgage,  to  "give  discharges,"  can  give 
such  acquittances  only  upon  the  receipt  of  the  sum  due; 
he  cannot  enter  into  any  speculations  by  which  the  value 
of  the  security  may  perhaps  be  enhanced.*  Authority  given 
by  a  father  to  a  son  to  "hire"  a  farm-laborer  authorizes  a 
contract  for  a  term  of  two  months.*  A  power  of  attorney 
to  one  to  sign  and  "indorse"  notes  for  him  and  in  his 
name  at  a  bank  gives  the  latter  authority  to  sign  and  in- 
dorse any  note  payable  at  and  due  to  that  bank,  and  no 
other.^ 

§63.  Particular  Powers  (Continued) — "Invest"  — 
"Lands"— "Lay  out "  —  " Loan "  —  " Make  Deeds  and 
Sales  "  —  "  Manage  "  —  "  Mortgage  "  —  "  Obtain  Securi- 
ties" —  "Place  "  —  "Procure  a  Purchaser." — A  power  to 
"invest"  money  and  look  after  one's  business  does  not 
authorize  an  agent  to  sell  a  principal's  property.^  Where 
a  power  of  attorney  to  invest  money  authorizes  the  agent 
to  use  the  principal's  signature  and  seal,  when  proper,  in 

1  Carson  v.  Smith,  5  Minn.  78;  77  *  Decker  v.    Hasael,  26  How.   Pr. 

Am.  Dec.  539.  528. 

3  Grevc  v.  Coffin,  14  Minn.  345;  100  ^  Morrison  v.  Taylor,  6  T.  B.  Men. 

Am.  Dec.  230.  82. 

3  Chilton  V.  Willford,  2  Wis.  1;  60  «  Smith    v.   Stephenson,    45    Iowa, 

Am.  Dec.  399.  645. 


93 


NATURE  AND  EXTENT  OP  AUTHORITY. 


63 


transacting  the  principal's  business,  the  agent  may,  on 
payment  of  a  loan  of  his  principal's  money,  reassign  a  bond 
assigned  as  collateral  security  therefor.^  A  power  to  convey 
"lands"  has  been  construed  to  relate  to  after-acquired 
lauds.''  Where  the  principal  agent  of  a  company  was  prima- 
rily employed  "  to  lay  out  the  grounds  of  a  company  in 
order  to  dispose  of  them,"  it  was  held  that  he  had  authority 
to  lay  out  and  dedicate  for  highways  land  of  the  company.' 
Where  a  woman  made  her  husband  her  agent  to  lease 
her  lands,  it  was  held  that  she  was  not  bound  by  his  at- 
tempt to  subject  the  rents  to  a  lien  for  agricultural  sup- 
plies advanced  to  the  tenant,  the  lienor  believing  the 
land  to  belong  to  the  husband,  but  she  having  done  noth- 
ing to  foster  the  belief.'*  An  authority  to  make  a  "loan" 
gives  no  authority  to  receive  payment  of  the  note  given 
for  the  money  loaned,®  or  to  collect  generally .*  An  agent 
having  a  principal's  money,  to  "loan,  manage,  and  collect" 
as  he  deems  best,  has  authority  to  make  an  agreement  for 
the  extension  of  the  time  of  payment.^  An  authority  sim- 
ply to  loan  money,  and  take  security  for  the  payment, 
does  not  imply  a  power  to  collect.*  A  power  of  attorney 
to  make  "all  such  deeds  of  conveyance  and  of  partition 
to  such  lands  as  I  am  entitled  to  "  authorizes  a  deed  of 
sale  as  well  as  a  deed  of  partition.®  A  power  to  "make 
and  execute  conveyances"  authorizes  the  agent  to  sign  a 
deed.*"  An  authority  to  "make  notes"  in  the  name  of  the 
principal  does  not  authorize  the  agent  to  make  accommo- 
dation notes."  A  salesman  authorized  to  "make  sales," 
ftud  selling  on  credit,  is  not  authorized  subsequently  to 
oollect  the  price  in  the  name  of  his  principal,  and  a  pay- 


1  Feldman  v.  Beier,  78  N.  Y.  293. 

»  Berkey  v.  Jufld,  22  Minn.  288. 

"  State  V.  Atherton,  16  N.  H. 
203. 

♦  Loftin  V.  Crossland,  94  N.  C.  76. 

''  Austin  V.  Thorp,  30  Iowa,  376. 

6  Cooley  V.  Willard,  34  111.  69;  85 
Am.  Dec.  276. 

'  Hurd  V.  Maple,  2  Bradw.  402. 


8  Cooley  V.  Willard.  34  111.  68;  85 
Am.  Dec.  296. 

'  Jackson  v.  Hodges,  2  Tenn.  Ch. 
276;  see  also  Execute  Papers  and 
Deeds,  supra. 

1"  Hunter  v.  Watson,  12  Cal.  363;  73 
Am.  Dec.  543. 

»  Gulick  V.  Grover,  33  N.  J.  L.  463; 
97  Am.  Dec.  728. 


i|^ 


§64 


PRINCIPAL  AND  AGENT. 


m 


ment  to  him  will  not  discharge  the  purchaser,  unless  he 
can  show  some  authority  in  the  agent  to  collect,  beyond 
that  necessarily  implied  in  a  mere  power  to  make  sales.* 
A  power  of  attorney  to  "manage"  all  the  lands  of  the 
principal  embraces  after-acquired  lands."  A  general  au- 
thority given  to  "manage"  a  person's  property  cannot  be 
considered  as  an  authority  to  employ  counsel  in  a  case 
concerning  property  belonging  to  another  person.'  An 
agent  to  "manage"  a  hotel  has  no  implied  power  to  bind 
his  principal  for  the  safekeeping  and  return  of  carriages 
furnished  by  a  livery-stable  keeper  for  guests  of  the  hotel.* 
A  power  to  "mortgage"  land  does  not  authorize  the  giv- 
ing of  the  principal's  note  with  the  mortgage,  so  as  to 
make  him  personally  liable.'  A  general  power  to  mort- 
gage A's  property  will  not  sustain  a  mortgage  for  the 
benefit  of  B."  Where  an  agent  was  directed  to  "  obtain 
securities"  for  the  payment  of  protested  notes,  and  to 
hand  them  over,  when  obtained,  to  certain  creditors  of 
the  principal,  and  the  agent,  not  obtaining  new  securi- 
ties, gave  the  notes  to  the  creditors  after  the  death  of  his 
principal,  it  was  held  that  their  title  to  the  notes  was 
good.'  Where  a  principal  wrote  to  his  agent  that  he  pro- 
posed to  "place"  his  goods  at  a  certain  price,  it  was  held 
that  this  gave  the  agent  no  authority  to  warrant  that  his 
principal  would  not  sell  for  a  less  price.®  An  authority 
to  "procure  a  purchaser"  for  property  does  not  give 
power  to  enter  into  a  contract  of  sale." 


§64.    Particular  Powers  (Continued) — "Purchase"  — 
"Rent  and  Care  for  "—"Receive  Checks"— "Release."  — 

An  authority  to  "purchase" — the  agent  not  being  fur- 
nished with  funds — permits  him  to  purchase  on  credit, 


»  Law  V.  Stokes,  3  Vt.  249. 

»  Berkey  v.  Judd,  22  Minn.  287. 

•  Perry  v.  Jones,  18  Kan.  552. 

*  Brockway  v.  MuUin,  d6  N.  J.  L. 
448;  50  Am.  Rep.  442. 


'  Mylius  r.  Cope,  23  Kan.  617. 

*  Greenwood  v.  Spring,  54  Barb.  376. 
»  Nicolet  V.  Pillot,  24  Wend.  240. 

^  Anderson  v.  BruLver,  112  Mass.  14. 

•  Hamer  v.  Sharp,  L.  B..  19  £q.  108. 


94 


95 


NATURE    AND   EXTENT   OF   AUTHORITY. 


64 


je"  — 


fur- 
fredit, 


rb.  376. 
240. 
).  14. 
108. 


and  give  tho  principal's  note,*  but  ordinarily  a  mere  author- 
ity to  purchase  gives  no  power  to  purchase  on  credit,''  or  to 
give  the  principal's  note,"  or  to  buy  a  larger  or  a  smaller 
quantity  than  ordered,*  or  to  sell  or  exchange  the  property." 
Where  an  agent  for  the  purchase  of  lumber  receives  in- 
structions by  letter  to  "  purchase  "  certain  quantities  of 
lumber  for  sale,  he  is  only  bound  to  a  substantial  com- 
pliance with  his  instructions  as  to  quantity,  and  a  slight 
difference  in  that  respect  will  not  be  considered  a  viola- 
tion of  his  authority,  such  as  to  entitle  his  principal  to 
reject  the  purchase.*  A  clerk  employed  under  a  written 
agreement  to  "  purchase  goods,"  and  conduct  a  mercan- 
tile house  in  a  certain  place,  "upon  the  cash  system," 
with  a  certain  sum  of  money  put  in  his  hands  for  that 
purpose,  cannot  bind  his  principal  for  goods  purchased 
for  the  house  on  credit.'  A  general  authority  to  pur- 
chase grain  gives  the  agent  no  power  to  contract  to  take 
all  the  grain  the  seller  can  deliver,  especially  if  the  con- 
tract does  not  bind  the  seller  to  deliver  any.*  An  agent 
of  a  commission  house,  authorized  to  purchase  hides,  etc., 
and  to  pay  for  them  with  his  principal's  money,  may  not 
make  advances  or  guarantee  payment  of  unsettled  ac- 
counts received  in  satisfaction  of  unauthorized  advances." 
An  authority  to  the  manager  of  a  farm  to  purchase  mules, 
implements,  and  supplies  for  the  farm,  gives  no  authority 


»  Spraguew.  Gillett,  9  Met.  91;  Bank 
V.  Bugby,  1  Abb.  App.  86;  Perrotin  v, 
CucuUu,  6  La.  587;  Fattnaa  v.  Lcet, 
41  Ind.  133.  So  aa  to  the  general  man- 
ager of  a  hotel  as  to  supplies  for  it: 
Beecher  v.  Venn,  35  Mich.  466.  So, 
where  giving  the  note  is  indispensable 
to  the  carrying  on  of  the  business: 
Temple  v.  Pomroy,  4  Gray,  128;  and 
see  Adams  v.  Boies,  24  Iowa,  96.  An 
authority  to  "purchase"  wheat  in- 
cludes authority  to  give  directions  as 
to  its  delivery:  Owen  v.  Brockschmidt, 
54  Mo.  285. 

*  Berry  v.  Barnes,  23  Ark.  411;  Stod- 
dard V.  Mcllwain,  7  Rich.  525;  Stub- 
bings  V.  Heintz,  1  Feake,  66. 


'  Emerson  v.  Hat  Co.,  12  Maes.  237; 
7  Am.  Dec.  66;  Savage  v.  Rix,  9 
N.  H.  2G3;  Gould  v.  Norfolk  Lead  Co., 

9  Cush.  338;  57  Am.  Dec.  50;  Taber 
V.  Cannon,  8  Met.  456;  Paige  r.  Stone, 

10  Met.  160;  43  Am.  Dec.  420;  Torr- 
ley  V.  Dustin  Mon.  Ass'n,  5  Allen, 
327;  Denison  v.  Tyson,  17  Vt.  519; 
Hazeltine  r.  Miller,  44  Me.  177;  Bank 
V.  Bugbee,  1  Abb.  App.  86. 

*  Olyphant  v.  McNair,  41  Barb.  446. 
'Toddv.  Benedict,  15  Iowa,  591. 

•  Merriman  v.  Fulton,  29  Tex.  97. 

^  Stoddard©.  Mcllwain,  7  Rich.  525. 

*  Hartwell  v.  Walker,  4  La.  Ann. 
457;  50  Am.  Dec.  577. 

•  Bohart  v.  Obeme,  36  Kan.  284. 


65 


PRINCIPAL  AND  AGENT. 


06 


to  buy  goods  for  the  laborers.*  An  authority  to  purchase 
a  town  site,  and  lay  out  a  town,  gives  power  to  dedicate 
land  for  tho  use  of  a  street.''  The  general  agent  of  a  non- 
resident merchant  has  power  to  authorize  a  clerk  to  apply 
to  tho  gas  company  to  let  on  gas  to  tho  principal's  counting- 
room.'  Where  an  agent  was  appointed  by  tho  owner  to 
"  rent  and  care  for  "  real  estate,  ho  was  held  not  author- 
ized to  sue  in  his  own  name  to  recover  possession  of  the 
property  from  a  claimant  under  a  tax  deed.*  An  authority 
to  "  receive  checks  "  in  payment  does  not  authorize  the 
agent  to  indorse  or  collect  them.**  A  power  to  "  release  " 
an  absolute  debt  includes  authority  to  release  a  contin- 
gent liability." 


§  65.  Particular  Powers  (Continued)— "Sell"— "Sell 
and  Convey" — "Sell  at  Retail." — A  power  to  sell  land 
gives  the  agent  power  to  execute  a  deed  and  convey  with 
a  covenant  of  seisin.''    A  verbal  authority  to  "sell"  realty 


*  Carter  v.  Burnham,  31  Ark.  212; 
and  SCO  Meyer  v.  Baldwin,  52  Misa. 
20.3. 

K  Barteau  v.  West,  23  Wis.  416. 
'  Shepherd  v.  Milwaukee  Gas  etc. 
Co.,  11  Wis.  234. 

*  McHenry  v.  Painter,  58  Iowa, 
3G5. 

^  Graham  v.  U.  S.  Savings  Inst.,  46 
Mo.  186. 

«Shaw  V.  Berry,  35  Me.  279;  58 
Am.  Dec.  702. 

'  Lo  Roy  V.  Beard,  8  How.  451;  Tag- 
gart  V.  Stanbcry,  2  McLean,  543; 
Valentine  v.  Piper,  22  Pick.  85;  33 
Am.  Dec.  715;  Hemstrect  v.  Burdick, 
90  III.  444;  Jackson  «.  Hodges,  2Tenn. 
Ch.  276;  People  v.  Boring,  8  Cal.  407; 
Fogarty  v.  Sawyer,  17  Cal.  591;  Yale 
V.  Eames,  1  Met.  488;  Alexander  v. 
Walter,  8  Gill,  239;  50  Am.  Dec.  688; 
Inhabitants  v.  Clark,  68  Me.  87;  28 
Am.  Rep.  22.  A  power  of  attorney 
to  sell  one's  real  estate  held  to  author- 
ize a  quitclaim  deed  of  land  which 
may  not  have  been  owned  by  the  per- 
son giving  the  power:  Alexander  r. 
Goodwin,  20  Neb.  216.  Where,  in  a 
power  of  attorney  to  sell  real  estate, 


it  api)ears  that  the  term  "to  sell  "is 
used  in  the  ordinary  sense,  and  the 
general  tenor  of  tho  instrument  is  to 
confer  a  power  of  disposal,  tho  author- 
ity to  execute  the  proper  conveyance 
is  necessarily  incident,  although  the 
term  "to  convey  "is  not  used:  Farn- 
ham  V.  Thompson,  34  Minn.  330.  But 
see  Force  V.  Dutcher,  18  N.  J.  Eq.  401; 
Nixon  V.  Hyserott,  5  Johns.  58;  Lyon 
V.  Pollock,  99  U.  S.  668.  In  Valen- 
tino V.  Piper,  22  Pick.  85,  33  Am.  Dec. 
715,  it  was  said:  "  Some  objection  was 
taken  to  the  legal  effect  of  this  instru- 
ment. It  purported  to  autht^.ize  the 
attorney  to  make  sale  of  tlie  real  es- 
tate of  the  constituent,  as  therein 
described,  but  there  were  no  express 
words  authorizing  the  attorney  to  exe- 
cute a  deed  or  deeds.  But  the  court 
are  of  opinion  that  the  instrument  is 
not  open  to  this  exception.  Where 
the  term  '  sale '  is  used  in  its  ordinary 
sense,  and  the  general  tenor  and  effect 
of  the  instrument  is  to  confer  on  the 
attorney  a  power  to  dispose  of  real 
estate,  the  authority  to  execute  the 
proper  instruments  required  by  law,  to 
carry  such  sale  into  effect,  is  neces- 


97 


NATURE  AND  EXTENT  OF  AUTHOrJTY. 


§C5 


ivcyance 

ugh   the 

Farn- 

But 

Eq.  401; 

Lyon 

Valen- 

m.  Dec. 

tion  was 

instru- 

ize  the 

real  es- 

thereia 

express 

to  exe- 

e  court 

nent  is 

Where 

dinary 

il  effect 

oa  the 

f  real 

te  the 

law,  to 

neces* 


is  insufTicioiit  to  authorize  the  execution  of  a  contract  or 
the  making  of  a  deed.'  Autliority  to  agents,  not  under 
seal,  to  "sell"  land  empowers  them  to  make  an  executory 
contract  to  hcH.*  An  agent  with  a  restricted  power  to  sell 
a  tract  of  land  at  a  given  price  has  no  power  to  bind  his 
principal  by  any  representation  as  to  the  quantity  or 
quality  of  the  land.^     A  power  authorizing  the  attorney 


sarily  incidunt.  It  ia  in  iiurauance  of 
a  guneriil  maxim  tliat  an  auMiority  to 
acconipliali  a  dotiiiitu  end  carries  with 
ib  aa  authority,  ho  far  a.:i  the  coii.stitu- 
eiit  can  cont'i:r  it,  to  execute  tlio  usual 
legal  anil  a|)}iropriate  ineasurea  proper 
to  aucotnpIi«h  the  oi)ject  propusuil.  A 
power  of  attorney  might  l»e  so  drawn 
a.i  to  authorize  the  attorney  to  nialvc 
sale  of  an  estate,  wliero  it  niiglit  he 
apparent  tliat  it  waa  tlie  intention  of 
the  eonstitnunt  to  authorize  tiio  attor- 
ney to  negotiate  for  a  aule,  leaving  it 
to  tlie  constituent  afterwarda  to  ratify 
it  a!ul  to  execute  deeds.  Siiould  it  ap- 
pear citlier  from  the  restricted  words 
used,  or  from  tiie  tenor  of  the  whole 
i;i3trument,  tliat  such  was  tiie  intent, 
it  ought  to  he  construed  as  conferring 
such  a  restricted  power  only.  In  tlie 
present  case,  we  tliinl{  it  was  tlio  in- 
tent of  the  constituent  to  confer  on 
the  attorney  an  authority  to  transfer 
the  estate." 

'  Duffy  r.  llohaon,  pout;  Treat  v.  Do 
Cclij,  41  Cal.  202;  Force  v.  Dutcher,  18 
N.  J.  Eq.  401 ;  Pringle  v.  Spaulding,  53 
Larh.  17.  "This,^  to  simply  find  a 
purchaser,  it  i3  said  in  Duffy  v.  Hob- 
soii,  40  Cal.  240,  G  Am.  Rep.  017.  "is 
t!io  settled  construction  put  upon  the 
employment  of  professional  brokers  'to 
sell  'or  'to  close  a  bargain  '  concerning 
real  estate,  aiul  we  know  of  no  reason 
why  the  same  language  eujployed  to  ex- 
press the  authority  of  any  other  agent 
'  to  .'icU '  sliould  have  a  more  extended 
meaning.  Besides,  a  sale  of  real  es- 
t  ite  involves  the  adjustment  of  many 
matters  in  addition  to  fixing  the  price 
at  which  the  property  is  to  be  sold. 
The  deed  of  conveyance  may  be  one 
witli  full  covenants  of  seisin  and  war- 
ranty, or  only  those  covenants  im- 
Eorted  by  the  use  of  the  words  '  grant, 
argain,  and  sell '  under  our  statute, 
or  it  may  be  by  quitclaim  merely. 
Vol.  L— 7 


The  vendor  may  bo  unwilling  to  deal 
with  a  particular  proposed  purcliasc 
on  any  terms.  He  may  c(insi(h;r  him 
pecuniarily  unable  to  comply  with  tie 
contract,  even  if  the  title  prove  satis- 
factory, anil  he  may  decline  to  bind 
himself  to  convey  to  siich  a  purchaser 
at  the  end  of  the  time  necessary  to 
examine  the  title,  because  he  mij^lii 
thereby  in  the  mean  time  lose  an  op- 
portunity to  sell  to  some  other  i>er.ii'U 
who  n»ight  desire  to  p\irchasc,  a:id  in 
whose  good  faith  and  ability  to  pay  ho 
rcjjosed  entire  confidence.  All  tliesj 
and  many  other  like  consideration  i 
might,  and  usually  do,  arise  in  the 
nnnd  of  the  vendor.  Now,  a  more 
authority  'to  sell'  can  hardly  confer 
power  upon  the  agent  to  determino 
all  these  matters  for  his  principal,  so 
as  to  bind  hi:n  by  his  determinatioa. 
And  yet,  unless  the  agent  do  have 
such  power,  he  cannot  make  a  defini- 
tive contract,  or  one  that  could  bj 
said  to  have  the  certainty  requisite  to 
deprive  the  principal  of  his  option  to 
ultimately  decline  to  make  the  sal .'. 
To  give  to  the  mere  word  'to  sell' 
such  a  broad  signification  as  that  would 
bo  to  invest  tlie  agent  with  powers  of 
that  amjile  and  discretionary  character 
usually  only  conferred  with  caution, 
and  by  means  of  a  general  letter  of  r.t- 
torney,  where  Lhe  terms  arc  distiictly 
expressed.  While  it  is  true  that  a 
power  to  sign  the  name  of  a  principid 
to  a  contract  of  sale  may  be  given  ver- 
bally, we  think  that  the  words  used 
for  the  purpose  should  be  distinct  a:id 
clear  in  their  meaning  and  impart,  and 
should,  with  the  requisite  degree  c>f 
certainty,  manifest  the  intention  of 
the  principal  to  do  something  more 
than  merely  to  employ  a  broker. " 

*  Jackson  v.  Badger,  35  Minn.  52. 

^  National  Iron  Co.  v.  Bruner,  19  • 
N.  J.  Eq.  331. 


§C5 


PRINCIPAL   AND  AGENT. 


08 


ill  fact  to  soil  "the  one  half"  of  n  lot  of  land,  without 
specifying  which,  or  whether  an  undivided  half,  empowers 
him  to  sell  one  half  in  severalty,  exercising  his  own  dis- 
cretion as  to  which  half.'  Where  a  letter  of  attorney 
authorizes  an  agent  to  sell  all  the  land  of  the  pnincipal, 
which  the  latter  had  not  previously  convoyed,  tho  agent 
may  convey  what  his  principal  had  previously  sold  but 
not  conveyed.''  An  agent  empowered  to  sell  and  convey 
land  conveyed  to  A,  who  paid  part  in  cash,  and,  in  pur- 
suance of  an  agreement  for  a  loan  from  B,  mortgaged  to 
tho  agent,  who  im-  icdiately  assigned  tho  mortgage  and 
indorsed  tho  notes  to  B,  who  thereupon  handed  him  tho 
amount  of  tho  loan.  It  was  held  that  tho  transaction 
was  a  sale  for  cash  within  tho  agent's  authority,  and  not 
a  barter  or  a  sale  on  time.' 

Under  a  general  power  to  sell  property,  real  or  personal, 
the  agent  may  make  a  contract  of  sale.*  An  agent  in- 
trusted with  personal  property  to  sell  may  make  a  condi- 
tional sale  on  trial,  or  a  contract  to  take  eflPect  as  a  sale  in 
case  the  article  on  trial  works  satisfactorily.^  An  agent 
authorized  to  sell  has  authority  to  take  all  the  usual  steps 
to  effect  a  sale;*  but  not  to  agree  to  pay  a  commission  to 
another  for  making  sales.'  An  agent  to  sell  goods  and 
collect  the  price  has  authority  to  make  any  deduction 
from  the  price  that  the  principal  could  have  made,®  Au- 
thority to  an  agent  to  sell  goods  is  no  authority  to  barter 
nor  to  exchaajti, -.*  t^ot  to  rescind  the  sale,  or  materially 
modify  its  term/i,  after  it  has  become  an  executed  con- 

from  the  principal,  allowed  the  deed 
and  purchase  notes  to  be  placed  in  the 
hands  of  a  third  person  until  an  alleged 
lien  should  be  removed.  Held,  not 
within  their  authority:  Taylor  v. 
White,  44  Iowa,  295. 

'  Atlee  V.  Fiuk,  75  Mo.  100;  42  Am. 
Rep.  385. 

*  Taylor  v.  Nussbaum,  2  Duer,  302. 

» Taylor  v.  Starkey,  59  N.  H.  142; 
Reese  v.  Medlock,  27  Tex.  120;  84 
Am.  Dec.  611;  Trudo  v.  Anderson,  10 
Mich.  357;  81  Am.  Dec.  795. 


»  Alcmany  v.  Oal^,  36  Cal.  90. 
2  Mitchell  V.  Maupin,  3  T.  B.  Mon. 
185. 
«  Plummer  v.  Buck,  16  Neb.  322. 

*  Haydock  v.  Stow,  40  N.  Y.  363. 

*  Oster  V.  Mickley,  35  Minn.  245. 

*  Fay  V.  Richmou'l,  43  Vt.  25;  Peters 
V.  Farnsworth,  15  Vt.  155;  40  Am. 
Dec.  671;  Bryant?'.  Moore,  26  Me.  84; 
45  Am.  Dec.  96;  Haydock  v.  Stow, 
40  N.  Y.  363.  Agents  were  author- 
ized to  sell  land  on  certain  conditions. 
They,  on  receiving  an  executed  deed 


08 


99 


NATURE  AND  EXTENT  OF  AUTHORITY. 


G6 


e  deed 
in  the 
illeged 
'd,  not 
■lor    V. 

t2  Am. 

r,  302. 


tract.*  An  agent  who  is  only  authorized  to  sell  notes  can- 
not bind  his  principal  by  a  guaranty  of  their  paynunit,'' 
Instructions  to  sell  a  vessel  for  "  fourteen  thousand  <lol. 
lars  cash,  free  of  all  charges  whatsoever,"  mean  charges  of 
sale,  n<it  expenses  on  account  of  a  previous  voyage,  sueh  as 
wages  and  provisions.'  One  authorized  to  sell  on  credit 
has  no  authority  to  foreclose  a  mortgage  whieli  lie  has 
taken  as  security,  nor  to  buy  in  for  the  principal  at  the 
sale.*  Where  a  principal  authorizes  his  agent  to  "  sell 
upon  credit,"  a  reasonable  credit  is  meant,  which  reason- 
ableness is  a  question  to  bo  determined  by  the  evidence.' 
An  agent  to  sell  land  on  credit  has  no  implied  authority 
to  receive  payment  therefor,  nor  to  receive  payment 
before  due,  or  in  anything  but  money.*  An  agent  author- 
ized to  sell  his  principal's  sherry,  when  manufactured,  is 
not  authorized  to  sell  it  before  it  is  manufactured.''  The 
mortgagee  of  a  stock  of  goods  signed  at  the  foot  of  the 
mortgage  a  memorandum  whereby  ho  appointed  the  mort- 
gagor his  agent  to  sell  and  dispose  of  and  replace  the 
stock.  This  was  held  not  to  make  the  mortgagor  an  agent 
of  the  mortgagee  for  the  purchase  and  sale  of  goods,  but 
merely  a  waiver  of  the  right  to  take  possession.*  One 
authorized  to  "  sell  and  convey"  property  has  no  right  to 
make  a  voluntary  conveyance  to  an  agent  to  enable  him 
to  control  and  protect  the  property,'  nor  to  make  partition 
of  the  land.***  An  authority  to  sell  at  retail  does  not  au- 
thorize a  clerk  to  sell  at  wholesale  to  satisfy  a  debt  due  to 
the  purchaser  from  the  principal." 

§66.    Particular     Powers     (Continued)— "Settle "— 
"  Ship"  — "  Sign     Name  "  — "  Solicit "  —  "  Subscribe  "  — 


»  Adrian  v.  Lcue,  13  S.  C.  183. 

*  Graul  V.  Strutzcl,  53  Iowa,  712. 
»  Dusar  v.  Perit,  4  Binn.  361. 

*  Aultman  v.  Jones,  1  Woolw.  99. 

*  Brown  v.    Central  Land  Co.,   42 
Cal.  257. 

«  Mann  v.  Robinson,  19  W.  Va.  49; 
42  Am.  Rep.  771. 


»  Merriam  v.  De  Turk,  60  Cal. 
549. 

8  Barrett  w.  Franklin,  14  R.  1.  24!. 

•  Dupont  V.  Wertheman,  10  Cal. 
354. 

>o  Borel  v.  Rollins,  30  Cal.  408. 

*'  ?Iampton  v.  Matthews,  14  Pa.  St. 
105;  Lee  v.  Tinges,  7  Md.  235. 


anm 


G6 


PRINCIPAL  ANL    \GENT. 


100 


"Sue"— 'Take  Care  of"— "Transact." — A  power  to  settle 
up  a  merraiitilo  business  gives  no  authority  to  purchase 
real  estate  or  to  give  a  note  for  the  purchase  price.'  An 
attorney  authorized  by  salvors  to  "settle"  their  claims 
against  the  vessel  saved  has  authority  to  receive  the 
money,  but  not  to  afterwards  distribute  it  upon  his  own 
judgment  among  the  salvors,  or  to  pay  charges  against 
the  fund.^  Where  a  physician  leaving  homo  temporarily 
made  K.  his  agent,  by  verbal  appointment,  to  transact  all 
business  for  him  in  Alabama,  and  left  with  him  his  books 
of  account  for  services  "for  settlement,"  it  was  held  that 
11.  had  no  authority  to  assign  the  books  to  a  surety  of 
his  principal  as  security  for  his  suretyship."  A  clerk  in  a 
store  authorized  to  settle  a  claim  against  a  carrier  for  the 
loss  of  certain  goods  cannot  give  a  discharge, without  re- 
ceiving any  consideration.  His  mere  agreement  to  receive 
other  goods  in  place  of  those  lost  will  not  operate  as  a 
release  of  the  carrier's  liability.*  A  power  to  settle  busi- 
ness and  collect  claims  gives  an  agent  a  right  to  execute 
a  replevin  bond.®  An  agent  employed  to  settle  attach- 
ment suits  against  the  principal  has  authority  to  raise 
money  to  settle  by  executing  a  note.®  Authority  given  to 
an  agent  to  ship  property  carries  Avith  it  authority  to 
accept  a  bill  of  lading,  or  to  make  a  contract  containing 
exemptions  from  liability.'     Authority  to  ship  cotton  and 


»  Fisher  v.  Salmon,  I  Cal.  413;  54 
Am.  Dec.  297.  A  soiitovenluo  county 
bonds  to  B,  requesting  him  to  treat 
them  as  hia  own,  and  do  the  best  to 
settle  them.  Held,  this  did  not  au- 
thorize B  to  sell  the  bonds  to  D,  or  to 
empower  C  to  do  so:  Hannon  v.  Hous- 
ton, 18  Kan.  561. 

^  Hawkins  v.  Avery,  32  Barb.  551. 

»  Wood  V.  McCain,  7  Ala.  800;  42 
Am.  Dec.  G12. 

♦  Patterson  v.  Moore,  34  Pa.  St.  09. 

*  Merrick  v.  Wagner,  44  111.  206. 

«  Tanner  v.  Hastings,  2  Bradw.  283. 

'  Moriarty  v.  Harnden's  Ex.,  1  Daly, 
227;  Ciiristenson  i".  American  Ex.  Co., 
15  Miun.  270;  2  Am.  Rep.  122;  Shel- 


ton  r.  Merchants' Dispatch  Trani.  Co., 
36  N.  Y.  Sup.  Cb.  527;  59  N.  Y.  2^8; 
Robinson  v.  Merchants*  Dispatch 
Trans.  Co.,  45  Iowa,  470;  Mtyer  v. 
Harnden's  Ex.  Co.,  24  How.  Pr.  290; 
Bcanw.  CIreen,  12  Ale.  422;  nUcbrown 
V.  Grand  Trunk  R.  R.  Co..  f  >  Me.  462; 
92  Am.  Dec.  GDG;  Levy  v.  Southern 
Ex.  Co.,  4  S.  C.  234.  "That  the 
plaintiff  herself  never  read  the  paper 
[a  bill  of  lading  containing  conditions] 
is  of  no  moment.  Tlia  arrangement 
was  made  by  her  agent,  wlio  must  bo 
presumed  to  have  acquainted  herself 
with  the  terms  of  tlie  engagement 
which  the  defendant  assenteil  to": 
Steers  v.  Liverpool  Steamship  Co.,  57 


■■! 


100 


101 


NATURE  AND  EXTENT  OP  AUTHORITY. 


§66 


and 


papor 
itioiis] 
oment 
list  bo 
icrself 
enieiit 
to": 
:o.,  57 


forward  tho  bills  of  lading  to  tho  consignee  does  not  im- 
ply authority  to  receive  advances  from  the  consignee;  and 
while  authority  to  shiji  and  sell  may  imply  authority  to 
receive  tho  proceeds,  it  docs  not  confer  authority  to  appro- 
priate tho  proceeds  to  payment  of  tho  agent's  individual 
debts.*  But  a  mere  agent  to  deliver  the  property  has  no 
authority  to  mako  a  contract  with  exemptions  from  lia- 
bility, as,  for  instance,  a  drayman.''  To  "use  and  sign 
my  name,"  for  tho  purpose  of  obtaining  accommodation 
at  a  bank,  gives  an  agent  power  to  sign  a  noto.^  A  per- 
son, whether  ho  can  himself  write  or  not,  may  authorize 
another  by  parol  to  sign  his  name  to  an  instrument."*  A 
power  "to  solicit  and  take  contracts"  does  not  carry  with 
it  the  power  to  collect;  and  a  payment  to  such  an  agent 
by  one  who  knew  that  orders  were  sent  to  tho  principal 
for  his  approval  does  not  release  from  liability  to  tho 
principal.'*  An  authority  to  subscribe  for  stock  upon  tho 
location  and  erection  of  certain  railroad  improvements 
does  not  authorize  a  subscription  payable  on  the  location 
of  such  improvements."  An  authority  to  sue  for  a  debt, 
and  to  do  all  in  tho  premises  that  the  principal  could  do, 
gives  power  to  attach.^  An  agent  appointed  to  "take  care 
of"  personal  property,  and  to  give  notice  of  any  lien  upon 
it,  has  no  authority  to  make  an  agreement  with  a  third 
person  to  purchase  the  property  of  his  principal,  at  a  sale 
to  which  it  is  exposed,  to  satisfy  rent  under  a  distress 
warrant,  and  therefore  tho  principal  cannot  maintain  an 


N.  Y.  1;  15  Am.  Rep.  45.3;  Sqiiiro  v. 
N.  Y.  Cent.  11.  11.  Co.,  98  Mass.  239; 
93  Ain.  Dec.  1(32;  New  Jersey  Steam 
N;iv.  Co.  V.  Merchants'  Bunk,  6  How. 
344. 

'  Hill  V.  Helton,  80  Ala.  628. 

''  Soiitliern  Ex.  Co.  v.  Armstead,  50 
Ala.  350:  Nelson  v.  R.  R.  Co.,  48 
N.  Y.  4',VS;  Buckland  v.  Adams  Ex. 
Co.,  97  .Mass.  124;  93  Am.  Dec.  G8; 
contr.t,  Rol)iiison  v.  Merchants' Trans. 
Co.,  45  Iowa,  470. 

•*  Dut  not  an  instrument  not  a  nego- 
tiable note:  First  Xat.  Bank  v.  Gay, 


G3  Mo.  33;  21  Am.  Rep.  430.  Author- 
ity to  sign  a  principal's  name  to  a 
note  for  a  specified  sum  is  Bpr^ciul,  and 
if  ho  Bigns  a  note  for  inoro  it  is  a  for- 
gery, and  tho  principal  is  not  liable: 
King  V.  Sparks,  77  Ga.  285;  4  Am.  St. 
Rep.  85. 

*  Handysido  v.  Cameron,  21  111.  588; 
74  Am.  Dec.  119. 

*  Greenhood  v.  Keator,  9  111.  App. 
183. 

"  Drover  v.  Evans,  59  Ind.  454. 
^  Do  Poret  v.  Guaman,  30  La.  Ann. 
930. 


Wi 


§67 


PRINCIPAL   AND  AGENT. 


102 


action  of  trover  upon  this  agreement  against  such  third 
person,  unless  he  ratifies  the  act  of  his  agent  before  trial.* 
Authority  to  an  agent  "to  trade  off  said  mule  if  he  could 
get  anything  that  suited  him"  does  not  empower  him  to 
exchange  the  mule  for  another,  and  bind  his  principal  to 
pay  a  sum  of  money  as  the  estimated  difference  in  value.'* 
A  person  "with  full  authority  to  transact  any  business, 
to  employ  men,  purchase  logs,  sell  timber,  or  to  perform 
any  other  business  connected  "  with  his  principal,  has  a 
general  authority,  and  may  transfer  lumber  in  payment 
to  men  employed  by  him.'  The  owners  of  a  tavern,  by  an 
instrument  in  which  they  recited  that  they  had  engaged 
K.  to  keep  said  tavern,  empowered  him  for  them,  and  in 
their  names,  and  for  their  use  and  benefit,  "to  transact 
all  business  pertaining  to  said  tavern,  which  in  his  judg- 
ment might  promote  their  interest,  and  to  purchase,  use, 
and  vend  all  necessary  provisions  for  said  house,"  and 
"to  act  for  us  as  fully  and  effectually  as  we  could  do"  if 
present.  It  was  held  that  R.  was  authorized  to  purchase 
spi.'ituous  liquors,  wine,  and  sugar  on  the  credit  of  the 
owners,  to  be  used  at  the  bar  of  said  tavern.* 

§  67.  What  Powers  Implied  under  Particular  Circum- 
stances—  Advertising — Admissions — Arbitrate —  Assign 
—  Auction  —  Board  at  Hotel  —  Borrow — Cancel  —  Com- 
promise—  Collect — Confess  Judgment. — A  general  agent 
of  a  patent-medicine  manufacturer  has  no  authority  to 
make  contracts  for  advertising  in  foreign  countries.* 
What  an  agent  says  while  acting  within  the  scope  of  his 
authority  is  admissible  against  his  principal,  as  part  of 
the  res  gestae,  but  not  statements  or  representations  made 
by  him  at  any  other  time.  And  declarations  made  by 
the  officers  of  corporations  rest  upon  the  same  principles 

*  Brisbane  v.  Adams,  3  N.  Y.  129.  *  Cummings    v,    Sargeut,    9    Met. 
^  McMillan  v.  Wooten,  80  Ala.  2G3.     172. 

*  Taylor  v.  Labeauine,  14  Mo.  572;        ^  Holloway  v.  Stephens,  2  Thomp. 
17  Mo.  33S;  Tappau  v.  Bailey,  4  Met.    &  C.  562. 

629. 


103 


NATURE  AND   EXTENT  OP  AUTHORITY. 


§67 


if 


les. 
his 
of 
lade 

pies 

Met. 


as  appl}'  to  other  agents.*  An  agent  has  no  power,  with- 
out express  authority,  to  refer  disputes  to  arbitration.'' 
An  authority  to  "settle"  does  not  authorize  the  agent  to 
submit  the  disputes  to  arbitration.'  But  the  power  may 
be  implied  from  an  authority  to  "act  on  the  principal's 
behalf  in  dissolving  the  partnership,  and  appoint  any 
other  person  as  he  may  think  fit";*  or  from  an  authority 
to  prosecute  a  suit  ^  or  to  "  compromise  or  compound  "  a 
claim.*  A  power  to  sell  or  lease  lauds,  to  take  charge  of 
them  and  to  prosecute  suits,  receive  money,  etc.,  does  not 
authorize  the  agent  to  assign  a  cause  of  action  for  a  tres- 
pass on  the  lands;'^  nor  does  a  power  to  enforce  in  every 
way  a  claim  confer  authority  to  assign  it  to  a  third  per- 
son.* A  simple  power  to  sell  does  not  include  a  sale  at 
auction.*  An  agent  employed  to  sell  goods  has  no  im- 
plied authority  to  obtain  board  at  a  hotel  on  the  credit 
of  his  principal.*"  An  agent  to  buy  and  sell  at  the  prin- 
cipal's store  has  no  authority  to  borrow  money,"  The 
authority  of  an  agent  who  travels  to  solicit  orders  for  a 
commercial  house  does  not  embrace  power  to  cancel  his 
contracts,  and  receive  back  goods  shipped  to  and  not 
satisfactory  to  a  customer."  A  power  to  pay  debts  gives 
authority  to  compromise  a  disputed  claim."  Where  A 
and  B  went  to  a  store,  and  each  purchased  a  bill  of  goods, 
and  A  guaranteed  the  payment  of  B's  bill,  and  subse- 
quently both  bills  were  sent  by  mail  to  A,  who  presented 


1  Penn.  R.  R  Co.  v.  Books,  57  Pa. 
St.  339;  98  Am.  Dec.  229. 

*  Michigan  Cent.  R.  R.  Co.  v.  Gou- 
gar,  ")5  111.  503;  Trout  v.  Emmons,  29 
111.  433;  81  Am.  Dec.  3215;  Alexandria 
Canal  Co.  v.  Swann,  5  How.  83;  Car- 
nochau  V.  GouKl,  1  Bail.  179;  19  Am. 
Dec.  008;  McPherson  v.  Cox,  80  N.  Y. 
472;  and  see  Goodson  v.  Brooke,  4 
Camp.  103. 

"  fcjcarborough  v.  Reynolds,  12  Ala. 
252;  Huber  v.  Zimmerman,  21  Ala. 
488;  50  Am.  Dec.  255.  See  Hino  v. 
Stephens,  33  Conn.  604. 

*  Ueuley  v.  Soper,  8  Barn.  &  C.  16. 


*  Buckland  v.  Conway,  10  Mass.  ."90. 

«  Wdks  V.  Back,  2  Ea.5t,  142;  Schol 
V.  Blnonifield,  8  Vt.  472. 

'  Geiger  v.  BoUes,  1  N.  Y.  Sup.  Ct. 
129. 

"  Garrigne  r.  Loeschcr,  3  Bosw.  578. 

0  Towlo  V.  Lcavitt,  23  N.  H.  300;  55 
Am.  Dec.  195. 

'"  Sampson  v.  Singer  Mfg.  Co.,  5 
S.  C.  405. 

1'  Spooner  t'.  Thompson,  48  Vt.  259. 

"  Diversy  v.  Kellogg,  44  111.  114;  92 
Am.  Dec.  154. 

"  Bergenthal  v.  Fiebrantz,  48  Wis. 
435. 


§C8 


PRINCIPAL   AND   AGENT. 


104 


B's  bill  to  hira,  representing  that  ho  had  authority  to 
collect  it,  whereupon  B  paid  it,  it  was  held  that  the 
mere  delivery  of  the  bill  by  the  creditor  to  A  through 
the  post-office  did  not  constitute  A  the  creditor's  agent 
for  the  collection  of  the  debt,  nor  was  it  any  evidence  of 
authority  to  collect  it.*  A  general  agent,  without  express 
authority,  cannot  confess  judgment  for  his  principal.'' 


§  68.  What  Powers  Implied  (Continued) — Employing 
Agents — Employing  Counsel — Exchange  or  Barter  — 
Deliver — Foreclose  Mortgage. — An  agent  of  a  stage  com- 
pany authorized  to  obtain  surgical  aid  for  a  passenger 
injured  by  the  upsetting  of  the  coach  is  not  therefore 
authorized  to  employ  a  physician  to  attend  to  one  who 
had  acted  as  coachman  without  the  consent  or  knowl- 
edge of  the  company,  and  who  had  also  been  injured  by 
the  same  accident.'  Where  a  principal  wrote  to  his 
general  agent,  "You  will  do  better  by  getting  new 
agents,"  etc.,  it  was  held  that  the  agent  thereby  received 
authority  to  employ  a  new  subagent.*  A  general  author- 
ity to  manage  property  for  another  does  not  give  power 
to  employ  counsel  in  a  case  between  third  persons,  but 
which  may  indirectly  affect  the  principal's  property.®  A 
general  agent  has  no  authority  to  employ  counsel  to  pros- 
ecute a  suit  for  a  servant  of  the  principal  injured  through 
the  negligence  of  a  third  person."  An  agent  to  sell  land 
must  sell  for  money;  he  cannot  exchange  it  for  merchan- 
dise.'^ So  one  authorized  to  sell  goods  cannot  exchange 
them  in  barter.*  And  an  authority  to  "sell,  transfer,  and 
convey"  lands  gives  no  authority  to  exchange  them  for 


1  Dutcher  v.  Beckwith,  45  111.  460; 
92  Am.  Dec.  232. 
"2  Howell  v.  Gordon,  40  Ga.  302. 

3  Shrivcr  v.  Stevens,  12  Pa.  St.  258 

*  McConnell  v.  McCormick,  12  Cal, 
142. 

"  Ferry  v.  Jones,  18  Kan.  552. 

^  Cochran  v.  Newton,  5  Denio,  482. 


'  Lumpkin  r.  Wilson,  5  Heisk.  555; 
Wheeler  anil  Wilson  Co.  v.  Givan,  65 
Mo.  89;  Victor  Sewing  Machine  Co.  v. 
Heller,  44  Wis.  265;  Triulo  v.  Ander- 
son, 10  Mich.  357;  81  Ai.  Dec.  795; 
Kent  V.  Bornstein,  12  Allen,  342. 

^  Guerreiero  v.  Poilc,  3  Barn.  &  Aid. 
616. 


105 


NATURE  AND  EXTENT  OP  AUTHORITY. 


69 


other  lands.*  So  one  employed  to  sell  has  no  authority  to 
exchange  the  money  ho  receives  with  a  third  person.^ 
Where  an  agent  managing  real  estate  for  liis  principal  sold 
it  and  took  a  note  and  mortgage  back,  which  were  left  with 
him  for  collection,  it  was  held  that  he  was  not  authorized 
to  exchange  them  for  the  unsecured  note  of  another  party 
and  to  release  the  mortgage.^  A  teamster  employed  by  a 
mill-owner  to  deliver  flour  to  a  railroad  company  for 
transportation  has  no  power,  by  virtue  of  his  employment, 
to  direct  the  delivery  of  the  flour  by  the  companj'  to  a 
third  person;  and  the  agents  of  the  company  are  bound 
to  know  this,  and  if  they  so  deliver  the  flour  the  company 
is  liable  as  for  a  conversion.*  An  agent  authorized  to 
sell  on  credit  has  no  power  to  foreclose  a  mortgage  which 
he  had  taken  to  secure  payment,  nor  to  buy  in  the  prop- 
erty for  his  principal  on  the  sale.® 


§  69.  What  Powers  Implied  (Continued)— Give  Credit 
— Guaranty — Hiring  Horses  —  Indorsing  —  Lease — Leg- 
acy— License — Loan. — An  ordinary  authority  to  sell  gives 
no  authority  to  sell  on  credit,*  but  the  authority  may  be 
construed  to  allow  it.^  A  book-keeper  has  no  power,  by 
virtue  of  his  position,  to  bind  his  employer  for  the  debt 
of  a  third  person.*  A  traveling  salesman  and  collector  has 
authority  to  hire  horses  and  carriages  in  the  country," 
and  so  has  an  agent  employed  to  sell  steam-engines. '•*    A 


'  Reese  V.  Medlock,  27  Tex.  120;  84 
Am.  Dec.  Gil. 

''  Kent  V.  Bornstein,  12  Allen, 
342. 

^  Hakes  v.  Myrick,  G9  Iowa,  189. 

*  Sawyer  v.  Railroad  Co.,  22  Wis. 
402;  09  Am.  Dec.  49. 

"  Aaltman  v.  Jones,  1  Woolw.  99. 

"  School  District  v.  .'Etna  Ins.  Co., 
62  Me.  330;  State  v.  Delaficlcl,  8  Paice, 
5-i7;  Seiplo  v.  Irwin,  30  Pa.  St.  513; 
Law  r.  Stokes,  32  N.  J.  L.  249;  90 
Am.  Dec.  055;  Burks  v.  Hubbard,  69 
Ala.  379;  Falls  v.  Gaither,  9  Port.  605. 
Aa  authority  to  sell ' '  on  credit "  meaus 


a  reasonable  credit:  Brown  v.  Central 
Land  Co.,  42  Cal.  257. 

'  Van  Alen  v.  Vanderpool,  6  Johns. 
69;  5  A!n.  Dec.  192;  Ureely  r.  Bartlctt, 
1  Greeul.  172.  As  where  the  agent 
was  to  sell  "  for  the  best  price  ho  could 
get  and  return  the  proceeds'":  May  v. 
Mitchell,  5  Humph.  305;  where  he 
was  to  sell  "to  the  best  advantage"'; 
Ruffin  V.  Mebane,  6  Ired.  E(i.  507. 

«  Ruppe  V.  Edwards,  52  Midi.  411. 

•Bentley  v.  Doggett,  51  Wis.  224; 
37  Am.  Rep.  827. 

>»  Huntley  v.  Mathias,  90  N.  C.  101; 
47  Am.  Rep.  517. 


70 


PRINCIPAL  AND  AGENT. 


106 


cashier  of  a  firm  which  is  in  the  habit  of  taking  commer- 
cial paper  in  the  course  of  business  has  authority  to  in- 
dorse such  paper,'  and  so  has  an  agent  employed  to  dis- 
count a  note.^  But  a  collector  authorized  to  receive  checks 
in  payment  of  bills  held  by  him  for  collection  has  no 
authority  to  indorse  and  collect  the  checks.'  A  general 
authority  to  transact  business,  and  receive  and  discharge 
debts,  gives  no  power  to  accept  or  indorse  bills.*  Posses- 
sion of  a  note  not  indorsed  raises  no  presumption  that  the 
holder  has  a  right  to  transfer  it.*  A  power  to  sell  land 
authorizes  the  leasing  of  it.*  A  clerk  authorized  to  receive 
payment  is  not  authorized  to  receive  a  legacy  due  his 
master.^  A  power  to  sell  land  will  not  give  an  agent  au- 
thority to  license  the  purchaser,  before  the  conveyance,  to 
enter  and  cut  timber  on  the  land.*  Authority  in  a  hired 
man  from  his  employer  to  lend  property  attached  and 
ill  aie  custody  of  the  sheriff  cannot  be  inferred  from  his 
having  exercised  such  authority  before  attachment,  when 
the  property  was  in  the  ordinary  use  of  his  employer." 

§  70.  What  Powers  Implied  (Continued)  —  Making^  Ac- 
commodation Notes— or  Deed  —  Negotiable  Paper — Mort- 
gage—  Pledge  —  Purchase.  —  A  general  agency  for  the 
transaction  of  the  principal's  business  will  not  authorize 
the  agent  to  make  accommodation  notes  in  his  name.*"  A 
power  to  make  "all  such  deeds  of  conveyance  and  partition 
to  such  land  as  I  am  entitled  to  "  authorizes  a  deed  of  sale 
as  well  as  of  partition."  A  power  to  "  ask,  demand,  recover, 
or  receive  the  principal's  share  of  an  estate,  to  give  dis- 


»  Eilwsrds  V.  Thomas,  06  Mo.  468. 

*  Merchants'  Bank  v.  Central  Bank, 
1  Ga.  418;  44  Am.  Dec.  665;  Stain- 
back  V.  Read,  11  Gratt.  281;  62  Am. 
Dec.  648. 

*  Graham  v.  United  States  Savings 
Inst.,  46  Mo.  186. 

*  Sewanee  Mining  Co.  v.  McCall,  3 
Head,  619. 

*  Hardesty  v.  Newby,  28  Mo.  567; 
75  Am.  Dec.  137. 


8  Williams  r.Woodard,  2  Wend.  487. 

'  Sanderson  v.  Bell,  2  Cromp.  &  M. 
313;  Day  v.  Boyd,  6  Heisk.  458. 

8  Hubbard  v.  Elmer,  7  Wend.  446; 
22  Am.  Dec.  590. 

»  Briggs  V.  Taylor,  35  Vt.  57. 

w  Gulick  V.  Grover,  33  N.  J.  L.  463; 
97  Am.  Dec.  728;  Bank  of  Hamburg 
r.  Johnson,  3  Rich.  42;  Wallace  v. 
Branch  Bank,  1  Ala.  565. 

"  Jacksou  V.Hodges,  2  Tenn.  Ch.  276. 


chl 

to  I 

cul 

th! 

th 

itsl 

ha| 

to 

be  I 

gcJ 


106 


107 


NATUllE   AND   EXTENT   OF   AUTHORITY. 


§70 


charges  and  acquittances  therefor 
to  convey  his  real  estate.'   The 


does  not  confer  power 


The  authority  of  an  agent  to  exe- 
cute a  deed  for  his  principal  may  bo  presumed  from  proof 
that  the  principal  received  the  purchase-money,  and  that 
the  vendee  went  into  possession  under  the  deed,  which  on 
its  face  purports  to  have  been  executed  by  such  agent,  and 
has  held  such  possession  for  twenty  years.'^  An  authority 
to  bind  the  principal  by  making  negotiable  paper  must 
be  express  or  implied  from  the  nature  of  the  agency.'  A 
general  authority  to  transact  business,  and  to  receive  and 
discharge  debts,  does  not  authorize  the  accepting  or  in- 
dorsing of  bills,  or  the  making  of  accommodation  paper,* 
nor  does  merely  acting  as  clerk  give  authority  to  sign 
notes  in  the  principal's  absence.*  An  agent  authorized  to 
transact  a  particular  affair  may  execute  a  note  jointly 
with  others  who  have  a  common  interest  in  the  subject- 
matter,  to  pay  the  necessary  expenses  for  the  accomplish- 
ment of  a  common  end.**  A  principal  clerk,  having  the 
general  management  of  a  store, and  accustomed  to  give  due- 
bills  in  the  name  of  his  employers  with  their  knowledge 
and  consent,  who  buys  goods  in  the  usual  course  of  busi- 
ness, has  authority,  upon  such  purchase,  to  take  up  due- 
bills  given  for  former  purchases,  and  give  a  note  therefor, 
in  the  name  of  his  employers,  including  therein  the 
amount  of  his  last  purchase.^ 

A  committee  of  a  town  appointed  to  lay  out  a  sum  of 
money  voted  for  repair  of  highways  has  no  power  to  give 


1.276. 


1  Hay  V.  Mayer,  8  Watts,  203;  34 
Am.  Dec.  453. 

-  Bias  V.  Cockrum,  37  Miss.  509;  75 
Am.  Dec.  476. 

3  Webber  v.  Williams  College,  23 
Pick.  302;  Rossiter  v.  Rossitcr,  8 
Wend.  496;  24  Am.  Dec.  62;  Sew- 
aneo  Mining  Co.  v.  McCall,  3  Head, 
619;  Jamea  v.  Lewis,  '.id  La.  Ann.  604; 
Hills  V.  Upton,  24  La.  Ann.  427;  Tay- 
lor V.  Robinson,  14  Cal.  399;  Hefifer- 
nan  v.  Addams,  7  Watts,  110;  Wood 
V.  McCain,  7  Ala.  800;  42  Am.  Dec. 


612;  City  Bank  v.  Kent,  57  Ga.  283; 
Pollock  V.  Cohen,  32  Ohio  St.  514; 
Feldman  v.  Beier,  78  N.  Y.  293;  Tem- 
ple V.  Pomroy,  4  Gray,  128. 

*  Hazeltine  v.  Miller,  44  Me.  177; 
Lawrence  v.  Gebhard,  41  Barb.  575; 
Gulick  V.  Grover,  33  N.  J.  L.  463;  97 
Am.  Dec.  728;  Bank  of  Hamburg  v. 
Johnson,  3  Rich.  42. 

*  Terry  v.  Fargo,  10  Johns.  114; 
Smith  r.  Gibson,  G  Blackf.  369. 

*  Layet  v.  Gano,  17  Ohio,  466. 

'  Chidsey  v.  Porter,  21  Pa.  St.  390. 


70 


PRINCIPAL   AND  AGENT. 


108 


10 


a  promissory  note.*  A  clerk  in  a  store  has  no  power  to 
give  a  note  for  money  borrowed  by  him;'^  nor  has  an  agent 
employed  in  the  manufacture  of  carriages  power  to  give 
notes  for  labor  and  materials.'  A  person  who  signs  or  in- 
dorsee a  note  with  blanks,  and  gives  it  to  another  to  use, 
impliedly  gives  him  authority  to  fill  the  blanks;*  and  such 
paper  in  the  hands  of  a  bona  fide  holder  will  be  valid, 
even  though  the  blanks  have  been  filled  by  the  agent 
for  unauthorized  sums.^  A  special  authority  conferred 
upon  an  agent  in  the  management  of  a  plantation,  and 
the  interests  connected  with  it,  to  demand  and  sue  for  all 
moneys,  etc.,  "subjecting  myself  to  be  sued  through  him, 
in  the  same  manner  as  if  I  was  personally  present,"  was 
held  not  to  give  the  agent  power  to  execute  a  note  in  the 
name  of  the  principal,  or  to  submit  matters  in  dispute 
to  arbitration  before  a  suit  was  brought.*  Authority  not 
under  seal,  "  to  sign  any  note  or  other  instrument  of 
writing,"  does  not  authorize  the  agent  to  execute  a  bill 
single.'  Authority  to  bind  a  corporation,  by  giving  a 
"  company  note,"  authorizes  a  bill  of  exchange  on  a 
person  who  had  no  funds.®  A  power  to  sell  and  con- 
vey land  gives  no  power  to  mortgage  it;®  and  so  of  a 
power  to  sell  personal  property.*"  An  agreement  by  a 
purchaser  of  goods,  that  a  third  person  shall  have  a  lien, 
by  mortgage  or  otherwise,  after  a  certain  time,  for  a  debt 
due  him  from  the  vendor,  does  not  constitute  the  vendor 
agent  of  the  purchaser  to  execute  such  mortgage."  One 
who  hires  a  boiler,  and  is  given  the  power  to  sell  it,  has 


1  Savage  V.  Rix,  9  N.  H.  263. 
^  Kern  V.  Piper,  4  Watts,  222. 
3  Pai^e  r.  Stone,  10  Met.  160;  43  Am, 
Dec.  421;  Dcnison  v.  lyaon,  17  Vt.  549, 


^  Alder  v.  Buckley,  1  Swan,  69. 
^  Tripp  V.  Swanzey  Paper  Co.,  13 
Pick.  291. 

*  Morris  v.  Watson,   15  Minn.  212; 


♦  Gillaspio  r.  Kelley,  41  Ind.  158;  13    Gaylord  v.  Stebbins,  4  Kan.  42;  Wood 


Am.  Rep.  318;  Holland  v.  Hatch,  11 
lad.  497;  Spitler  v.  James,  32  Ind. 
202;  2  Am.  Rep.  334;  Blackwell  v. 
Ketcham,  53  Ind.  184;  Abbott  v.  Rose, 
62  Me.  194;  10  Am.  Rep.  427. 

'^Id. 

®  Scarborough  v.  Reynolds,  12  Ala. 
858^ 


V.  Goodridge,  C  Cush.  117;  52  Am. 
Dec.  771;  Jeffrey  v.  Hursh,  49  Mich. 
31. 

'9  Switzer  v.  Wilvers,  24  Kan.  384; 
36  Am.  Rep.  259. 

''  Hyde  v.  Boston  and  Barre  Co., 21 
Pick.  90. 


no| 
mi 
th( 


108 


109 


NATURE   AND   EXTENT   OF   AUTHORITY. 


§70 


69. 
Co.,  13 


110  authority  to  mortgage  it,  and  if  ho  does  so,  the  owner 
may  maintain  replevin  against  the  mortgagee.'     An  au- 
thority to  sell  goods  does  not  give  power  to  pledge  them;" 
nor  does  an  authority  to  receive  payment  authorize  the 
pledging  of  a  note  received  for  the  debt;'*  nor  does  author- 
ity to  carry  on  a  manufacturing  business  give  power  to 
pledge  or  mortgage  its  machinery  or  buildings.^     A  clerk 
of  a  merchant,  to  do  out-door  business,  negotiate  pur- 
chases and  charter-parties,  and  present  bills  of  lading  for 
signature  on  shipping  property  of  the  merchant,  has  no 
authority  as  such  clerk  to  pledge  such  bills  of  lading  or 
to  receive  advances  thereon.®     A  verbal  authority  from 
an  absconding  debtor  to  assist  him  "  in  the  settlement  of 
his  affairs  "  will  not  authorize  a  pledge  of  his  furniture  as 
security  to  one  of  his  creditors.*    In  a  New  York  case  an 
agent  was  sent  to  a  city  for  the  purpose  of  hurrying  for- 
ward certain  rails  in  all  possible  ways,  and  to  see  that 
there  were  no  delays,  as  it  was  important  for  the  princi- 
pal to  have  them  at  once.     It  was  held  that  the  agent 
could  bind  the  principal  to  pay  a  sum  for  which  the  rails 
were  held  under  a  claim  of  lien.''    In  another,  the  defend- 
ants sent  their  teamster  with  a  note  to  the  plaintiff  to  get 
some  rye,  saying  that  they  would  pay  for  it  later.     Plain- 
tiff gave  the  rye  to  the  teamster,  saying  that  ho  would  not 
take  less  than  seventy-five  cents  per  bushel  for  it,  and 
telling  him  to  inform  defendants.     The  teamster  called 
the   next  day  for  another  load,  falsely  telling  plaintiff 
that  he  had  told  of  his  price,  and  that  defendants  were 
satisfied  with  it;  whereupon  plaintiff  gave  him  another 
load.     In  an  action  by  plaintiff  to  recover  the  seventy-five 


*  Stevens  v.  Cunningham,  3  Allen, 
491. 

''  Wheeler  and  Wilson  Sewing  Ma- 
chine Co.  V.  Givan,  65  Mo.  89;  Voss  v. 
Robertson,  46  Ala.  483;  Parsons  v. 
Webb,  8  Me.  38;  22  Am.  Dec.  220;  Vic- 
tor Sewing  Machine  Co.  v.  Heller,  44 
Wis.  265;  Miller  v.  Schneider,  19  La. 
Ann.  300;  92  Am.  Dec.  635. 


3  Jones  V.  Farley,  G  Greenl.  226; 
Hays  V.  Lynn,  7  Watts,  524. 

*  Despatch  Lino  v.  Bellamy  Mfg. 
Co.,  12  N.  H.  205;  37  Am.  Dec. 
203. 

*  Zachrisson  v.  Ahman,  2  Sand.  68. 
8  Swett  V.  Brown,  5  Pick.  178. 

'  Robinson  v.  Springfield  Iron  Co., 
39  Hun,  034. 


§71 


PRINCIPAL   AND   AGENT. 


110 


11 


cents  per  bushel,  it  was  held  that  the  teamster's  agency 
was  only  manual,  and  that  ho  could  not  bind  his  em- 
ployers by  assenting  to  the  price;  that  consequently  the 
parties  had  never  agreed  upon  a  price,  and  that  only  the 
market  value  could  be  recovered.* 

g  71.  What  Powers  Implied  (Oontinued) — Receive 
Payment. — An  authority  to  sell  chattels  gives  authority 
to  receive  payment,^  and  authority  to  receive  payment  of 
a  debt  includes  authority  to  receive  part  of  it."  An  agent 
to  sell  goods  on  credit  has  implied  authority  to  receive  pay- 
ment,* but  not  an  ordinary  agent  to  solicit  orders.*  A 
traveling  agent  to  sell  goods,  who  has  not  the  possession 
of  the  goods,  may  still  receive  payment  so  as  to  bind  his 
principal,  where  such  is  the  general  and  known  usage, 
and  it  has  been  recognized  by  the  principal."  An  ordi- 
nary authority  to  make  or  conclude  a  contract  gives  no  au- 
thority to  receive  payments  due  under  it.'  An  agent  to 
sell  land  on  credit  has  no  implied  authority  to  receive 
payment.*  An  agent  authorized  to  receive  payment  of  a 
debt  must  receive  payment  in  money."    He  has  no  au- 


» Booth  V.  Bierce,  38  N.  Y.  463;  98 
Am.  Dec.  73. 

»Rice  V.  GroflFmann,  56  Mo.  434; 
Bickncll  v.  Buck,  58  Ind.  354;  Collins 
V.  Newton,  7  Baxt.  269;  Hoskins  v. 
Johnson,  5  Sneed,  469.  A  son  who 
keeps  his  father's  books  and  accounts, 
and  figures  interest  on  notes,  has  no 
authority  to  collect  or  settle  such 
notes:  Reynolds  v.  Ferree,  86  111.  670; 
and  see  Bowen  v.  School  District,  36 
Mich.  149;  Harris  v.  Simmerman,  81 
111.  413. 

»  Whclan  v.  Reilly,  61  Mo.  565. 

*  And  the  fact  that  the  words  "pay- 
able at  oiEce ''  are  on  the  bill  rendered 
does  not  charge  the  buyer  with  notice 
to  the  contrary:  Putnam  v.  French, 
53  Vt.  402;  38  Am.  Rep.  682.  But 
the  words  "agents  not  authorized  to 
collect,"  in  large  print  on  the  bill,  is 
constructive  notice:  Mc Kindly  v.  Dun- 
ham, 55  Wis.  515;  42  Am.  Rep.  740. 

'  McKindly  v.  Dunham,  55  Wis.  515; 
42  Am.  Rep.  740;  Seiple  v.  Irwin,  30 


Pa.  St.  513;  Law  v.  Stokes,  32  N.  J.  L. 
249;  90  Am.  Dec.  655;  Butler  v.  Dor- 
man,  68  Mo.  298;  30  Am.  Rep.  795. 

«  Meyer  v.  Stone,  46  Ark.  210;  55 
Am.  Rep.  577. 

'  Williams  v.  Walker,  2  Sand.  Ch. 
425;  Doubleday  v.  Kress,  40  N.  Y. 
410;  10  Am.  Rep.  502;  Komemann  v. 
Monaghan,  24  Mich.  36. 

^  Mann  v.  Robinson,  19  W.  Va.  49; 
42  Am.  Rep.  771. 

"Padfield  V.  Green,  85  111.  529; 
Woodbury  v.  Lamed,  5  Minn.  339; 
Scobey  v.  Woods,  3  Baxt.  06;  Stewart 
V.  Woodward,  50  Vt.  78;  28  Am.  Dec. 
488;  Sweeting  v.  Pearce,  7  Com.  B., 
N.  S.,  449;  Mann  r.  Robinson,  19  W. 
Va.  49;  42  Am.  Rep.  771.  Bank  bills 
( r  other  current  funds  are  suflBcient: 
Rodgerst'.  Bass,  46  Tex.  505;  Coleman 
V.  Wingfield,  4  Ilcisk.  133;  Dillard  v. 
Clements,  2  Baxt.  137;  but  not  con- 
federate notes:  Mangum  v.  Ball,  43 
Miss.  288;  5  Am.  Rep.  488;  Webster 
V.  Whitworth,  49  Ala.  210. 


th 

of 

in 
du| 


Ill 


NATURE   AND   EXTENT   OP   AUTHORITY. 


§71 


3mann  v. 


thority  to  tako  property  in  exchange/  or  negotiable  paper 
of  or  from  the  debtor,^  or  to  extend  the  time  of  payment 
in  whole  or  in  part,'^  nor  to  receive  the  debt  before  it  is 
due/  or  only  part  of  it  for  the  whole." 

In  the  absence  of  special  instructions  to  an  agent  to 
collect  in  gold  or  silver  currency,  a  payment  to  the  agent 
in  bank  bills,  or  other  currency  generally  taken  and  used 
in  the  payment  of  debts,  and  current  in  business  trans- 
actions as  money,  satisfies  the  debt.*  A  salesman  author- 
ized to  make  .  .los  on  credit  has  no  authority  to  collect 
subsequently  the  price.'  An  authority  to  make  a  contract 
for  the  sale  of  land  gives  authority  to  receive  so  much  of 
the  purchase-money  as  is  paid  down;*  but  an  authority  to 
sell  property  does  not  include  authority  to  receive  pay- 
ment," nor  does  an  authority  to  negotiate  a  bargain.'"  Un- 
less a  principal  has  held  his  selling  agent  out  to  the  buyer 
as  having  authority  to  collect,  a  payment  to  the  agent  is 
not  good."  A  canvassing  agent  for  the  sale  of  subscrip- 
tion books  has  no  authority  to  receive  payment  for  books 
sold  but  not  delivered  by  him."  A  debtor  whoso  debt  is 
evidenced  by  a  written  security  must  see  that  the  person 


» Kirk  V.  Hiatt,  2  Ind.  322;  Ault- 
man  v.  Lee,  43  Iowa,  404.  Authority 
to  an  agent  to  receive  payment  of  a 
debt  for  his  principal  does  not  author- 
ize! the  agent  to  receive  a  part  in  mer- 
chandise: Rhine  V.  Bhike,  59  Tex,  240. 
All  agent  for  the  collection  of  a  note 
is  confined  to  the  taking  of  money  in 
payment,  and  has  no  power  unless 
special  authority  is  given  to  take 
goods  in  payment:  Mudgett  v.  Day, 
12  Cal.  139. 

^  Drain  v.  Doggett,  41  Iowa,  682; 
McCulloch  V.  McKee,  16  Pa.  St.  289; 
Hall  V.  Storrs,  7  Wis.  253;  Bertholf  v. 
Quinlan,  68  111.  297. 

^  flutchiugs  V.  Hunger,  41 N.  Y.  158; 
Chappel  V.  Raymond,  20  La.  Ann. 
277;  Gcrrish  v.  Maher,  70  111.  470. 

♦Smith  V.  Kidd,  68  N.  Y.  130;  23 
Am.  Rep.  157;  Mann  v.  Robinson,  19 
W.  Va.  49-;  42  Am.  Rep.  771. 

*  Pratt  V.  United  States,  3  Nott  & 
H.  106;  McHany  v.  Schenk,  83  111. 


357;  Patterson  v.  Moore,  34  Pa.  St. 
69. 

«  Rodgers  v.  Bass,  46  Tex.  505. 

'  Seiplo  V.  Irwin,  30 Pa.  St.  515;  Law 
V.  Stokes,  32  N.  J.  L.  249;  90  Am. 
Dec.  655. 

«  Yerby  i-.  Grigsby,  9  Leigh,  387; 
Peck  V.  Harriott,  6  Serg.  &  R.  145; 
Goodale  v.  Wheeler,  11  N.  II.  424; 
Hoskins  v.  Johnson,  5  Snced,  469; 
Rice  V.  Goffmann,  56  Mo.  434;  Johnson 
V.  McGruder,  15  }JI.\  365;  Higgins 
V.  Moore,  6  Bosw  ',<  i-l  Power  to  col- 
lect a  note  given  foi-  balance  of  pur- 
chase-money may  be  inferred  from 
authority  to  sell  land  and  take  note  in 
payment:  Rodgers  v.  Bass,  46  Tex.  505. 

•Higgins  V.  Moore,  .34  N.  Y.  417: 
Catterall  v.  Kindle,  L.  R.  1  C.  P.  186. 

'«  Doubleday  v.  Kress,  60  N.  Y.  410; 
10  Am.  Rep.  602;  Austin  v.  Thorp,  30 
Iowa,  376. 

"  Clark  V.  Smith,  88  111.  298. 

"  Chambers  v.  Short,  79  Mo.  201. 


8  71 


PRINCIPAL  AND  AGENT. 


112 


to  whom  1)0  pays  tho  debt,  as  agent  of  tho  principal,  has 
tho  written  security  in  his  possession.'  Tho  presumption 
of  authority  of  the  agent  to  collect  a  security  for  a  debt 
in  his  custody  ceases  when  tho  security  is  withdrawn  by 
the  principal  from  his  custody;^  so  one  authorized  to  sell 
property,  and  take  a  note  in  payment  ii  principal's 

name,  after  ho  has  delivered  tho  note  to  iho  principal, 
has  no  authority  to  receive  payment  thereof.*  Delivering 
a  note,  unindorsed,  to  another  for  collection,  will  author- 
ize him  to  receive  payment  and  deliver  it  to  tho  maker, 
but  will  not  authorize  hiin  to  sue  on  it  for  his  own  use.* 


on 

<](< 

fr( 

no 

re 

an 

dc 

an 

iin 

ci 

fe 

n 


Illustrations.  —  Plaintiff's  traveling  salesman  sold  a  bill 
of  goods  to  defendant  on  credit.  Plaintiff  forwarded  tho  goods 
to  the  latter,  together  with  a  letter  and  bill  of  items,  upon  tho 
top  of  which  was  printed  a  provision  that  payment  nmst  bo 
made  to  the  principal,  and  that  salesmen  were  not  authorized 
to  collect.  Defendant's  book-keeper  received  tho  bill,  but  tho 
printed  stipulation  was  not  read,  and  aftcrwarc's  defendant,  at 
1)13  own  place  of  business,  paid  the  agent  for  *  (roods.  Held, 
that  this  did  not  discharge  the  debt  to  plaint  aw  v.  Stoics, 

32  N.  J.  L.  249;  90  Am.  Dec.  655.  A  writ  was  issued  in  tho 
name  of  A  as  plaintiff,  and  at  the  time  of  issuing  it  A  indorsed 
thereon  that  the  suit  was  brought  to  tho  use  of  B.  Held,  that 
A  thereby  made  B  his  agent  to  receive  and  collect  tho  amount 
of  tho  debt  sued  for,  and  that  as  it  was  for  his  own  use,  B 
might  receive  anything  he  thought  proper  for  tho  debt:  Clark 
V.  Shields,  3  Hawks,  4G1.  An  agent  was  employed  for  tho  pur- 
pose of  superintending  the  sale  of  stoves  and  hollow-ware  for  his 
principal  in  a  given  section  of  country,  and  authorized  to  re- 
ceive payment  therefor  in  different  articles  of  the  produce  of 
the  country.  Held,  not  authorized  to  execute  a  note  payable  in 
such  wares  at  a  future  day,  and  thus  bind  his  principal  by  his 
acknowledgment  of  value  received:  Denison  v.  Tyson,  17  Vt. 
549.     Defendant  bought  ale  of  B.  &  Co.,  who  professed  to  act 


*  Tappan  ?>.  Morseinan,  18  Iowa,  499; 
Smitli  V.  Kidd,  G8  N.  Y.  1.30;  2.1  Am. 
Rep.  157.  But  it  has  been  held  that 
the  possession  by  an  assumed  agent  of 
a  promissory  note  payable  to  the  or- 
der of  the  payee,  and  not  indorsed  by 
him,  was  not  alone  sufficient  evidence 
of  his  authority  to  authorize  a  pay- 
ment thereof  to  him:  Doubleday  v. 
Kreaa,  50  N.  Y.  410;  10  Am.  Rep.  502. 


■■•Guilford  v.  Stacer,  53  Ga.  G18; 
Haines  v.  Pohlmann,  25  N.  J.  En.  179. 
And  this  is  so  even  where  the  debt  lias 
been  contracted  or  negotiated  through 
the  agent:  Haines  v.  Pohlmann,  '25 
N.  J.  Eq.  129;  Smith  v.  Kiild,  08  N.  Y. 
130;  23  Am.  Rep.  157. 

*  Draper  v.  Rice,  56  Iowa,  114;  41 
Am.  Rep.  88. 

«  Padfield  v.  Green,  85  111.  529. 


112 


113 


NATURE    AND   EXTENT   OF   AUTHOUrXY.      §§72,73 


pur- 
for  his 

to  re- 
luce  of 
iblo  in 
I  by  his 
|l7  Vt. 

to  act 


on  their  own  account.  The  ale  belonged  to  plaintifT,  ami  was 
tlcliv(!re(l  to  (h  fendantupon  an  order  for  it  obtained  by  1>.  A-  Co. 
from  plaintiff.  Defendant  paid  H.  6:  Co.  for  the  ale,  and  liad 
no  knowledge  of  plaintilT't*  interest  until  after  the  ale  was  re- 
ceived and  paid  for.  Held,  that  plaintifT  cannot  HUe  the  (h^fend- 
ant  for  the  purchaBe-money;  that  the  fiut  that  the  order  of 
delivery  came  from  plaintiff  was  not  suflieient  to  give  defend- 
ant notice  of  plaintiff's  right,  and  that  the  transaction  comes 
under  the  doctriiM'S  ai)plieable  to  agents  of  an  undisclosed  prin- 
cipal contracting  in  their  own  names,  who,  when  empowered  to 
eell,  may  receive  p^Vi  icnt:  Kumlry  v.  Cnrhrtt,  IH  Cal.  41)4.  On 
a  bill  presented  by  ai;  agent  was  printed  in  red  ink,  in  Bmall 
typo,  a  direction  to  pay  d  the  princiiial's  ofliee,  or  by  check  to 
liis  order.  The  employment  of  the  agent  was  to  sell  by  sample. 
Ilehl,  that  a  purchaser  who  had  paid,  in  good  faith,  the  bill  to 
the  agent  was  releasc'd  from  liability  to  the  principal:  Trainer 
V.  Morison,  78  Mo.  IGO;  57  Am.  Hep.  700. 

§72.  What  Powers  Implied  (Continued)  —  Renting 
Store — Rescind  Contract.  —  A  principal  is  liable  for  the 
rent  of  a  store  occupied  by  his  ngcnt  in  carrying  on  his 
business.^  An  authority  to  make  a  contract  gives  no  au- 
thority to  cancel  or  rescind  it."  An  agent  to  carry  out  a 
contract  already  made  cannot  change  the  contract  or 
make  a  new  one.*  An  authority  to  sell  gives  no  j^owcr  to 
rescind  the  sale  and  adjust  damages  for  a  breach  of  war- 
ranty.* 

§  73.  What  Powers  Implied  (Continued)  —  To  Sell  — 
Settle  —  Suretyship  —  Tender  —  Transfer  —  Voluntary 
Conveyance.  —  A  power  to  conduct  and  control  the  prin- 
cipal's affairs  in  liis  absence  does  not  authorize  the  sale  of 
his  land,*^  nor  a  power  to  locate  land."  To  make  another 
"his  general  and  special  agent  to  do  and  transact  all  man- 
ner of  business  "  does  not  authorize  him  to  sell  stocks  or 
other  property  of  the  principal.^     One  employed  to  drive 


'■  Tucker  v.  Woolaey,  64  Barb.  142; 
C  Lana.  482. 

^  Stoddard  v.  Warren,  7  Rep.  517; 
Diversy  v.  Kellogg,  44  III.  114;  92  Am. 
Dec.  154;  Stilwell  v.  Mut.  las.  Co.,  72 
N.  Y.  385. 

Vol.  I.— 8 


»  Gerrish  r.  Maher,  70  111.  470. 

*  Bradford  v.  Bush.  10  Ala.  3SG. 

*  Watson  V.  Hopkins,  27  Tex.  637. 

*  Moore  v.  Lockett,  2  Bibb,  67;  i-. 
Am.  Deo.  683. 

^  Hodge  V.  Combs,  1  Black,  192. 


§74 


PRINCIPAL  AND  AGENT. 


114 


stock  from  one  town  to  another  has  no  authority  to  sell 
any  animal  that  becomes  foot-sore,  and  his  sale  passes  no 
title.*  A  request  in  a  letter  to  put  certain  accompanying 
lottery-tickets  into  such  hands  as  he  shall  think  safe  will 
not  authorize  a  sale  by  him  on  credit.'^  Where  one  au- 
thorized his  debtor  to  leave  a  note  or  the  money  with  his 
son,  it  was  held  that  no  authority  could  be  implied  from 
this  for  the  son  to  sell  the  note  to  a  stranger.'  There  is, 
ordinarily,  no  implied  authority  on  the  part  of  a  commer- 
cial traveler  to  sell  the  samples  intrusted  to  him."*  A  tele- 
graph operator  cannot  settle  claims  against  the  companj'.® 
One  cannot  bind  his  principal  as  surety  unless  specially 
authorized."  A  tender  to  an  agent  authorized  to  receive 
payment  binds  the  principal.^  A  transfer  is  \alid  where 
the  owner  of  bank  stock  delivers  a  certificate  thereof  with 
an  indefinite  power  of  disposition  in  blank  to  his  agent, 
who,  representing  it  as  his  own,  transfers  the  certificate 
and  power  to  a  purchaser  in  the  lourse  of  business  as 
payment  for  a  loan.®  A  power  to  sell  realty  for  such  price 
and  on  such  terms  as  might  seem  meet  will  not  authorize 
a  conveyance  in  consideration  of  natural  love  and  affec- 
tion,"  or  for  a  nominal  consideration  only.*" 

§  74.  What  Powers  Implied  (Continued) — Waiver — 
Warranty. — An  agent  to  sell  and  deliver  thrashing-ma- 
chines, the  purchaser  to  return  the  machine  within  a 
certain  time  if  it  does  not  work  vvell,  has  authority  to 
waive  such  return."  An  agent  to  receive  articles  cannot 
dispense  with   their  delivery."    The  authority  to  make 


» Reitz  V.  Ma  tin,  12  Ind.  306;  74 
Am.  Dec.  215. 

■^  Brown  v.  Bull,  3  Mass.  211. 

=>  Ames  V.  Drew,  31  N.  H.,  475. 

♦Kolin  V.  Washer,  64  Tex.  131; 
53  Am.  Rep.  745. 

*  Western  Union  Telegraph  Com- 
pany V.  Rains,  63  Tex.  27. 

•State  V.  Daspit,  30  La.  Ann.  1112; 
Bank  of  Hamburg  v.  Johnson,  3  Rich. 
42. 

^  Moffatt  V.  Parsons,  5  Taunt.  307; 


Manhattan  Ins.  Co.  v.  LePert,  52  Tex. 
504. 

»  State  Bank  v.  Cox,  11  Rich.  Eq. 
344;  78  Am.  Dec.  459. 

»  Mott  V.  Smith,  16  Cal.  536. 

'•  Meade  v.  Brothers,  28  Wis.  689. 

"  Pitsinowsky  i\  Beardsley,  37  Iowa, 
9;  and  see  Zaleski  v.  Clark,  44  Conn. 
318,  26  Am.  Rep.  446,  as  to  power  to 
make  condition  that  article  may  be 
returned  if  not  satisfactory. 

"  Boyett  V.  Braswell,  72  N.  C.  26a 


! 


114 


115 


NATURE  AND  EXTENT  OP  AUTHORITY. 


§74 


3.  689. 

17  Iowa, 

Conn. 

nwer  to 

may  be 

C.  260. 


contracts  for  the  purchase  of  grain  gives  authority  to 
modify  or  waive  such  contract.^  Authority  in  a  son  to 
keep  his  father's  books  and  accounts,  and  to  compute  the 
interest  due  on  notes,  does  not  show  authority  in  the  son 
to  settle  a  note  by  agreeing  to  take  a  quantity  of  corn  in 
full  satisfaction.''  An  agent  of  an  insurance  company,  to 
receive  premiums  and  applications  for  insurance  and 
transmit  policies,  has  no  authority  to  waive  notice  of  an 
assignment  of  a  policy."  Where  a  general  agent  was  au- 
thorized by  an  insurance  company  "to  receive  applica- 
tions for  insurance  and  reinsurance,  to  be  submitted  for 
approval,"  and  he  was  "authorized  to  make  applications 
binding  until  disapproval,"  it  was  held  that  an  agree- 
ment made  by  him  to  extend  a  policy  not  disapproved 
was  valid.*  A  general  authority  to  sell  carries  with  it  an 
authority  to  warrant,*  but  a  special  authority  to  sell  a 
particular  thing  does  not.® 

But  there  is  no  authority  to  warrant  as  to  the  future 
condition  of  the  goods,'  nor  to  make  an  unusual  warranty,^ 


*  Anderson  v.  Coonley,  21  Wend. 
279;  Owen  v.  Brockschmidt,  54  Mo. 
285. 

*  Reynolds  v.  Ferree,  86  111.  570. 

'  Tate  V.  Citizens'  etc.  Ins.  Co.,  13 
Gray,  79. 

*  Leeds  V.  Mechanics'  Ins.  Co.,  8 
N.  Y.  357. 

*  Schuchardt  v.  Allen,  1  Wall.  359; 
Tice  V.  Gallup,  2  Hun,  440;  Nulson  v. 
Cowing,  6  Hill,  337,  overruling  Gib- 
son «>.  Colt,  7  Johns.  390;  Saudford  v. 
Handy,  23  Wend.  200;  Bryant  v. 
Moore,  20  Me.  84;  45  Am.  Dec.  96; 
Randall  v.  Kehlor,  GO  Me.  37;  11  Am. 
Rep.  169;  Gaines  v.  Me  linley,  1  Ala. 
440;  Bradford  v.  Buah,  10  Ala.  380; 
Ezel  t>.  Franklin,  2  Hueed,  230;  Frank- 
lin V.  Eztdl,  1  Sneed,  497;  Hunter 
V,  Jameson,  0  Ired.  252;  Boothljy  v. 
Scales,  27  Wis.  620;  Woodford  v. 
McClenahaii,  4  Gilm.  85;  Murray  v. 
Brooks,  41  Iowa,  45;  Fay  r.  Rich- 
mond, 43  Vt.  25;  Pal  iier  v.  Hatch,  46 
Mo.  585;  Morris  v.  Bo  wen,  52  N.  H. 
416;  Croom  v.  Shaw,  1  Fla.  211;  Skin- 
ner V.  Guun,  9  Port.  305;  Cocke  v. 


Campbell,  13  Ala.  286;  Peters  v. 
Faruijworth,  15  Vt.  155;  40  Am.  Dec. 
671;  Taggart  v.  Stanbcry,  2  McLean, 
543;  Andrews  v.  Kneelaud,  6  Cow. 
354;  Ferguson  v.  Hamilton,  35  Barb. 
427;  Milburn  v.  Belloni,  34  Barb.  607; 
McCormiuk  v.  Kelly,  28  Minn.  11(5. 
If  it  is  the  custom  of  the  x)articular 
trade:  Pickert  v.  Marston,  68  Wis. 
465;  60  Am.  Rep.  877;  Scott  v. 
McGrath,  7  Barb.  53;  Lipscomlj  v. 
Kitrell,  11  Humph.  256. 

**  Cooley  i\  Perrine,  41  N.  J.  L. 
322;  32  Am.  Rep.  210;  Brady  v.  Todd, 
9  Com.  B.,  N.  S.,  592. 

'  Illustrations:  A  was  authorized 
by  B  to  sell  flour.  I/eld,  that  A  had 
no  autliority  to  warrant  that  the  flour 
would  keep  s^yeet  during  a  sea-voyage: 
Upton  V.  SuS'olk  Mills,  1 1  Cush.  580; 
59  Am.  Dec.  163.  B's  agunt  takes 
goodj  of  C  to  sell  on  commission. 
Ho  has  no  authority  to  gi\araiitue 
the  price  they  will  bring:  Quiun  v, 
Carr,  6  Thomp.  &  C.  402;  4  Hun, 
259. 

8  Palmer  v.  Hatch,  46  Mo.  585. 


§75 


PRINCIPAL   AND  AGENT. 


IIG 


nor  to  warrant  goods  not  usually  sold  with  a  warranty.* 
A  buyer  who  knows  the  kind  of  warranty  which  the  agent 
is  authorized  to  give  cannot  take  from  hira  an  unauthor- 
ized warranty  and  hold  the  principal  on  it.''  A  power  to 
sell  land  authorizes  a  conveyance  with  a  general  war- 
ranty.' A  general  agent  for  the  sale  of  safes  has  no  au- 
thority to  warrant  them  burglar-proof  in  the  absence  of  a 
general  custom,  presumably  known  to  buyer  and  seller,  to 
do  so.^  A  power  given  by  a  seller  of  certain  sacks  of  wool 
to  a  third  person,  to  weigh  the  same  and  deliver  them  to 
the  buyer,  does  not  authorize  the  agent  to  make  any  war- 
ranty on  the  part  of  the  seller  as  to  the  quality  of  the 
wool.^ 

Illustrations.  —  A  made  a  warranty  that  whisky  which  he 
was  authorized  to  sell  by  B  would  not  be  seized  for  a  prior  vio- 
lation of  the  revenue  laws.  Held,  not  binding  on  B:  Palmer  v. 
Hatch,  46  Mo.  585.  C  wrote  to  his  agent  that  he  proposed  to 
"place"  his  goods  at  a  certain  price.  Held,  that  the  agent  had 
no  authority  to  warrant  that  his  principal  would  not  sell  for  a 
less  price:  Anderson  v.  Bruner,  112  Mass.  14. 

§  75.  Carrier's  Agents. — A  contract  for  the  carriage 
of  goods,  made  with  an  agent  of  the  carrier,  is  the  same 
as  if  made  with  the  carrier  himself.®  A  general  freight 
agent  can  bind  the  railroad  company  by  a  contract  with 
a  shipper  to  furnish  a  certain  number  of  cars  at  a  certain 
place  on  a  certain  day.'  The  agents  of  an  express  com- 
pany cannot  bind  their  principal  for  goods  received  out- 
side the  office.* 


'  An  agent  employed  to  sell  bank 
stock  has  no  authority  to  warrant  it: 
Smith  V.  Tracy,  36  N.  Y.  79. 

'^  Wood  Mowing  and  Reaping  Ma- 
chine Co.  V.  Crow,  70  Iowa,  340. 

*  Vanda  v.  Hopkins,  1  J.  J.  Marsh. 
285;  19  Am.  Dec,  92;  Peters  v.  Fariis- 
worth,  15  Vt.  155;  40  Am.  Dec.  671. 
See  Bronson  v.  Coffin,  118  Mass.  156. 

*  Herring  v.  Skaggs,  73  Ala.  44G;  34 
Am.  Rep.  4. 


*  Richmond  Trading  and  Mfg.  Co. 
V.  Farquar,  8  Blackf.  89. 

«  Mayall  v.  Boston  etc.  R.  R.  Co.,  19 
N.  H.  122;  Reynolds  v.  Toppan,  15 
Mass.  370;  8  Am.  Dec.  110;  Goodrich 
V.  Thompson,  4  Rob.  75;  44  N.  Y. 
324. 

^  Baker  v.  Kansas  City,  St.  Joseph, 
etc.  R.  R.  Co.,  91  Mo.  152. 

*  Cronkite  v.  WeUs,  32  N.  Y.  247. 


116 


'g.  Co. 

Co.,  19 
an,  15 
oilrich 
N.  Y. 

oseph, 

247. 


117 


NATURE  AND  EXTENT  OP  AUTHORITY. 


§76 


§  76.  Railroad  Servants. — A  foreman  porter,  in  charge 
of  a  station  in  the  absence  of  the  station-master,  has  no  im- 
plied authority  to  give  in  charge  a  person  whom  he  suspects 
of  stealing  the  company's  property;^  a  ticket  clerk  has  no 
authority  to  do  a  similar  thing  ;^  the  agents  of  a  railroad 
have  no  authority  to  make  contracts  to  carry  beyond  its 
route;'  a  railroad  yard-master  has  no  authority  to  employ 
a  surgeon  for  an  employee  injured  by  the  cars;*  nor  has 
a  superintendent  of  a  railroad,^  or  a  station-master,"  au- 
thority to  employ  a  surgeon  to  attend  an  injured  passen- 
ger or  other  person.  A  station  agent  has  no  authority  to 
sign  bills  of  lading  for  goods  not  received  ;^  but  he  has 
implied  authority  to  contract  to  furnish  a  certain  number 
of  cattle-cars  at  his  station  on  a  certain  day.*  A  physician, 
in  the  employ  of  a  railroad,  with  authority  to  buy  medi- 
cines, has  no  implied  power  to  contract  for  board,  lodging, 
and  nursing  of  a  person  injured  by  the  cars.®  The  surgeon 
of  a  railroad  company  has  no  implied  authority  to  bind 
the  company  by  an  agreement  to  pay  for  services  and 
meals  furnished  nurses  and  others  in  attendance  upon  an 


'  El  wards  v.  Londoa  etc.  R.  R.  Co., 
L.  R.  5  Com.  P.  445. 

-  Allen  i\  London  etc.  R.  R.  Co., 
L.  R.  G  Q.  B.  Go. 

^  Wait  V.  Railroad  Co.,  5  Lans.  475; 
Burroughs  v.  Railroad  Co.,  100  Mass. 
20;  1  Am.  Rep.  78;  Grover  Machine 
Co.  V.  Railroad  Co.,  70  Mo.  672;  35 
Am.  Rep.  444. 

*  Marquette  R.  R.  Co.  v.  Taft,  28 
Mich.  289;  Cairo  etc.  R.  R.  Co.  v. 
Mahoney,  82  111.  73.  In  England  a 
general  manager  has  such  authority: 
Walker  v.  Railroad  Co.,  L.  R.  2  Ex. 
228. 

^  Stephenson  v.  Railroad  Co.,  2Duer, 
^1. 

•*  Cox  r.  Railroad  Co.,  3  Ex.  2C8. 

'  Baltimore  etc.  R.  R.  Co.  v.  Wil- 
kena,  44  MJ.  11;  22  Am.  Rep.  26. 
But  see  Armour  v.  Michigan  Central 
R.  R.  Co.,  Co  N.  Y.  Ill;  22  Am.  Rep. 

co:j. 

•*  Harrison  v.  Missouri  Pacific  R.  R. 
Co.,  74  Mo.  3G4;  41  Am.  Rep.  318. 
"It  may  be  safely  affirmed,"  said  the 


court  in  this  case,  "that  a  station 
agent,  clothed  with  the  power  and 
whose  duty  it  is  to  receive  and  forward 
freight,  who  makes  a  contract  within 
the  scope  of  his  apparent  autliority, 
thereby  binds  the  company  he  rep- 
resents, although  in  making  such  a 
contract  he  may  have  exceeded  his 
authority;  and  when  sucli  company 
seeks  to  absolve  itself  from  liability 
arising  under  such  contract,  on  the 
ground  that  the  agent,  although  ap- 
parently authorized  to  make  it,  in  fact 
had  no  such  authority,  it  must  show 
that  the  party  with  whom  the  contract 
was  made  had  knowledge  of  the  fact 
that  the  acent  was  acting  beyond  his 
authority. '  To  show  that  an  agent  of 
a  railroad  company  settled  for  stock 
injured  does  not  tend  to  show  his  au- 
thority to  act  in  regard  to  the  road- 
bed, ditches,  or  drainage:  Drake  v. 
Chicago,  Rock  Island,  etc.,  R.  R.  Co., 
70  Iowa,  59. 

•  Maybery  v.   Chicago   etc.   R.  R. 
Co.,  75  Mo.  492. 


76 


PRINCIPAL  AND  AGENT. 


118 


employee  injured  by  an  accident  on  the  road,  and  under 
the  surgeon's  treatment.*  A  station  agent  may  bind  the 
carrier  by  a  contract  beyond  its  legal  duties  and  in  con- 
flict with  its  regulations;  he  may  agree  to  carry  to  a  place 
or  at  a  time  other  than  the  rules  of  the  company  permit.^ 
The  agent  of  a  railroad  company  for  the  sale  of  tickets 
has  authority  to  make  a  contract  with  a  passenger  which 
is  at  variance  with  the  printed  conditions  of  the  ticket  ;* 
but  in  the  absence  of  evidence,  the  presumption  is,  that  a 
ticket  agent  at  a  way-station  has  no  authority  to  change 
or  modify  contracts  between  the  company  and  its  through- 
passengers.'*  But  an  agent  employed  for  the  sole  purpose 
of  soliciting  passengers  to  patronize  the  road  of  the  com- 
pany, and  who  is  not  held  out  by  the  company  as  their 
agent  for  any  other  purpose,  has  no  power  to  bind  the 
company  by  a  contract  to  receive  freight  from  another 
road  and  transport  it  to  the  depot  of,  and  ship  it  on, 
the  road  for  which  he  is  such  agent.*  An  engineer  in 
the  service  of  a  railroad  company  has  no  power,  with- 
out special  authority,  to  bind  the  company  by  his  con- 
tracts.' Authority  to  an  assistant  superintendent  to 
employ  a  station  agent  includes  the  authority  to  agree  on 
his  compensation."  Where  a  manager  of  a  railroad  is 
authorized,  in  case  of  accident,  to  clear  the  road,  he  acts 
"within  the  general  scope  of  his  authority  in  putting  a  lot 
of  swine,  let  loose  by  an  accident,  into  a  farmer's  yard.* 


*  Buslinell  v.  Chicago  and  North- 
western R'y  Co.,  6D  Iowa,  020. 

^  Pickt'ord  i\  Railroad  Co.,  12  Mees. 
&  W.  76(i;  Wilson  v.  Railroad  Co.,  18 
Eng.  L.  &  Eq.  557;  Strohn  v.  Detroit 
etc.  R.  R.  Co.,  23  Wis.  126;  Deming 
V.  Grand  Trunk  R.  R.  Co.,  48  N.  H. 
455;  Lackawanna  R.  R.  Co.  v.  Chene- 
with.  52  Pa.  St.  382;  91  Am.  Dec.  108. 

'  Burnham  v.  Grand  Trunk  R.  R. 
Co.,  63  Me.  298;  18  Am.  Rep.  220. 


*  McClure  v.  Philadelphia  etc.  R. 
R.  Co.,  34  Md.  532;  6  Am.  Rep. 
345. 

*  Taylor  v.  Chicago  etc.  R.  R.  Co., 
74  111.  86. 

'  Gardner  v.  Boston  and  Maine  R. 
R.  Co.,  70  Me.  181. 

*  Alabama  Great  Southern  R.  R.  Co. 
V.  Hill,  76  Ala.  303. 

*  Hawks  V.  Locke,  139  Mass.  205; 
52  Am.  Bep.  702. 


118 


119 


DUTIES   AND    LIABILITIES   OF   AGENT. 


§77 


3.   Duties  and  Liabilities  Arising  out  of  the  Con- 
tract OF  Agency. 


con- 


CHAPTER   IX. 

DUTIES  AND  LIABIUTIES  OF  AGENT  TO  PRINCIPAL. 

§  77.  Duties  of  agent. 

§  78.  To  act  as  agent. 

§  79.  To  perform  duties  in  person. 

§  80.  To  give  notice  to  i)rincipal. 

§  81.  To  obey  instructions  and  orders  —  When  excused. 

§  82.  To  act  in  good  faith  and  in  principal's  interest. 

§  83.  To  use  reasonable  skill  and  diligence. 

§  84.  Deputies. 

§  85.  Profits  belong  to  principal. 

§  86.  Losses  must  be  borne  by  principal. 

§87.  Keeping  and  deposit  of  money — Mode. 

§  88.  Remittance  by  agent  —  Mode. 

§  89.  To  keep  accounts. 

§  90.  Cannot  dispute  principal's  title. 

§  91.  Mixing  property. 

§  92.  Agent  making  profits. 

§  93.  Pur^ihasing  and  selling  property. 

§  94.  Agent  of  both  parties. 

§  77.  Duties  of  Agents. — There  are  certain  duties 
which  the  agent  owes  to  his  principal,  and  which  the 
principal  has  a  right  to  expect  of  his  agent.  For  a  viola- 
tion of  such  duties  the  agent  is  responsible  for  all  the 
damages  which  are  the  natural  result  thereof.*  And  an 
agent  who  has  become  responsible  to  his  principal  for  the 
misconduct  of  his  own  subagent  may  recover  from  such 
subagent  what  he  has  been  compelled  to  pay  the  princi- 
pal.'' 

>Wits    r.   Morrill,   66    Barb.    511;    Wade,  58  Tenn.  480;  Dodge  v.  Tillot- 
Price  V.  Keyes,  02  N.  Y.  378;  Bell  v.     son,  12  Pick.  .S28. 
Cunningham,  3  Pet.  69;   Johnson  v.        '*  Pownall  v.  Bair,  78  Pa.  St.  403. 


§78 


PRINCIPAL  AND  AGENT. 


120 


§  78.  To  Act  as  Agent. — A  paid  agent  must  perform 
the  duties  of  his  office,  and  if  he  neglects  to  enter  upon 
the  performance  of  what  ho  has  undertaken  to  do,  he  will 
be  liable  to  the  principal.*  A  gratuitous  agent  is  not 
liable  for  refusing  to  undertake  or  for  the  duties  of  the 
agency;'^  but  once  undertaken,  he  is  liable  for  disre- 
garding instructions  whereby  a  loss  occurs  to  the  princi- 
pal.' If  it  is  the  usage  of  a  place  that  a  mercentile  agency 
should  bo  executed  in  a  particular  way,  the  parties  who 
authorize   and   agree  to  exercise   this  agency  impliedly 


*  Evans  on  Agency,  309. 

'■*  Evans  on  Agency,  325;  Elaee  v.  Gal- 
ward,  5  Term  Rep.  143;  BaUev.  West, 
13  Com.  B.  4(56.  In  Morrison  v.  Orr, 
3  Stew.  &  P.  49,  23  Am.  Dec.  319,  it 
was  held  that  the  non-feasance  of  a 

gratuitous  undertaking  created  no  lia- 
ility.  In  this  case  Orr  placed  in  the 
hands  of  Morrison  the  exemplification 
of  a  judgment  rendered  against  a  third 
person,  for  which  Morrison  gave  a  re- 
ceipt, in  which  it  was  said:  "I  am  to 
endeavor  to  collect  said  amount  and 
pay  it  over  to  said  Orr."  Morrison 
failed  to  do  anything,  and  was  sued  for 
damages.  The  judge  instructed  the 
jury  that  they  were  bound  to  infer,  in 
the  absence  of  any  evidence  on  the 
subject,  that  Morrison  was  to  receive 
compensation  for  his  agency,  and  that 
he  was  therefore  bound  to  greater  dili- 

f;ence  than  he  had  exercised,  and  was 
iable.  On  appeal  this  was  held  erro- 
neous. "If,  '  said  the  court,  "Mor- 
rison had  been  an  attorney,  whose 
business  and  employment  was  the  col- 
lection of  debts,  there  is  no  doubt 
that  the  inference  drawn  by  the  judge 
would  have  been  correct.  If  one  re- 
ceives business  within  the  line  of  his 
profession  or  occupation,  and  promises 
attention  to  it,  — or  if  he  does  not  make 
an  express  promise,  one  would  be  im- 
plied, —  the  law  would  create  a  pre- 
sumption that  he  was  to  receive  the 
ordinary  compensation,  although  not 
a  word  had  been  said  about  compensa- 
tion. But  it  seems  to  me  that  the 
presumption  rests  entirely  on  the 
ground  that  it  is  in  the  proper  line  of 
the  business  of  the  person  so  under- 


taking it;  and,  if  not  accustomed  to 
such  agencies  for  hire,  that  the  law,  so 
far  from  presuming  that  a  compensa- 
tion was  to  be  received,  would  infer 
that  it  was  a  mere  naked  agency,  or 
mandatory,  in  which  compensation  is 
not  an  ingredient  in  tlie  undertaking. 
It  is  one  of  those  friendly  offices  that, 
in  our  relations  with  society,  daily  oc- 
cur, without  either  party  ever  thinking 
of  compensation.  This  distinction  is 
recognized  by  Chief  Justice  Kent  in 
Thome  v.  Deas,  4  Johns.  84.  If,  then, 
it  was  a  voluntary  and  gratuitous 
agency,  without  reward,  the  agent 
was  not  liable  for  a  non-feasance;  he 
might  perform  his  undertaking  or  not, 
as  suited  his  convenience.  It  is  true, 
by  the  civil  law,  he  would  be  liable  to 
the  mandator  for  all  damages  that  en- 
sued from  his  failure  to  perform  his 
promise;  but  quite  a  different  rule  pre- 
vails at  common  law.  By  the  latter 
such  contracts  are  held  to  be  of  im- 
perfect obligation,  and  not  to  be  en- 
forced at  law  for  want  of  a  sufficient 
consideration.  In  a  case  where  one 
joint  owner  of  a  ship  promised  the 
other  joint  owner  to  have  an  insurance 
effected,  and  failed  to  do  so,  on  the 
ship  being  lost,  a  suit  was  brought, 
and  the  pi-omise  was  held  to  be  nudum 
pactum:  Thome  v.  Deas,  4  Johns.  84. 
It  should,  at  any  rate,  have  been  mat- 
ter of  proofs  before  the  jury,  whether 
Morrison  was  to  receive  compensation 
or  not." 

»  Williams  v.  Higgins,  30  Md.  404; 
Benden  v.  Manning,  2  N.  H.  289;  Pas- 
sano  V.  Acosta,  4  La.  26;  23  Am.  Dec. 
470. 


120 


121 


DUTIES    AND    LIABILITIES   OP   AGENT.      §§  70,  80 


incorporate  this  usage  into  their  contract.*  "Whatever 
acts  are  usually  done  by  such  classes  of  agents,  whatever 
rights  are  usually  exercised  by  them,  and  whatever  duties 
are  usually  attached  to  them,  all  such  acts,  rights,  and 
duties  are  deemed  to  be  incidents  of  the  authority  con- 
fided to  them  in  their  particular  business,  employment, 
or  character.  These,  indeed,  are  in  some  cases  so  well 
known  and  so  well  defined  in  the  common  negotiations 
of  commerce,  and  by  the  frequent  recognition  of  courts 
of  justice,  as  to  become  matters  of  legal  intendment  and 
inference,  and  not  to  be  open  for  inquiry  or  controversy. 
In  other  cases,  indeed,  they  may  be  fairly  open  as  mat- 
ters of  fact,  to  be  established  by  suitable  proofs."^ 

§  79.  To  Perform  his  Duty  in  Person. — An  agent,  as 
we  have  seen,'  cannot  delegate  his  authority  to  another. 
But  one  who  has  reason  to  expect  the  arrival  of  a  draft 
at  his  office  for  the  benefit  of  his  principal  is  bound,  if 
ho  leaves  the  office  for  several  days  together,  to  leave  au- 
thority with  some  one  to  open  letters,  and  present  the 
draft  in  case  of  its  arrival  during  his  absence.* 


404; 
Pas- 
Dec. 


§  80.  To  Give  Notice  to  Principal. — It  is  the  duty  of 
an  agent  to  give  his  principal  notice  of  every  fact  which 
it  is  to  the  interest  of  the  principal  to  know  for  his  guid- 


'  Lawson  on  Usages  and  Customs, 
sec.  142;  Wharton  on  Agency,  sec. 
134;  Young  v.  Cole,  3  Bing.  N.  C.  724; 
Sutton  V.  Tathani,  10  Ad.  &  E.  27; 
Bayliffe  v.  Butter  worth,  1  Ex.  445; 
Graves  v.  Legg,  2  Hurl.  &  N.  210; 
Pickering  v.  Buck,  lH  East,  38; 
Brady  v.  Todd,  9  Com.  B.,  N.  S., 
5'J2;  Frank  v.  Jenkins,  22  Ohio  St. 
577;  Schuchardt  v.  Allen,  1  Wall. 
351);  Greely  v.  Bartlett,  1  Greenl. 
172;  10  Am.  Dec.  54;  Randall  v. 
Kchlor,  60  Me.  37;  11  Am.  Rep.  169; 
(roodenow  v.  Tyler,  7  Mass.  36;  5 
Am.  Dec.  22;  Upton  v.  Suffolk  Mills, 
11  Gush.  586;  59  Am.  Dec.  163;  Day 
V.  Holmes,  103  Masj.  306;  Willard  v. 


Buckingham,  36  Conn.  395;  Daylight- 
Burner  Gas  Co.  V.  Odlin,  51  N.  H.  56; 
McKinstry  v.  Pearsall,  3  Jolms.  319; 
Smith  V.  Tracy,  30  N.  Y.  79;  Rosen- 
stock  V.  Tormey,  32  Md.  169;  3  Am. 
Rep.  125;  American  Central  Insur- 
ance Co.  V.  McLanathan,  11  Kan. 
533.  And  see  Russell  a  Hankey,  6 
Term  Rep.  12;  Belcher  v.  Parsons, 
Amb.  219;  Caffrey  v.  Darby,  6  Vcs. 
490;  Massey  v.  Banner,  1  Jacob  &  W. 
241. 

'^  Story  on  Agency,  sec.  106. 

^  Ante,  Chapter  V.,  Delegation  of 
Authority. 

*  Brady  v.  Little  Miami  R.  R.  Co., 
34  Barb.  249. 


§81 


PRINCIPAL  AND  AGENT. 


122 


ance,^  and  to  notify  him  immediately  of  his  receipt  of 
money.''  The  knowledge  of  an  agent  in  the  course  of  his 
agency  is  the  knowledge  of  the  principal.'  And  so  is 
knowledge  acquired  by  him  while  not  acting  as  agent,  if 
he  had  it  in  mind  when  he  was  afterwards  acting  for  his 
principal.'* 

§  81.  To  Obey  his  Instructions  and  Orders.  —  An  agent 
must  follow  strictly  the  instructions  and  orders  of  his 
principal,  and  will  be  liable  for  not  doing  so.^  A  disre- 
gard of  instructions  cannot  be  excused  on  the  ground  of 
usage."  If  the  agent  disobeys  his  orders  he  is  liable  to 
the  principal,  even  though  he  acts  in  good  faith,'  or  his 
deviation  was  advantageous  to  the  principal,*  or  he  in- 
tended to  benefit  his  principal.^  And  if,  in  violating  his 
instructions,  he  obtains  a  profit,  it  belongs  to  the  princi- 
pal.'" A  violation  by  an  agent  of  the  positive  instructions 
of  his  principal  is  gross  negligence,  and  renders  him  liable 


'  Clark  V.  Bank  of  Wheeling,  17  Pa. 
St.  324;  Moore  v.  Thompson,  9  Phila. 
1G4;  Browii  v.  Arrott,  (J  Watts  &  S. 
410;  Forresticr  v.  Bordman,  1  Story, 
44;  Dodge  v.  Perkins,  9  Pick.  3G8;  and 
see  Callar  v.  Ford,  45  Iowa,  331. 

■^  Lylc  V.  Murray,  4  Sand.  590;  Mc- 
Mahan  v.  Franklin,  38  Mo.  548. 

!>  Hunter  v.  Watson,  12  Cal.  363;  73 
Am.  Dec.  543. 

*  Wilson  V.  Minn.  etc.  Ins.  Co.,  36 
Minn.  112;  1  Am.  St.  Rep.  659;  and 
see  post,  Division  4,  Notice. 

» Clark  V.  Roberts,  26  Mich.  506; 
Wilson  V.  Wilson,  20  Pa.  St.  393;  Fol- 
lansbcc  v.  Parker,  70  111.  11;  Smith  v. 
LasccUes,  2  Term  Rep.  187;  Park  v. 
Hammond,  4  Camp.  344;  Scott  v. 
Rogers,  31  N.  Y.  070;  Courcier  v.  Rit- 
tcr,  4  Wash.  C.  C.  551;  Hall  v.  Storrs, 
7  Wis.  253;  Williams  v.  Higgins,  30 
Md,  404;  Brown  v.  McGran,  14  Pet. 
479;  Blot  v.  Boiceau,  3  N.  Y.  78;  61 
Am.  Dec.  345;  1  Sand.  Ill;  Xcnoa  v, 
Wickham,  L.  R.  2  U.  L.  290;  Rundle 
V.  Moore,  3  Johns.  Cas.  36;  Marfield 
V.  Douglass,  1  Sand.  301;  Johnson  v. 
Railroad  Co.,  31  Barb.  198;  Uro  v. 
Curell,  16  Mart.  502;  Wilts  v.  Morrell, 


66  Barb.  511;  Robinson  Machine  Co. 
V.  Vorse,  52  Iowa,  207;  Stearine  etc. 
Co.  V.  Heintzman,  17  Com.  B.,  N.  S., 
56;  Ihompsonv.  Stewart,  3  Conn.  171; 
8  Am.  Dec.  108;  Szymanski  v.  Plas- 
san,  20  La.  Ann.  90;  96  Am.  Dec. 
382. 

'^  Lawson  on  Usages  and  Customs, 
sec.  153;  Day  v.  Holmes,  103  Mass. 
306;  Cropper  v.  Cook,  L.  R.  3  Com.  P. 
194;  Pickering!'.  Demerritt,  100 Mass. 
400;  Rosenstock  v.  Tormey,  32  Md. 
169;  Parsonar.  Martin,  11  Gray,  112; 
Strong  V.  Bliss,  6  Met.  393;  Barksdale 
V.  Brown,  1  Nott  &  McC.  517;  9  Am. 
Dec.  720;  Hall  v.  Storrs,  7  Wis.  253. 

'  Laverty  v.  Snethen,  68  N.  Y.  522; 
23  Am.  Rep.  184;  Bank  of  Owensboro 
V.  Western  Bank,  13  Bush,  526;  26 
Am.  Rep.  21 1 ;  Williams  v.  Littlcfield, 
12  Wend.  362.  See  Price  v.  Keyes, 
62  N.  Y.  378. 

*  McDermid  v.  Cotton,  2  Bradw. 
.•297;  Shipherd  v.  Field,  70  111.  438. 

"Scott  V.  Rogers,  31  N.  Y.  676; 
Evans  v.  Root,  7  N.  Y.  186;  57  Am. 
Doc.  512;  Rechtscherd  v.  Bank,  47 
Mo.  181. 

'•  Story  on  Agency,  sec.  192. 


123 


DUTIES   AND    LIABILITIES   OP  AGENT. 


§81 


for  such  loss  or  damage  as  may  result  from  it,  and  in  such 
case  every  doubtful  circumstance  is  construed  f^gainst 
him.*  But  he  is  not  obliged  to  perform  an  immoral  or 
an  illegal  act,  even  though  required  by  the  principal." 
But  an  agent  sued  by  his  principal  for  profits  or  money 
paid  to  him  cannot  set  up  that  the  transaction  was  ille- 
gal.' A  deviation  from  or  failure  to  carry  out  his  orders, 
caused  by  necessity  or  an  extraordinary  emergency,  will 
be  justifiable.'*  The  acceptance  of  bills  by  an  agent,  to 
avoid  the  suspension  of  work  of  great  importance  to  tho 
principal,  does  not  fall  within  that  class  of  cases  of  ex- 
traordinary emergency  or  overruling  necessity  in  which, 
from  the  very  necessities  of  the  case,  an  agent  is  justi- 
fied in  deviating  from  the  authority  conferred  on  him.'' 
And  an  agent  will  not  be  responsible  for  not  following 
strictly  the  instructions  of  the  principal  where  such  in- 
structions are  ambiguous  or  doubtful  as  to  their  mean- 
ing." If  a  principal  gives  his  agent  instructions  capable 
of  two  constructions,  the  agent  is  protected  if  he  acts  in 
good  faith  on  either.^  One  who  is  authorized  to  draw 
drafts  on  another  "  at  ten  or  twelve  days,"  with  nothing 
to  indicate  whether  ten  or  twelve  days  after  date  or  after 
sight  is  meant,  may  exercise  his  own  discretion,  and  con- 


'  Adams  v.  Robinson,  C5  Ala.  586. 

-  Evans  on  Agency,  293:  Story  on 
Agency,  sec.  195;  Wharton  on  Agency. 
so.'.  249;  Le  Guen  v.  Gouverneur,  1 
Johns.  Cas.  436;  1  Am.  Dec.  121; 
Curran  v.  Downs,  7  Mo.  329;  Cannan 
V.  Bryce,  3  Barn.  &  Aid.  179;  Webster 
V.  Do  Tastet,  7  Term  Eop.  157;  Arm- 
strong f.  Toller,  11  Wheat.  258. 

3  Pointer  v.  Smith,  7  Hoi&k.  137; 
Brooks  V.  Martin,  2  Wall.  70;  Baldwin 
V.  Potter,  46  Vt.  402;  Murray  v.  Van- 
dcrbilt,  39  Barb.  140;  Daniels  v.  Bar- 
i\QV,  22  Ind.  207;  Mayor  v.  Draper,  23 
Barb.  425. 

*  Jervis  v.  Hoyt,  2  Hun,  637;  Catlin 
r.  Bell,  4  Camp.  183;  Greenleaf  v. 
Moody,  13  Allen,  363;  Liotard  v. 
Graves,  3  Caines,  226;  Dusar  v.  Perit, 
4  Binn.  361 ;  Williams  v.  Shackleford, 
16  Ala.  318;   Forrestier  v,  Bordman, 


1  Story,  43;  Gould  v.  Rich,  7  Met. 
556;  Lawler  v.  Keuquick,  1  .Tohns. 
Cas.  175;  Judson  v.  Sturges,  5  Day, 
556;  Wharton  on  Agency,  sec.  388; 
Bernard  v.  Maury,  20  Gratt.  434; 
Weakley  v.  Pearce,  5  Heisk.  401; 
Shaw  V.  Stone,  1  Cush.  228. 

**  Sewanee  Mining  Co.  v.  McCall,  3 
Head,  619. 

"  De  Tastel  v.  Cronisallat,  2  Wash. 
C.  C.  132;  Marsh  v.  Whitmore,  21 
Wall.  178;  Vianna  v.  Barclay,  3  Cow. 
281;  Jervis  V.  Hoyt,  2  Hun,  637;  Fos- 
ter V.  Rockwell,  104  Mass.  167;  Bcs- 
sent  V.  Harris,  63  N.  C.  542;  Long  v. 
Pool,  68  N.  C.  479;  Ireland  v.  Living- 
8ton,  L.  R.  5  H.  li.  Cas.  395;  Me- 
chanics' Bank  v.  Merchants'  Bank,  6 
Met.  13. 

'  Minnesota  Linseed  Oil  v.  Monta« 
guc,  65  Iowa,  67. 


§81 


PRINCIPAL   AND   AGENT. 


124 


suit  his  own  convenicnco  in  that  particular.*  And  so  a 
slight  and  unimportant  deviation  from  his  instructions 
will  not  render  tho  agent  liable  to  the  principal.^ 

Illustrations.  —  W.  gave  a  draft  to  an  express  company  to 
collect,  with  instructions  to  return  it  at  once  if  not  paid.  On 
their  presenting  it  to  the  drawee,  he  asked  them  to  wait  until 
he  had  received  certain  explanations  from  W.,  which  they 
agreed  to  do.  Afterwards,  and  before  the  draft  was  again  pre- 
sented to  him,  the  drawee  became  insolvent.  Held,  that  tho 
company  was  responsible  for  the  loss:  Whitney  v.  Merchants'  Ex- 

Jness  Co.,  104  Mass.  152;  6  Am.  Rep.  207.*  A  principal  directed 
lis  agent  to  remit  him  three  hundred  dollars  in  bills  of  fifty  dol- 
lars or  one  hundred  dollars  each;  tho  agent  sent  the  amount  in 
lulls  of  five  dollars,  ten  dollars,  and  twenty  dollars.  The  sum 
was  lost  or  stolen  in  transitu.  Held,  that  the  agent  was  liable: 
Wilson  V.  Wilson,  26  Pa.  St.  393.*    An  owner  directed  his  agent  to 


^  Barney  v.  Newcomb,  9  Cush.  46. 
'  Evans  on  Agency,  309. 

*  "It  is  tho  first  duty  of  an  agent," 
Baiil  tho  court,  "whoso  authority  is 
limited,  to  adhere  faithfully  to  his  in- 
Btructiona  in  uU  cases  to  which  they 
can  bo  properly  applied.  If  ho  ex- 
ceeds or  violates  or  neglects  them,  he 
is  responsible  for  all  losses  which  are 
the  natural  consequences  of  his  act "  : 
Whitney  v.  Merchants'  Exchange  Co., 
104  Mass.  l-)'2;  G  Am.  Rep.  207. 

*  "Tho  primary  obligation  of  an 
agent,"  saiil  the  court  in  this  case, 
"whose  authority  is  limited  by  in- 
structions, is  to  adhere  faithfully  to 
those  instructions  in  all  cases  to  which 
they  ouglit  properly  to  apply:  Story 
on  Agency,  sec.  192.  He  is  in  general 
bound  to  obey  the  orders  of  his  prin- 
cipal exact!//,  if  they  bo  imperative, 
and  nob  discretionary;  and,  in  order 
to  make  it  tho  duty  of  a  factor  to  obey 
an  order,  it  is  not  necessary  that  it 
should  be  given  in  the  form  of  a  com- 
mand. The  expression  of  a  wish  by 
tho  consignor  may  fairly  be  presumed 
to  bo  an  order:  Story  on  Contracts, 
sec.  359;  Brown  v.  McGran,  14  Pet. 
494.  It  is  true  that  instructions  may 
be  disregarded  in  cases  of  extreme  ne- 
cessity, arising  from  unforeseen  emer- 
gencies, or  if  performance  becomes 
impossible,  or  if  they  require  a  breach 
of  law  or  morals:  Story  on  Agency, 
sec.  194.     These  are,  however,  excep- 


tional cases.  There  may,  perhaps,  be 
others  which  have  been  sanctioned  by 
adjudications,  founded  on  tho  princi- 
ple that  the  departure  complained  of 
was  not  material.  But  the  general 
rule  is  as  indicated  in  what  has  been 
said,  and  tlio  case  before  tho  court  was 
not  brought  within  any  of  the  excep- 
tions. To  justify  a  departure  from 
instructions,  where  a  loss  has  resulted 
from  such  deviation,  the  caso  must  bo 
brought  within  some  of  the  recognized 
exceptions.  It  is  not  sutlicient  that 
the  deviation  was  not  material,  if  it 
appear  that  the  party  giving  the  in- 
structions regarded  them  as  material, 
unless  it  bo  shown  affirmatively  that 
the  deviation  in  no  manner  contributed 
to  the  loss.  This  may  be  a  difficult 
task  in  a  case  like  tho  present;  but  the 
defendant  voluntarily  assumed  it  when 
he  substituted  his  own  plan  for  that 
prescribed  by  the  plaintifiF.  To  force 
a  man  to  perform  an  executory  con- 
tract after  substituting  for  tho  consid- 
eration other  terms  than  those  provided 
for  in  the  bargain  is  to  deprive  him 
of  tho  right  to  manage  his  own  busi- 
ness in  his  own  way.  To  do  this  on 
the  ground  that  the  departure  is  not 
material,  when  it  is  manifest  that  the 
party  considered  it  otherwise,  is  a  vio- 
lation of  private  right,  which  leads  to 
uncertainty  and  litigation  without  ne- 
cessity or  excuse.  In  Ncsbit  v.  Burry, 
25  Fa.  St.  210, this  court  refused  to  com- 


pri 

"  pi 

wil 

nol 

bel 

po 

th{ 

fori 

Or 


OWJ 


124 


125 


DUTIES   AND     LIABILITIES   OP   AGENT. 


§81 


procure  insurance  on  a  vessel  to  sail  as  soon  as  certain  frigates, 
"calculating  to  take  advantage  of  their  protection."  She  nailed 
•without  them,  and  was  captured.  Held,  that  the  agent  was 
not  liable  for  not  having  efl'ected  insurance,  as  it  would  have 
been  of  no  avail:  Ahop  v.  Coit,  12  Mass.  40.  An  agent  ap- 
pointed by  creditors  to  settle  certain  claims  received  from 
the  debtor  promissory  notes,  which  before  maturity  ho  sold 
for  less  than  the  face  thereof,  without  informing  his  principals. 
On  being  called  upon  to  account,  ho  denied  that  he  had  received 
anything  on  the  notes  for  which  he  was  liable  to  account. 
Held,  that  the  sale  was  without  authority,  and  the  principals 
could  recover  from  the  agent  the  full  amount  of  the  notes: 
Allen  v.  Brown,  44  N.  Y.  228;  aflirming  57  Barb.  86,  An 
owner  instructed  his  agent  in  Liverpool  to  hold  flour  until  an 
expected  act  of  Parliament  had  produced  its  effect  upon  the 
market,  and  then  to  sell.  Held,  that  it  was  left  to  the  agent's 
judgment  to  determine  when  the  effect  was  produced,  and  that 
he  was  not  liable  for  an  error  in  judgment,  if  he  acted  in  good 
faith  and  with  reasonable  prudence:  Milbanh  v.  Dennhtoun,  21 
N.  Y.  386.  The  principal  instructed  his  agent  to  buy  goods, 
and  draw  upon  W.,  his  banker,  having  funds,  for  thirty  and 
sixty  days,  for  the  price.  The  agent  drew  at  four  months,  and 
about  three  weeks  before  the  bill  f"ll  due  the  banker  failed. 
Held,  that  the  principal  was  not  bound  to  take  up  the  bill,  as 
against  the  agent:  Potter  v.  Everett,  2  Hall,  252.  An  agent, 
having  received  money  of  the  principal,  was  directed  to  remit 
it  by  purchasing  a  bill  of  exchange.  Ho  purchased  the  bill 
upon  his  own  credit,  using  the  funds  of  his  principal  as  his 


Is  a  vio- 
leada  to 
lout  ne- 
1  Burry, 
Itocom- 


t)el  a  man  to  give  up  hia  oxen,  although 
10  had  sold  them  and  received  part 
of  the  purcliaae-money,  because  it  M'as 
a  part  of  the  contract  that  they  were 
sold  by  weight,  and  the  weight  was  to 
be  ascertained  by  '  the  scales  at  Mount 
Jackson. '  The  scales  designated  were 
BO  out  of  repair  that  the  weight  could 
not  bo  ascertained  by  them,  and  it  was 
held  that  no  others  could  be  substi- 
tuted against  his  consent,  so  as  to  di- 
vest his  right  of  property.  Whether 
au  action  for  damages  could  have  been 
sustained  was  not  the  question  there; 
nor  is  it  the  question  here.  As  be- 
tween vendor  and  vendee,  the  right  of 
property.and  the  consequent  risk,  vests 
on  delivery  of  the  goods  purchased  by 
the  designated  carrier,  packed,  and 
directed  according  to  usage  or  instruc- 
tions. But  if  a  different  method  of 
packing  and  directing,  or  a  different 
carrier  than  the  one  designated,  be 


adopted  by  the  vendor,  he  assumes 
the  risk  in  case  of  loss,  unless  it  be 
shown  that  his  deviation  in  no  way 
contributed  to  the  loss.  Where  the 
goods  are  stolen,  how  can  this  be 
shown?  In  sending  bank  notes  by 
mail,  it  is  manifest  that  while  a  large 
package  would  attract  the  attention 
and  care  of  honest  agents  on  the  route, 
it  might  tempt  the  cupidity  of  dishon- 
est ones.  The  party  who  proposes  to 
take  the  risk  of  this  method  of  remit- 
tance has  a  right  to  weigh  the  advan- 
tages and  disatlvantages  of  the  various 
methods  of  inclosing  the  notes;  and  if 
he  directs  the  money  to  be  remitted 
in  notes  of  one  hundred  dollars  or  fifty 
dollars,  the  debtor  has  no  right  to  in- 
crease the  size  of  the  package  by  re- 
mitting in  notes  of  ten  dollars  and  five 
dollars.  There  was  error  in  permitting 
the  jury  to  find  that  the  departure 
from  instructions  was  immaterial." 


82 


PRINCIPAL   AND  AOENT. 


12G 


own.  Held,  that  such  a  purchase  was  not  authorized;  that  the 
agent  rcrauined  hablo  for  the  money:  Stone  v.  Jfayrs,  3  Denio, 
675.  An  agent  to  buy  and  ship  wheat  to  Nashville  shipped  a 
quantity  to  Sanders's  Ferry,  on  the  Cumberland  River.  The 
boat  containing  it  sank  when  near  its  destination,  and  the 
agent  sold  the  wheat  to  the  carrier.  Held,  that  the  emergency 
did  not  authorize  this.  Foster  v.  Smithy  2  Cold.  474;  88  Am. 
Dec.  G04.  An  agent  was  directed  to  forward  a  claim  to  a  certain 
person  for  collection,  but  forwarded  it  to  another.  Held,  liable 
for  any  loss  resulting  thereby:  liiUta  v.  Phelps,  79  Mo.  302.  A 
principal  authorized  his  agfnt  to  sell,  on  condition  that  pay- 
ment was  secured  by  paper  *'  unquestionably  good."  The  pur- 
chasers were  notoriously  insolvent,  and  their  notes  were  not 
collectible.  Held,  that  the  principal  had  a  valid  claim  against 
the  estate  of  his  agent,  who  had  died  intestate:  Robinson  Ma- 
chine Works  V.  Vorse,  52  Iowa,  207.  An  agent  employed  to 
subscribe  for  stock  in  a  railroad  company  for  Iiis  principal,  and 
in  his  principal's  name,  subscribed  and  paid  calls  in  his  own 
name,  and  afterwards  procured  a  certificate,  and  tendered  a 
transfer  to  the  principal,  who  refused  to  take  and  pay  for  them. 
Held,  that  the  agent  could  not  recover.  He  should  have  sub- 
scribed in  the  principal's  name:  Shrack  v.  McKnight,S4  Pa.  St.  26. 
Plaintiff  employed  defendant  to  take  two  horses  to  Richmond, 
Virginia,  to  exhibit  at  the  fair,  and  to  sell  for  the  best  price  he 
could  get,  for  which  he  was  to  bo  paid  for  his  services  and  trav- 
eling expenses.  Ho  sold  one  horse,  but  was  unable  to  sell  the 
other.  He  then  received  a  letter  from  plaintiff,  directing  him 
to  see  some  men  in  Petersburg,  who  might  direct  him  to  a  pur- 
chaser. Ho  went  there,  saw  them,  but  effected  no  sale.  He 
then,  without  instructions,  but  in  good  faith,  took  the  horse  to 
various  places  in  North  and  South  Carolina.  In  the  latter  he 
finally  sold  him,  but  not  until  his  expenses  had  amounted  to  a 
considerable  sum.  Held,  that  the  agent,  after  he  left  Peters- 
burg, exceeded  his  instructions,  and  was  not  entitled  to  pay  or 
traveling  expenses  after  that  time:  Fxdler  v.  Ellis,  39  Vt.  345; 
94  Am.  Dec.  327. 


§  82.  To  Act  in  Good  Faith  and  in  Ir^tereii  of  Princi- 
pal.—  The  agent's  position  beinc:  nr  ^f  trust,  he  must 
act  in  good  faith  and  to  the  p;  al's  intep     ^     The 

relations  between  an  attorney  in  t,  who  undertakes  to 
care  for  and  protect  the  land  of  his  pri;  ripal,  and  nego- 
tiate sales  of  the  same,  and  the  principal,  are  of  a  fiduciary 
nature,  and  the  agent  must  not  put  himself,  during  his 

^  Holladay  v.  Davis,  5  Or.  49. 


12G 


127 


DUTIES    AND    LIAniLITIES   OF   AGENT. 


§83 


agency,  in  n  position  which  h  adverse  to  that  of  (ho  prin- 
cipal.' If  one  acts  ns  ngent  of  anotljor,  antl  uses  liis  money 
in  milking  a  purchase  of  hind  at  shcrifT's  sak',  l)ut  buys 
in  his  own  name,  the  interest  ho  acquires  by  tlie  purchase 
vests  in  equity  in  his  principal.* 

Illustrations. —  A  was  indebted  upon  a  note  and  mortgapo 
to  B,  in  the  sum  of  forty  thousand  dollars.  B  assigned  the 
note  and  mortgage  to  C,  and  received  from  him  his  notes  in 
lieu  thereof.  Afterwards  A  mortgaged  to  C,  together  with 
other  property,  the  property  previously  mortgaged  to  !>,  subject 
to  first  mortgage,  for  which  (J  was  to  advance  to  A,  from  tinje  to 
lime,  sums  of  money,  not  to  exceed  twelve  thousand  dollars,  to 
enable  A  to  pay  his  debts.  By  this  mortgage  C  was  authorized 
to  receive  the  rents  of  the  mortgaged  premises,  and  apply  them 
to  the  payment  of  the  twelve  thousand  dollars  and  interest,  and 
in  case  the  rents  should  not  be  suflicient  for  that  purpose,  and 
A  should  not  pay  within  two  months  after  request,  then  C  was 
to  sell,  and  out  of  the  proceeds  to  pay  the  amount  and  interest 
so  advanced.  C  at  various  times  advanced  to  A  nearly  twelve 
thousand  dollars,  and  collected  rents  to  the  amount  of  twenty- 
eight  thousand  dollars.  Subsequently  C  died,  and  then  his 
executor  collected  the  rents.  Held,  in  an  action  by  A  againtt 
C's  administrator,  that  C  acted  in  the  purchase  of  the  note  and 
mortgage  of  B  as  an  agent  of  A,  and  that  A  was  entitled  to  the 
trust  fund:  Guntcr  v.  Janes,  9  Cal.  C43.  In  an  action  to  fore- 
close a  mortgage  where  K.  defended  as  a  subsequent  purchaser 
of  the  mortgaged  property,  the  lower  court  having  found  as  a 
fact  that  K.  was  the  agent  of  plaintiff,  and  acted  as  such  in 
procuring  the  note  and  mortgage,  and  receiving  interest  upon 
the  note,  but  without  stating  more  particularly  the  duties  de- 
volving upon  him  as  agent,  the  appellate  court  refused  to  infer 
from  this  that  his  duties  us  agent  were  of  a  character  which 
prevented  him  from  contracting  in  relation  to  the  property  on 
which  the  debt  was  secured:  McCarthy  v.  White,  21  Cal.  495. 

§  83.    To  Use  Reasonable  Skill  and  Diligence. — The 

agent  in  the  execution  of  the  principal's  orders  must  use 
reasonable  skill  and  diligence,  and  will  be  liable  to  him 
for  the  cousequenees  of  his  negligence.'     By  reasonable 

'  Rubidoex  v.  Parks,  48  Cal.  215.  field  v.  Davis,  6  Conn.  442;  Levcrick 

'Green  v.  Clark,  31  Cal.  591;  see  v.  Meigs.  1  Cow.  645;  Shiells  ?•.  Black- 

post.  Division  4,  Trustees.  burno,  1  H.  Black.  158;  Moore  v.  Ghol* 

>  Myles  V.  Myles,  6  Bush,  237;  Red-  son,  34  Miss.  372. 


§83 


PRINCIPAL  AND   AGENT. 


128 


skill  and  diligence  is  meant  that  ordinarily  possessed  by 
persons  in  the  same  trade  or  business,  and  generally  used 
by  persons  of  common  capacity  in  their  own  affairs.* 
And  an  agent  will  never  bo  permitted  to  profit  by  his 
negligence  towards  his  priui^iprJ.''  But  for  mere  errors 
of  judgment  the  agent  is  not  responsible.'  In  a  leading 
English  case  it  is  laid  dovvn  that  if  A,  a  general  merchanl, 
undertakes  voluntarily,  without  reward,  to  enter  a  parcel 
of  goods  for  B,  together  with  a  parcel  of  his  own  of  the 
same  sort,  at  the  custom-house  for  exportation,  but  makes 
the  entry  under  a  wrong  denomination,  whereby  both 
parcels  are  seized,  A  having  taken  the  same  care  of  the 
goods  of  B  as  of  his  own,  not  having  received  any  reward, 
and  not  being  of  a  profession  or  an  employment  which 
necessarily  implied  skill  in  what  he  had  undertaken,  is 
not  liable  to  an  action  for  the  loss  occasioned  to  B.'' 
Where  one  sends  money  to  a  commission  merchant  with 
which  to  buy  wheao,  telling  him  to  buy  sound  wheat,  if 
the  agent  exercises  reasonable  care  and  skill  ho  is  not 
liable  if  the  wheat  is  damp.^ 


Illustrations.  —  On  the  30th  of  March,  an  agent  to  sell  for 
cash  took  a  promissory  note  in  part  payment,  when  he  might 
have  had  cash,  and  on  the  28th  of  May,  in  answer  to  a  demand 
for  the  proceeds,  said  he  knew  nothing  of  i,hc  matter.  Held, 
that  the  jury  were  warranted  in  finding  an  unreasonable  delay 
to  settle,  although  the  note  had  not  then  been  paid:  Ilemenway 
V.  Hcmenway,  5  ?'  'c.  389.  A  master  of  a  ship,  with  orders  to 
sell  the  cargo  at,  a  foreign  port,  held  not  liable  for  leaving  it 
there  with  a  merchant  for  sa^o,  ho  not  having  been  able  +0  effect 
a  sale  himself:  Day  v.  Noble,  2  Pick.  615;  13  Am.  Dec.  463. 


'  Chapman  v.  Walton,  10  Bing.  57; 
Howard  v.  Grover,  28  Mc.  97;  Mc- 
Canuless  v.  McWha,  22  Pa.  St.  2G1. 
A  principal  who  knowingly  employs 
au  incompetent  agent  cannot  be  heard 
to  complain:  VVakeman  v.  Hazleton,  3 
Barb.  Ch.  148. 

2  Mitchell  V.  Aten,  37  Kan.  33;  1 
Am.  St.  Rep.  231. 

»  Page  V.  Wells,  37  Mich.  415;  Get- 


ting V.  Scudder,  71  111.  86,  to  the  ef- 
fect that  an  agent  tu  insure  is  not  a 
guarantor  of  the  solvency  of  the  com- 
panies in  which  he  places  the  insur- 
ance. 

*  Shiells  V.  Blackburne,  1  II.  Black. 
158. 

*Lake  City  Flouring  Mill  Co.  v. 
McVean,  32  Minn.  301. 


Br 


128 


129 


DUTIES   AND    LIABILITIES   OP   AGENT.      g§  84,  85 


ing 


to. 


ilack. 


Jo.    V. 


§  84.  Deputies.  —  An  agent  who  has  authority  to  ap- 
point deputies  is  liable  for  negligence  in  appointing 
them,  but  not  for  their  negligent  acts.'  An  agent  is  liable 
to  his  jorincipal  for  the  neglect  of  a  subagent  employed 
by  the  agent,  with  the  principal's  knowledge,  but  upon 
the  agent's  account.* 

§  85.  Profits  Belong  to  Principal. — All  profits  directly 
or  indirectly  made  by  an  agent  in  the  course  of  or  in  con- 
nection with  his  employment,  whether  in  performance  of 
or  in  violation  of  his  duty,  belong  to  the  principal.^ 
Where  an  agent  acts  for  an  agreed  sal'  'y,  or  where  there 
is  no  express  contract  in  reference  to  hi;;  compensation,  he 
will  not  be  allowed  to  retain  profits  incidentally  obtained 
in  the  exf^r^ution  of  his  duty,  any  usage  to  the  contrary 
notwithstanding;  and  all  profits  and  advantages  over  and 
above  the  agent's  ordinary  compensation  belong  to  the 
principal.'*  So  a  trustee  or  guardian  who  speculates  with 
trust  funds  is  liable  for  the  profits  made  by  liim.^  There 
is  notliing,  however,  to  prevent  both  parties  from  agreeing 
that  the  benefit  of  certain  profits  shall  belong  to  the  agent," 
or  the  principal  may  ratify  the  agent's  conduct.'' 

'  Warren  Bank  v.  SuflFolk  Bank,  10    Jcfifrles  v.  Wiester,  2  Saw.  1.35;  Oliver 


Cush.  585;  Campbell  v.  Reeves,  .3 
Head,  22G;  Bath  v.  Caton,  37  Mich. 
I'JO;  Tiornan  v.  Commercial  Bank,  7 
How.  (Miss.)  (348;  40  Am.  Dec.  83; 
Commercial  Bank  v.  Martin,  1  La. 
Ann.  344;  45  Am.  Dec.  87.  But  see 
Morgan  v.  Tener,  83  Pa.  St.  305. 

•^  Barnanl  r.  Coffin,  141  Mass.  37;  55 
Am.  Rop.  443. 

■*  Evans  on  Agency,  333;  Bain  i\ 
Brown,  50  N.  Y.  285;  Dutton  r.  Will- 
ncr,  52  N.  Y.  312;  Brown  v.  Post,  1 
Hun,  303;  Doild  v.  Wakcnian,  2a  N. 
J.  Eq.  414;  Campbell  v.  Ins.  Co.,  2 
Whart.  04;  Bartholemew  v.  Leech,  7 


?'.  Piatt,  3  How.  .333;  Judcvino  v. 
Hardwick,  49  Vt.  ISO;  Leake  v.  Suth- 
erland, 25  Ark.  210;  Clark  r.  Ander- 
son, 10  Bush,  99;  Krutz  r.  Fisher,  8 
Kan.  90;  Moinett  r.  Day,  1  Ba:ct. 
431;  BcUr.  Bell,  3  W.  Va.  183;  M  or- 
ison r.  Thompson,  L.  R.  9  Q.  B.  483; 
Barber  r.  Dennis,  G  Mod.  09;  Dii)lock 
r.  Blackburn,  3  Camp.  43;  Wdcy's 
Appeal,  8  Watts  &  S.  244;  Marvin  v. 
Buchanan,  02  Barb.  408;  White  v. 
Ward,  20  Ark.  445;  Rhea  i\  Puryear, 
20  Ark.  344. 

*  .Jacques  v.  Edgell,  40  ]Mo.  70. 

^Norris's   Appeal,   71   Pa.  St.    106; 


Watts,  472;  Norris's  Appeal,  71  Pa.  St.  Bond   i'.    Lockwuod,  33   111.  212;   see 

100;  Coursin's  Appeal,  79  Pa.  St.  220;  Division  3,  Trustees. 

Lafl'erty  r.  Jclley,  22  Ind.  471;  Acken-  ''Anderson    v.   Weiser,    24    Iowa, 

buigh  V.  McCool,  .30  Ind.  473;  Barton  428. 

V.  Moss,  32  111.  50;  Mason  v.  Bauman,  "  Great  Western  Ins.   Co.    v.  Cun- 

C2  111.   70;  Ely  v.    Hauford,   05  111.  liflfe,   L.   R.   9  Ch.   525;  Redtield  v. 

2G7;  Stoner  v.  Weiser,  2i  Iowa,  434;  Tcgg,  38  N.  Y.  212. 
Vol.  L-9 


gSG 


PRINCIPAL   AND   AGENT. 


130 


Illustrations. — An  agent  is  employed  to  Bell  property  at  a 
certain  price.  lie  sc]ls  for  a  greater  price.  IIo  must  account 
to  the  principal  for  the  excess:  Kerfoot  v.  Hyman,  52  111.  512; 
Mcrryman  v.  David,  31  111  403.  (But  ho  is  not  liable  to  the 
purchaser:  Id.)  An  apprentice  was  impressed  by  the  gov- 
ernment as  a  sailor  and  earned  certain  money.  ITcld,  that 
it  belonged  to  the  master:  Barber  v.  Devnis,  G  Mod.  G9.  A 
gave  B  $80  to  buy  him  a  horse,  for  which  service  B  was 
to  receive  $1.  B  obtained  the  horse  for  $72.50.  Held,  that 
A  was  entitled  to  recover  from  B  the  sum  of  $6.50:  BunJcer 
V.  Miles,  30  Me.  431;  50  Am.  Dec.  G32.'  A  employed  a  broker 
♦o  purchase  a  particular  ship  on  the  basis  of  an  oft'er  of  £9,000, 
or  as  cheaply  as  ho  could.  The  ship  was  purchased  for  £9,250. 
Prior  to  the  sale,  the  vendor  had  arranged  with  B  that  if  B  could 
eell  the  ship  for  more  than  £8,500  he  might  retain  the  excess,  and 
B  had  agreed  with  the  broker,  without  the  knowledge  of  A,  that 
if  the  sale  was  consummated,  the  broker  should  receive  part 
of  the  excess  over  £8,500.  After  the  sale,  £225  was  paid  by  B  to 
the  broker.  Held,  that  A  was  entitled  to  recover  this  sum  from 
the  broker:  Morrison  v.  Thompson,  L.  R.  9  Q.  B.  480.^  R.  em- 
ployed W.  to  compromise  with  his  creditors,  and  authorized  him 
to  offer  fifty  cents  on  the  dollar.  W.,  while  acting  as  such  agent, 
purchased  several  notes  of  R.  at  that  rate,  upon  his  own  account, 
and  fifterwards  sold  such  notes  to  J.  for  the  whole  nominal 
amount,  after  they  became  due.  Held,  that  J.  could  not  be 
permitted  to  recover  more  than  fifty  per  cent  upon  the  amount 
of  such  notes:  Reed  v.  Warner,  5  Paige,  G50.  A  special  agent  of 
a  company  preserved  copies  of  his  correspondence  with  the  gen- 
era] agent.  Held,  that  they  belonged  to  the  agent  instead  of 
the  company:  Evans  v.  Van  Hall,  1  Clarke  Ch.  22. 

§  86.    Losses  must  be  Borne  by  Principal. — And  as  to 

the  principal  belong  the  gains,  so  it  is  the  principal  that 
must  bear  the  losses  which  may  occur  in  the  course  of 
the  agency.' 


'  "If  the  defendant  made  a  valid 
contract  with  the  plaintiff  to  do  the  ser- 
vice requested  as  au  agent,  and  did  do 
it  as  was  agreed,  he  was  not  at  liberty 
to  make  a  profit  to  himself  in  the 
transaction  in  which  he  was  acting  as 
the  agent;  and  whatever  sum  re- 
mained in  his  hands  after  pay'ng  the 
price  of  the  horse,  deducting  the  com- 
pensation to  be  made  to  him,  was  the 
money  of  the  plaintiff,  for  which  the 
equitable  action  of  money  had  and  re- 
ceived could  be  maintained  ":  Bunker 
V.  Miles,  30  Me.  431i  60  Am.  Dec.  632. 


»  "Indeed,"  said  Cockburn,  C.  J., 
"it  may  be  laid  down  as  a  general 
principle  that  in  all  cases  where  a  per- 
son is  cither  actually  or  constructively 
an  agent  for  other  persons,  all  profits 
and  advantages  made  by  him  m  the 
business  beyond  his  ordinary  compen- 
sation are  to  be  for  the  benefit  of  his 
employers, " — indorsing  th  is  statement 
of  the  law  in  Story  on  Agency,  see. 
211;  Morison  v,  Ibompson,  L.  R.  9 
Q.  B.  Cas.  480. 

*  D'Arcy  v.  Lyle,  6  Binn.  441 ;  Rich- 
ardsoa  v.  FutreU,  42  Misa.  525. 


131 


DUTIES   AND    LIABILITIES   OP  AGENT.      §§  87,  88 


§  87.    Keeping  and  Deposit  of  Money  by  Agent — Mode. 

— If  an  agent  deposit  his  principal's  money  in  a  bank  or 
other  depository,  using  reasonable  prudence  and  care  in 
its  selection,  he  will  not  be  responsible  for  the  loss  of 
the  money  caused  by  its  becoming  insolvent.^ 

§  88.  Remittances  by  Agent — Mode. — If  an  agent  re- 
mits money  according  to  the  orders  or  usage  of  the  prin- 
cipal, he  will  not  be  liable  if  it  is  lost  in  transit.  If  the 
agent  is  instructed  to  "forward"  money,  he  discharges 
his  duty  by  sending  it  in  a  letter,  by  mail,  and  if  it  is 
lost,  the  loss  is  the  principal's.^  An  agent  to  collect 
money  is  bound  to  immediate  payment.'  On  the  other 
hand,  if  the  agent  remits  money  in  an  unauthorized 
mode,  the  risk  is  his.* 

Illustrations.  —  A  authorized  B  to  transmit  a  sura  of 
money  to  him,  as  he,  B,  might  think  best.  B  sent  the  money 
by  mail,  and  it  was  taken  from  the  post-ofiice,  and  appropri- 
ated to  his  own  use,  by  a  person  authorized  by  A  to  take  his 
letters  from  the  office.  Held,  that  A  must,  as  agent  of  B,  suffer 
the  loss:  Lamb  v.  Trogden,  2  Dev.  &  B.  Eq.  190.  Defendants 
were  directed  to  place  certain  money  to  plaintiff's  credit  in 
the  Exchange  Bank  of  Denver,  and  in  order  to  comply,  were 
obliged  to  transmit  the  money  from  Kansas  City,  Missouri,  to 
Denver.  Hcld^  that  defendants  had  the  right  to  transmit  the 
money  by  some  usual  and  ordinary  method  recognized  among 
business  men  as  proper  for  that  purpose;  and  where  there  were 
several  methods  of  transmitting  money  between  those  points, 
equally  used  l.y  business  men,  and  safe  and  economical,  they 
might  choose  c-ither;  Earnest  v.  StoUer^  2  McCrary,  380. 
A  local  railroad  agent  was  instructed  to  remit  daily  to  the 
headquarters  of  the  company  all  sums  of  money  received  over 
ten  dollars.  Held,  that  he  would  be  allowed  a  reasonable  time, 
in  view  of  his  other  duties,  to  make  the  remittance,  and  was 
not  liable  for  money  stolen  from  him  which  he  did  not  receive 
in  time  to  remit  as  instructed:  Robinson  v.  Illinois  etc.  R.  R.  Co., 
30  Iowa,  401. 

'  Knight  V.  Plymouth,  3  Atk.  480;  Rawls,  21  Ga.  289;  Lyle  v.  Murray,  4 

Hammon  v.  Cottlo,  G  Serg.  &  U.  290.  Sand.  51)0. 

*  Buell  V.  Chapin,  99  Mass.  694;  97  *  Ferris    v.   Paris,    10    Johns.    285; 

Am.  Dec.  68.  Kerr  v.  Catton,  23  Tex.  411;  Burr  v. 

»  Merchants'    Baok   of     Macoa   v.  Sickles,  17  Ark.  428;  65  Am.  Dec.  437. 


§89 


PRINCIPAL  AND  AGENT. 


132 


§  89.    To  Keep  Accounts — Account  for  Money.— So  it 

is  the  duty  of  the  agent  to  keep  regular  accounts/  and  to 
account  to  his  principal  for  money  received,  goods  sold, 
and  orders  obtained/  and  even  though  such  sales,  as  be- 
tween the  principal  and  the  purchaser,  are  illegal.'  An 
agent  cannot  keep  monoj'  of  his  principal  on  the  plea  that 
it  was  given  him  for  an  unlawful  purpose."*  Gross  misman- 
agement by  a  financial  agent,  consisting  of  failure  to  keep 
accounts  and  vouchers,  is  a  defense  to  his  action  for  salary.^ 
Money  deposited  in  bank  by  an  agent  as  an  ordinary  de- 
posit, tho  agent  stating  that  it  was  his  principal's  money, 
but  desiring  the  officer  to  place  it  to  his  credit  on  the 
books  of  the  bank,  alleging  that  he  might  have  occasion 
to  use  it  for  the  benefit  of  his  principal,  may  be  followed 
in  a  court  of  equity  by  the  principal."  A  demand  by  the 
principal  on  the  agent  for  moneys  received  by  him  is 
necessary  before  bringing  suit,^  unless  so  long  a  time  ha3 
elapsed  since  the  collection  as  to  raise  tho  presumption 
that  the  agent  has  appropriated  tho  money  to  his  own 
use,®  or  unless  he  has  refused  or  neglecicd  to  render  an 
account,"  or  denies  the  agency;'"  or  -where  a  claim  is  set 
up  exceeding  the  amount  collected,  or  where  the  agent  in 
his  answer  disputes  his  liability."  An  agent  is  liable  to 
tho  principal  for  interest  on  money  in  his  hands,  wh3re  he 

363; 


*  White    V.    Lincoln,    8    Ves 
Wharton  on  Agency,  sec.  299. 

^  Evans  on  A:,'ency,  339. 

3  Baldwin  i-.  Potter,  40  Vt.  402. 

*  Souhcgan  Bank  v.  Wallace,  Gl  N. 
H.  24. 

'•>  Smith  V.  Crews,  2  Mo.  App.  269. 

«  Whitley  v.  Foy,  6  Jones  Eq.  34; 
78  Am.  Dec.  236. 

'  Bedell  r.Janncy,  4 Gilm.  193;  Hed- 
deusr.  Younglove,  46Ind.  212:  White- 
head V.  Wells,  29  Ark.  99;  Haas  v. 
Damon,  9  Iowa.  589;  Armstrong  v. 
Smith,  3  Blackf.  251;  Jett  v.  Hemp- 
stead, 25  Ark.  402;  Walrath?,-.  Thomp- 
son, 0  Hill,  450;  Judah  r.  Dyolt,  3 
Blackf.  324;  25  Am.  Dec.  113;  Baird 
«  Walker,  12  Barb.  3J1;  Waldtn  v. 
Crafts,  2  Abb.  Pr.  304;  Colvin  v.  Uol- 
brook,  2  N.  Y.  130;  Taylor  v.  Spears, 


1  Ark.  .381;  44  Am.  Dec.  519;  Switzer 
V.  Skiles,  3  Gilm.  529;  44  Am.  Dec. 
723;  but  see  Leake  v.  Sutherland,  25 
Ark.  210.  A  mere  collecting  agent  is 
liable  for  money  collected  and  not 
paid  over  without  any  previous  de- 
mand: Little  V.  Hoyt,  5  Hill,  395;  40 
Am.  Dec.  360;  Hiekok  v.  Hickok,  13 
Barli.  633;  Sehroeppel  v.  Corning,  6 
N.  Y.  117. 

8  Badell  V.  Janney,  4  GUm.  193,  and 
cases  cited  in  last  section. 

"  Haas  V.  Damon,  9  Iowa,  589; 
Hcmcuway  v.  Hemenway,  5  Pick. 
389;  Brown  v.  Arnott,  0  Watts  &  S. 
402. 

">  Tillotson  V.  McCrillis,  1 1  Vt.  477; 
Wiley  V.  Logan,  95  N.  C.  358. 

'1  Wiley  V.  Lon;an,  95  N.  C.  358; 
Tillotson  V.  McCrillis,  11  Vt.  477. 


132 


133 


DUTIES   AND    LIABILITIES   OF   AGENT. 


90 


cok,  13 


}3,  and 

589; 
Pick. 
&  S. 

It.  477; 

358; 


retains  it  after  the  period  when  he  should,  of  right,  have 
turned  it  over  to  the  principal,*  or  where  he  otherwise 
improperly  withholds  it  from  the  principal,''  or  where  he 
has  employed  it  for  the  purpose  of  gain  for  himself.^  An 
agent  who,  having  received  money  of  his  principal  to  per- 
form a  certain  trust,  wholly  omits  to  perform  his  duty,  and 
converts  the  money  to  his  private  use,  thereby  renders  him- 
self liable  to  an  action  ex  delicto,  or  to  an  action  of  assumpsit 
for  money  had  and  received  to  the  use  of  the  plaintiff.  But 
where  he  actually  enters  upon  and  performs  the  duties  of 
the  trust,  neither  of  such  actions  will  lie  against  him  for 
the  recovery  of  an  alleged  balance  of  money  so  intrusted 
to  him.  The  remedy  against  him  is  by  action  of  account 
render,  or  by  bill  in  equity.*  Where  the  agent  keeps  the 
money  by  him  to  pay  it  over  when  the  principal  calls  for 
it,**  he  is  not  liable  for  interest.  The  agent  is  only  called 
upon  to  account  to  his  principal.  Thus  if  the  principal 
is  the  trustee  of  another,  lie  is  not  obliged  to  account  to 
that  other,*  and  a  subageuo  must  account  to  the  agent, 
and  not  to  the  principal.' 

Illustrations. — A  principal  drew  an  order  directing  his 
agent  to  deposit  the  proceeds  of  certain  lumber  to  the  credit  of 
a  third  person.  The  next  day  he  demanded  of  the  agent  an 
account  of  the  proceeds,  who  replied  that  he  had  nothing  to  do 
with  him,  and  referred  him  to  such  third  person.  Held,  that  this 
did  not  constitute  an  unreasonable  refusal  to  account:  Torrcy 
v.  Bryant,  16  Pick.  528. 

§  90.  Cannot  Dispute  Principal's  Title. — An  agent  is 
not  allowed  to  dispute  the  title  of  his  principal."     Thus 


>■  Dodge  V.  Perking,  9  Pick.  368. 

-  Anilersou  v.  State,  2  Ga.  370; 
BeiloU  i\  Jiinney,  4  Giltn.  193. 

•*  Williams  v.  Storrs,  6  Johns.  Ch. 
3o:i;  10  Am.  Dec.  340. 

*  lleesi.le  v.  Keeaide,  49  Pa.  St.  322; 
88  Am.  Dee.  50.3. 

"  Williams  v.  Storra,  6  Johns.  Ch. 
a")3;  10  Am.  Dec.  340;  Salisbury  v. 
Wilkiii.sou,  cited  in  Chedworth  w.  Ed- 
wards, 8  Ves.  47. 


*  Attorney-General  v.  Chesterfield, 
18  Beav.  590;  but  see  Turner  v. 
Turner,  36  Tex.  41. 

^  Stevens  v.  Badcock,  3  Barn.  & 
Add.  354;  Cartwright  v.  Hately,  I 
Ves.  Jr.  292;  Cleaves  v.  StockwcU,  33 
Me.  341;  see  Louisville  etc.  R.  R.  Co. 
V.  Blair,  4  Baxt.  407. 

*  Aubery  v.  Fiske,  30  N.  Y.  -17; 
Barnabo  v.  Kabbe,  54  N.  Y.  510; 
Hancock   v.   Gomez,   58    Barb.    41/0; 


§91 


PRINCIPAL   AND   AGENT. 


134 


an  agent  who  has  collected  money  cannot  interplead  his 
principal  and  a  third  party  who  claims  it.*  An  agent  who 
has  collected  money  cannot  deny  the  right  of  the  princi- 
pal to  receive  it;  e.  g.,  a  collector  of  taxes  cannot  deny 
the  right  of  the  county  thereto  hecause  illegally  levied.^ 
But  if  A  verhally  employs  B  as  his  agent  to  purchase  a 
house  for  him,  and  B  makes  the  purchase,  takes  the  deed 
in  his  own  name,  and  pays  his  own  money  for  it,  A 
cannot  compel  B  to  convey.' 

Illustrations.  —  The  plaintifa'''s  agent  sold  a  vessel,  and 
paid  the  proceeds  to  the  defendant  for  the  plaintiff.  Held,  the 
former  could  not  resist  the  claim  of  the  latter  for  such  money 
on  the  ground  that  the  plaintiff  did  not  own  the  vessel  when 
sold:  Jenlcs  v.  Manson,  53  Me.  209. 

§  91.  Mixing  Property. — He  must  not  mix  his  own 
property  with  that  of  his  principal.*  If  the  agent  seeks 
to  make  his  principal  liable  for  losses, — as,  for  instance, 
by  depreciation  or  theft,  —  he  must  keep  his  principal's 
money  separate  and  distinct  from  his  own.''  Thus  where 
an  agent  deposits  the  money  of  a  principal  in  a  bank  in  his 
own  name,  he  is  liable  for  the  loss  if  the  bank  fail.*  Where 
an  agent  mingles  his  principal's  money  with  his  own  so 
that  it  cannot  be  followed,  the  principal  cannot  recover 
it  specifically.  But  the  agent  does  not  by  so  doing  con- 
vert himself  into  a  mere  debtor;  the  principal  may  claim 
from  the  admixture  the  sum  which  belonged  to  him.^ 

Marvin  v.  Elwood,  11  Paige,  3G5; 
Holbrook  v.  Wight,  2i  Wend.  1G9;  35 
Am.  Dec.  607;  Collins  v.  Tillou,  26 
Conn.  308;  68  Am.  Dec.  308;  Reed 
V.  Dougan,  54  In  J.  306;  Firestone  v. 
Firestone,  48  Ala.  128;  B;ua  v.  Clark, 
30  j\Io.  252;  McNamee  v.  Relf,  52  Miss. 
426;  Dctteley  v.  Reed,  4  Q.  B.  411. 

'  Snodgrasa  v.  Butler,  54  Miss.  45. 

2  Placer  County  v.  Aatin,  8  Cal.  333; 
Clark  r.  Moody,  17  Mass.  145,  148; 
Hammond  w.Christie,5Rcb.(X.Y.)lG0. 

"  Wallace-.  Brown,  ION.  J.  Eq.  308. 

*  Rogers  v.  Boehin,  2  Esp.  702; 
Wharton  on  Agency,  sec.  243;  Drake 
V.  Martin,  1  Beav.  525. 


*  School  District  v.  First  Nat.  Bank, 
102  Mass.  174;  Webster  v.  Pearcc,  35 
111.  15-);  Bartlettv.  IlamiltoT'..  46  Me. 
435;  Massachusetts  In3.  Co.  v.  Car- 
penter, 2  Sweeny,  734;  Marine  Bank 
V.  Fulton  Bank,  2  Wall.  252. 

"  Ilammon  v.  Cottle,  6  Serg.  &  R. 
290;  Case  v.  Abecl,  1  Paige,  393;  In 
ro  Stafford,  11  Barb.  353;  Cartmcll  t-. 
Allard,  7  Bash,  482;  Massachusetts 
Ins.  Co.  V.  Carpenter,  2  Sweeny,  734; 
Greene  v.  Haskell,  5  R.  I.  447;  Sear- 
gent  V.  Downey,  49  Wis.  524. 

'  Farmers'  etc.  Bank  v.  King,  57  Pa. 
St.  202;  98  Am.  Dec.  215. 


135 


DUTIES   AND    LIABILITIES   OF   AGENT. 


§02 


§  92.  Agent  Making  Profits.  —  An  ngont  is  employed 
to  further  the  interest  of  his  principal;  it  is  his  duty  to 
give  to  the  principal's  affairs  his  care  and  skill,  and  to  act 
in  all  things  for  his  interest.  Therefore,  it  is  an  old 
principle  of  law  that  an  agent  shall  not  be  permitted  to 
make  a  secret  profit  or  advantage  out  of  iiis  agency.*  The 
principle  is,  that  an  agent  must  not  use  his  fiduciary 
powers  for  his  own  benefit.^  He  cannot  take  advantage 
of  information  which  he  has  acquired  through  his  posi- 
tion to  use  it  for  his  owp  benefit.^ 

Illustrations. — An  agent  intrusted  with  a  mortgage  for 
sale  was  offered  four  thousand  eight  hundred  dollars  for  it, 
but  concealed  the  offer  from  his  principal  and  purchased  it  him- 
self from  him  for  four  thousand  five  hundred  dollars.  Held, 
that  he  must  account  to  the  principal  for  any  profit  matlc  by 
him  out  of  the  sale:  Mason  v.  Bauman,  G2  111.  7G.  A  brokcT 
is  employed  to  buy  a  ship  as  cheaply  as  possible.  In  making 
the  purchase  he  receives  from  the  vendor  a  commission.  Tlie 
principal  is  entitled  to  it:  Morison  v.  Thompson,  L.  U.  9  Q.  B.  480. 
A  bank  president  has  authority  to  certify  cliecks.  He  will  not  be 
permitted  to  certify  his  own  checks:  Chijiln  v.  Bank,  25  N.Y.  203. 
An  agent  abroad  is  authorized  to  sell  a  cargo  for  bills  on  Eng- 
land to  be  placed  subject  to  his  principal's  order.  The  agent 
invests  them  in  goods  on  his  own  account.  He  is  liable  for  the 
profits  to  the  principal:  Thompson  v.  Steicarf,  3  Conn.  171 ;  8  Am. 
Dec.  168.  A  railroad  company,  on  the  application  of  one  of  its 
station  agents,  agreed  to  furnish  an  excursion  train  for  a  third 
party.  There  was  no  such  third  party;  but  the  agent  was  get- 
ting up  the  excursion  for  his  own  profit.  Discovering  this  after- 
wards, the  company  refused  to  furnish  the  train.  Held,  that 
the  agent  had  no  right  of  action:  Pcfjram  v.  Charlotte  etc.  R.  It. 
Co.,  84  N.  C.  G96;  37  Am.  Rep.  039.*    A  warehouseman  wlio  was 

Raiman,  25  Pa.  St.  .354;  04  Am.  Dec. 
703;  (iarilner  v.  Ogdeii,  22  N.  Y.  o27; 
78  Am.  l^^ec.  1H2;  Norrii  v.  Tayloe.  49 
111.  17;  95  All).  Doc.  508. 

*  "The  plaintiff  could  not,  from  his 
fiduciary  relations  towards  the  com- 
pany, enter  into  a  binding  contract 
with  it.  The  law,  in  harniony  w/lIi 
sound  morals,  refuses  its  sanction  to 
any  measure,  though  assuming  tlie 
form  of  contract,  procured  liy  a  liilu- 
ciary  froiu  his  principal  in  violation  of 
the  trusts  reposed  in  him,  and  to  the 
injury  of  the  latter,  at  least   uuless 


'Bain  v.  Brown,  50  N.  Y.  285; 
Mooro  V.  Mandlebaum,  8  Mich.  433; 
Cool  V.  Phillips,  GO  111.  217;  C'oursin's 
Appeal,  79  Pa.  St.  220;  Wilson  v. 
■\Vil3on,  4  Abb.  App.  021;  De 
Bussche  V.  Alt,  L.  R.  8  Ch.  Div.  280; 
Grumlcy  v.  Webb,  44  Mo.  444;  100 
Am.  Dec.  304;  Simons  v.  Vulcan  Od 
Co.,  01  Pa.  St.  202;  100  Am.  Dec.  028; 
Miller  V.  L.  &  N.  R.  R.  Co.,  83  Ala. 
274;  3  Am.  St.  Rep.  722. 

^  Eshel.nan  v.  Lewis,  49  Pa.  St.  410. 

3  Ringo  V.  Binns,  10  Pet.  2(59;  Reed 
V.  Norris,  2  Mylne  &  C.  374;  Heury  v. 


§02 


PRINCIPAL   AND   AGENT. 


136 


occupying  promises  under  a  lease  about  to  expire  was  negotiat- 
ing for  a  renewal.     His  clerk,  who  had  access  to  his  books  and 


8uch  principal  is  fully  advised  of  all 
the  ciroimstancea,  and  knows  at  the 
time  that  ho  in  dealing  with  ouo  then 
divested  of  h'u  agency,  and  acting  in 
an  adversary  and  independent  capa- 
city ":  Pegrain  v.  Charlotte  etc.  R.  II. 
Co.,  84  N.  C.  GiMi;  37  Am.  Rep.  G39. 
An  employee  of  a  leasee  of  a  theater, 
shortly  hefore  his  lease  expired,  se- 
cretly procured  a  lease  of  tlie  premises 
for  a  new  term  to  himself  at  an  ad- 
vanced rent,  field,  that  he  held  the 
new  lease  as  a  trustee  for  his  employer: 
Davis  V.  Hamlin,  108  111.  39;  48 
Am.  Rep.  541.  "The  ol)taining  of 
the  lease  by  Davis,"  said  tho  court, 
"amounted  to  a  virtual  destruction  of 
his  employer's  whole  business  at  tho 
terniinatiou  of  the  old  lease,  under 
which  the  latter  was  holding.  By 
some  ten  years  of  labor,  Handin  had 
built  up  a  business  of  a  very  profitable 
character.  Tliere  was  a  good-will  at- 
tached to  it,  which  wai  valuable. 
Hamlin  was  intending  to  make  it 
a  lifetime  business.  Sustaining  this 
lease  to  Davis,  at  the  end  of  Hamlin's 
lease,  April  18,  1883,  all  this  business 
would  come  to  an  end,  and  pass,  good- 
will and  all,  from  Hamlin,  tho  em- 
ployer, into  tlio  hands  of  Davis,  the 
employee.  And  this  would  have  been 
accomplished  by  the  means  of  a  re- 
newal lease  obtained  by  a  confidential 
agent  in  violation  of  tho  duty  of  his 
relation,  and  acq[uired,  presumably, 
because  of  peculiar  means  of  knowl- 
edge of  tlio  profitableness  of  the  busi- 
ness, afforded  him  by  the  confidential 
position  in  which  he  was  employed. 
A  personal  benefit  thus  obtained  by 
an  agent  equity  will  hold  to  inuro  for 
tlia  benefit  of  the  principal.  Public 
policy,  wo  think,  must  condemn  such  a 
transaction  as  that  in  question.  To 
sanction  it  would  hold  out  a  tempta- 
tion to  the  agent  to  speculate  off  from 
hi.3  principal  to  the  latter's  detriment, 
Davis  very  well  knew  that  his  em- 
ployer would  be  willing  to  pay  a  much 
higher  rent  than  that  at  which  he  ob- 
tained tiie  lease,  and  that  he  could  dis- 
pose of  the  lease  to  Handin  at  a  large 
profit  to  himself,  and  such  means  of 
knowledge  was  derived  from  his  posi- 
tion as  agent.  If  a  manager  of  a  busi- 
uess  were  allowed  to  obtain  such  a 


Icaso  for  himself,  there  would  bo  laid 
before  him  the  inducement  to  produce 
in  t'le  mind  of  his  principal  an  under- 
estimato  cf  the  value  of  tho  lease,  and 
to  that  cud,  maybe,  to  mismanage  so  as 
to  reduce  profits,  in  order  thut  be  might 
more  easily  acquire  the  loaso  for  him- 
self. It  is  contended  by  appellant's 
counsel  that  tho  rule  we  appl}',  which 
holds  an  agent  to  be  a  trusteo  for  his 
principal,  has  no  application  to  the  case 
at  bar,  because  Davis  was  not  an  agent 
to  obtain  a  renewal  of  tlie  lease,  and 
was  not  charged  with  any  duty  in  re- 
gard thereto;  that  his  was  but  thcepe- 
cific  employment  to  cngago  amuse- 
ments for  tho  theater,  and  that  lie  was 
an  agent  only  witliin  tho  scopa  of  that 
employment;  that  Hamlin,  having  a 
lease  which  would  expire  April  16, 
1883,  hc'l  no  right  or  iitcrejt  i:i  the 
property  thereafter;  and  that  Davis, 
in  negotiating  for  tho  lease,  did  not 
deal  with  any  property  wherein  Ham- 
lin had  any  interest,  and  that  such 
property  was  not  tho  subject-matter 
of  any  trust  between  them.  AlLhough 
there  was  hero  no  right  of  renewal  of 
tho  lease  in  tho  tenant,  ho  had  a  rea- 
sonable expectation  of  its  renewal, 
which  courts  of  equity  have  recog- 
nized aa  an  interest  of  value,  secretly 
to  interfere  with  which,  and  disap- 
pouit,  by  an  agent  in  the  management 
of  the  lessee's  business,  we  regard  as 
inconsistent  with  tho  fidelity  which 
the  agent  owes  to  the  busine:i3  of  his 
principal.  There  was  the  good-will  of 
the  business,  which  belonged  to  the 
business  as  a  portion  of  it,  and  this 
the  agent  got  for  himself.  It  i.i  fur- 
ther argued  that  the  rtlation  here  be- 
tween Hamlin  and  Davis  v.-as  that  of 
master  and  servant,  or  employer  and 
employee,  and  that  the  rula  has  never 
been  applied  to  that  relation  as  a  class, 
and  that  the  classes  coming  within  that 
doctrine  aro  embraced  within  tho  list 
of  defined  confidential  relation?,  such 
as  trustee  and  beneficiary,  guardian 
and  ward,  etc.  The  subject  is  not 
comprehended  within  any  such  nar- 
rowness of  view  as  is  presented  on  ap- 
pellant's part.  And  applying  the  rule 
it  is  the  nature  of  the  relation  which 
is  to  be  regarded,  and  not  the  desig- 
nation of  the  one  filling  the  relation." 


v{ 

oil 
l( 

a\ 

b; 


136 


137 


DUTIES   AND    LIABILITIEH    OF   AGENT. 


§03 


papers,  and  knew  his  business  pending  that  negotiation,  secretly 
obtained  a  lease  to  himself  and  another.  IlcJd,  that  thoy  would 
ho  compelled  to  transfer  th*  lease  to  the  master:  (ioivcr  v. 
A.ulrcw,WCo\.  119;  43  Am.  Rep.  242.'  A,  being  financially  em- 
barrassed, called  on  B  to  assist  him,  and  agreed  to  pay  B  liber- 
ally for  his  time  and  expenses.  B  accordingly  purcliascd  A's 
outstanding  draft,  and  A  gave  notes  to  B  in  payment  therefor. 
Held,  that  B  was  A's  agent  in  purchasing  the  draft;  and  that 
the  discount  at  which  he  secured  it  must  inure  to  A's  benefit: 
Noycs  V.  Landon,  59  Vt.  5G9.  An  agent  by  false  and  fraudulent 
representation  sold  goods  from  his  principal  to  himself  so  as  to 
realize  from  a  rise  in  value.  Held,  that  he  was  liable  for  ex- 
emplary damages:  Pcchham  Iron  Co.  w.IIarpcr,  41  Ohio  St.  100. 
A  principal  agreed  to  pay  his  agent  a  certain  commission  on 
the  amount  for  which  land  was  sold  if  the  agent  furnished  a 
buyer  within  a  certain  time  at  not  less  than  a  certain  price, 
and  the  agent  furnished  a  purchaser  at  more  than  that  price. 
Ildd,  that  the  agent  was  not  entitled  to  any  surplus  above  the 
fixed  price:  Blanchard  \.  Jones,  101  Ind.  542. 


sucU 
Lardian 
lis  not 

Ih  uar- 
lon  ap- 
lic  rule 
1  which 
Idesig- 
Ition." 


§  93.  Purchasing  and  Selling  Property. — Therefore  an 
agent  is  not  allowed  to  purchase  his  principal's  property, 
which  is  in  his  hands  to  manage  and  direct."     An  agent 


■  "Wo  untlerstaml  it  to  be  tho  duty 
of  the  employee,"  said  tho  court,  "to 
devote  hij  entire  acts,  so  far  as  his 
actj  may  aCcct  tho  business  of  his  em- 
ployer, to  tho  interests  and  service  of 
t'le  c.nployer;  that  he  can  engage  in 
no  business  detrimental  to  tho  busi- 
ness of  tho  employer;  and  that  he 
sl:ould  ill  no  case  be  permitted  to  do 
for  his  own  benefit  that  which  would 
have  the  effect  of  destroying  tho  busi- 
ness to  sustain  and  carry  on  wliich 
hi.j  services  have  been  secured.  An 
agent  should  not,  any  more  than  a 
trustee,  adopt  a  courso  that  will  oper- 
ate as  an  inducement  to  postpone  the 
principal's  interest  to  his  own.  An 
ugeiit  or  subagcnt  who  uses  the  in- 
formation ho  has  obtained  in  the  course 
of  Ills  agency  as  a  means  of  buying  for 
binisclf  will  bo  compelled  to  convey 
to  tlie  principal:  Elliott  v.  Merryman, 
1  Lead.  Cas.  Eq.  91.  It  may  bo  said 
that  Andrew  was  not  the  agent  of 
plaiiitiifs  so  far  as  concerns  the  obtain- 
ing of  a  renewal  of  the  lease;  that  he 
wii:i  not  charged  with  the  duty  of  ob- 
taining a  renewal;  it  must,  however, 


bo  said  that  he  was,  by  virtue  of  his 
employment,  charged  with  tho  duty  of 
furthering  their  interests,  ami  with  tho 
duty  of  not  using  t!;o  information  ob- 
tained by  him  as  their  employee  to 
their  detriment.  It  soem.j  to  us  that 
if  Andrew  desired  to  engage  in  the 
same  business  as  lii.i  employers,  on  his 
own  account,  a  very  pLiiu  and  very 
proper  course  was  open  to  him,  viz.,  to 
state  to  them  all  tho  facts,  and  ask 
them  to  determine  whether  they  de- 
sired a  renewal.  By  pursuing  the 
courso  which  ho  did,  ho  gave  to  Hop- 
kins an  inducement  not  only  not  to 
give  plaintiffs  a  renewal  at  a  decreased 
rental,  but  also  an  inducement  not  to 
renew  at  tho  then  rental,  and  lie  com- 
pelled plaintiffs  to  have  an  unknown 
competitor  who  based  his  action  upon 
knowledge  acquired  by  him  while  in 
their  employ.  We  do  not  think  that 
this  is  equity  or  good  conscience." 

^  The  clerk  of  an  agent  to  sell  lands 
who  is  employed  or  concerned  in  the 
affairs  of  tho  seller  relating  to  the 
lands  is  alike  with  his  principal  pro- 
hibited from  purchasing,   and  if   be 


93 


PRINCIPAL  AND  AGENT. 


138 


employed  to  purchase  property  for  his  principal  cannot 
purchase  it  for  himself.*  Where  a  debtor  employs  an 
agent  to  effect  a  compromise  with  his  creditors,  such 
agent  cannot  purchase  a  debt  against  his  principal,  for 
his  own  benefit;  and  though  the  principal  neglects  to  re- 
imburse the  agent  for  the  amount  paid  by  him  in  pur- 
chasing the  debts  of  the  principal,  such  agent  is  entitled 
to  hold  the  claims  so  purchased  only  for  the  amount  paid, 
and  a  reasonable  compensation  for  his  services.^  Nor  can 
he  purchase  his  own  property  for  his  principal.*  An  agent 
cannot  fill  an  order  by  selling  his  own  stock,  even  with 
the  most  honest  intentions  and  at  a  fair  market  price, 
unless  he  discloses  to  his  principal  the  ownership  of  the 
stock;  if  ho  does  so  fill  it,  the  principal  may  repudiate  the 
transaction,  return  the  stock,  though  after  it  has  become 
worthless  in  the  market,  and  recover  back  the  considera- 
tion.'* So  an  agent  employed  to  purchase  will  not  be  per- 
mitted to  sell  to  his  principal  for  a  higher  price  than  he 
paid  himself.'^  But  the  rule  that  he  who  undertakes  to 
act  for  another  must  not  act  for  his  own  benefit,  and  to 
the  detriment  of  his  principal,  does  not  apply  where  the 
principal  has  authorized  the  agent  to  do  so." 

An  agent  cannot,  without  the  principal's  consent,  be- 
come the  purchaser  of  property  which  he  is  employed  by 


docs  so,  tho  seller  may  compel  him  to 
rcconvoy  tho  laiuls,  or  account  for 
their  proceeds:  Gardner  v.  Ogilen,  22 
N.  Y.  327;  78  Am.  Dec.  193. 

1  Riiigo  V.  Biniis,  10  Tet.  269;  Dob- 
Bon  r.  llacey,  I)  Sand.  Ch.  CI ;  Van  Epps 
V.  Van  Epps,  9  Paige,  237;  Torrey  v. 
Bank  of  Isew  Orleans,  9  Paige,  049; 
Voorhees  v.  Pre.sbyterian  Church,  8 
Barb.  130;  E.ihlciuan  v.  Lewis,  49  Pa. 
St.  410;  Smith  v.  Brotherline,  C2  Pa. 
St.  401;  Wolford  v.  Herrington,  74 
Pa.  St.  311;  15  Am.  Rep.  548;  Von 
Hurter  i\  Speugcinan,  17  N.  J.  Eq. 
185;  Fisher  v.  Krutz,  9  Kan.  501; 
Armstrong  v.  Elliott,  29  Mich.  485; 
Pinnock  v.  Clouyh,  16  Vt.  500;  42 
Am.  Dec.  521;  Follansbo  v.  Kilbreth, 
17  III.  522;  05  Am.  Dec.  691. 


^  Reed  v.  Warner,  5  Paige,  650. 

"  Dorris  v.  French,  4  Hun,  292; 
Conkey  v.  Bond,  30  N.  Y.  427;  Tewks- 
bury  V.  Spruance,  75  III.  187;  Ely  v, 
Hanford,  05  III.  207;  GoukU-.  Gould, 
30  Barb.  270;  Taussig  v.  Hart,  58 
N.  Y.  425;  Bcntley  v.  Craven,  18 
Q.  B.  720;  Sharman  v.  Brandt,  L.  R. 
6  Beav.  75.  But  the  principal  may 
ratify  it;  and  if  ho  does  so  in  part  he 
does  60  in  toto:  Ely  v.  Hanford,  65  111. 
207. 

*  Conkey  v.  Bond,  34  Barb.  270. 

» Taussig  V.  Hart,  58  N.  Y.  425; 
Cottom  V.  Holliday,  59  111.  176;  Ely  v. 
Hanford,  65  111.  207;  Collins  v.  Case, 
23  Wis.  230. 

«  Moody  V.  Smith,  70  N.  Y.  598. 


tl 
W 
0 

o 


h 

Si 


139 


DUTIES   AND    LIABILITIES   OF  AGENT. 


93 


the  principal  to  sell  for  him,'  nor  can  ho  sell  to  a  firm  of 
which  he  is  a  member,^  or  to  ii  third  person  for  the  benefit 
of  that  pei'Hon  and  himself  jointly.'  An  agent  in  charge 
of  real  estate  cannot  acquire  a  tax  title  thereto  adverse  to 
his  principal,  who  has  failed  to  furnish  him  with  the  means 
to  pay  the  taxes;  the  burden  is  on  the  agent  to  show  that 
his  agency  had  terminated  when  ho  acquired  the  title.* 
Such  a  purchase  or  sale,  however,  is  not  void;  as  between 
the  agent  and  third  persons  it  is  good,  but  it  may  bo  set 
aside  at  the  suit  of  the  principal  within  a  reasonable 
timc,°  or  he  may  ratify  it  and  make  it  valid."  But  an 
agent  may  lawfully  purchase  his  principal's  property, 
where  the  principal  is  fully  advised  and  there  is  no  fraud 
in  the  transaction,'  but  the  burden  is  on  the  agent  to  show 
this.*  And  "it  is  not  enough,"  said  Jessel,  M.  Iv.,  in  Dunne 
V.  EiifjllshJ'  "for  an  agent  to  tell  the  principal  that  he  is 
going  to  have  an  interest  in  the  purchase,  or  to  have  a 
part  in  the  purchase.  lie  must  toll  him  all  the  material 
facts.     Ho  must  make  a  full  disclosure."     Hence,  where 


-  Bain  v.  Brown,  50  N.  Y.  285;  Cum- 
berlauil  Coal  Co.  f.  Sliertnau,  30  Bar)). 
553;  Scott  v.  Mdiin,  3G  Tox.  157; 
Ruckmaa  v.  Borgholz,  37  N.  J.  L.  437; 
Marsh  v.  Whitiiiore,  21  Wall.  178; 
Copjlaml  V.  Mercantile  Im.  Co.,  G 
Pick.  IDS;  Tynesr.  (irimstead,  1  Tenn. 
C!i.  508;  Clutu  v.  Barron,  2  Mich.  102; 
Dwight  r.  Bl-ickniar.  2  Mich.  330;  57 
Aui.  Dec.  130;  Ainea  v.  Port  Huron 
Log  Co.,  11  Mich.  1.39;  83  Am.  Dec. 
731;  Kerfoot  v.  Hy:nau,  52  111.  512; 
Mason  i:  Bauman,  02  111.  70;  Parker  v. 
Vose,  45  Me.  54;  White  v.  Ward,  20 
Ark.  445;  Stewart  r.  Mather,  32  Wis. 
344;  Eklridge  v.  Walker,  00  111.  230; 
Cleveland  Ins.  Co.  v.  Reed,  1  Bias.  ISO; 
Bartholemcw  v.  Leech,  7  Watts,  472; 
Griunley  v.  Webb,  44  Mo.  444;  100 
Am.  Dec.  304;  Walker  v.  Palmer,  24 
Ala.  .358;  Blount  v.  Robeson,  3  Jones 
El].  73;  Armstrong  v.  Elliott,  29  Mich. 
485;  Gaines  v.  Allen,  58  Mo.  541;  Col- 
lins V.  Case,  23  Wis.  230.  Tlie  rule  is 
the  same  where  ho  is  authorized  to  sell 
at  a  stipulated  price:  Ruckman  v. 
Bergholz,  37  N.  J.  L.  437;  Tato  v. 
Williamson,  2  L.  K.  Ch.  55;  JeStiea  v. 


Wiester,  2  Saw.  135;  In;;lo  v.  Hart- 
man,  37  Iowa,  274;  Gardner  r.  Ogden, 
22  N.  Y.  327;  78  Am.  Dec.  192;  Moso- 
lev  V.  Buck,  3  Munf.  232;  5  Am.  Dec. 
508. 

^Francia  v.  Kerker,  85  111.  190; 
Reimcrs  V.  Ridncr,  2  Rob.  (N.  Y.)  11. 

^  Hughes  V.  Washington,  72  111.  84. 

*  Bowman  v.  OiHcer,  53  Iowa,  040. 

MVadsworthr.  Gay,  118  Mass.  44; 
Uhlich  V.  Muhlke,  01  111.  499;  Green- 
wood V.  Spring,  54  Barb.  375;  Leach 
V.  Fowler,  22  Ark.  143;  Estes  v. 
Boothc,  20  Ark.  583;  Ea.stcr-.i  Bank  v. 
Taylor,  41  Ala.  93;  Taiisoig  v.  Hart, 
49  N.  Y.  301;  Cleveland  Ins.  Co.  v. 
Reed,  1  Biss.  183.  But  the  sulo  or 
purchase  is  voidable  as  to  third  parties 
who  have  notice:  Norrig  v.  Tayloc,  49 
111.  18;  95  Am.  Dec.  508. 

«  Walworth  v.  Bank,  10  Wis.  G29. 

'  Fisher's  Appeal,  34  Pa.  St.  29; 
Brown  v.  Post,  1  llun,  303;  Condit  v. 
Blackwcll,  22  N.  J.  Ecj.  481;  Comstock 
V,  Comstock,  57  Barb.  453. 

8  Wharton  on  Agency,  sec.  232; 
Murphy  v.  O'Shca,  2  Jones  &  L.  422. 

»  L.  R.  18  Eq.  524. 


93 


rUINCIPAL   AND   AGENT. 


140 


an  ngont  represented  to  his  principul  that  ho  could  sell 
the  hitter's  mining  property  to  one  P.  for  one  hundred 
thousand  dollars,  connealing  the  fact  that  ho  had  already 
contracted  to  sell  it  to  him  for  two  hundred  thousand 
dollars,  it  was  lield  that  on  discovery  of  the  fraud  the  princi- 
pal might  recover  of  the  agent  to  whom  ho  sold  the  prop- 
erty the  difTcrence  between  the  price  paid  by  the  agent 
and  the  sura  received  by  him  on  the  sale  to  V}  An  agent 
selling  at  auction  may  bid  on  behalf  of  a  third  person.^ 
After  an  agent  or  trustee  has  fully  discharged  his  duty  in 
the  sale  of  property,  ho  may  make  an  independent  pur- 
chase of  it  from  tho  owner  under  his  sale.'  If  one  who  is 
clearly  an  agent  for  another  to  purchase  property  repudi- 
ates tho  agency  and  acts  for  himself,  using  his  own  funds, 
ho  cannot  bo  declared  a  trustee  for  his  principal,  although 
the  latter  may  have  been  misled  by  his  conduct.^ 

Illustrations. —  A  is  employed  by  B  to  manage  his  prop- 
erty and  pay  his  taxes.  B's  property  is  sold  at  a  tax  sale.  A 
cannot  become  a  purchaser:  Curls  v.  Cissna,  7  Biss.  260; 
Franh  v.  Morris,  9  W.  Va.  G64;  Fountain  Coal  Co.  v.  Phelps, 
95  Tnd.  271.  An  agent  is  employed  to  collect  tho  rents  and  to 
exercise  control  over  the  principal's  property  in  his  absence. 
Tho  agent  cannot  purchase  tho  property  at  an  execution  sale: 
Gnimlcy  v.  Wchh,  4-1  Mo.  444;  100  Am.  Dec.  304.  An  agent 
employed  to  collect  and  foreclose  a  mortgage  took  a  convey- 
ance of  the  equity  of  redemption  to  himself.  Held,  that  he 
took  the  title  as  trustee  for  his  principal:  Giddings  v.  Fastwan, 
5  Paig(>,  5G1.  An  agent  employed  to  take  up  an  outstanding 
mortgage  took  an  assignment  to  himself.  Held,  that  ho  held  it 
as  trustee  for  his  principal:  Case  v.  Carroll,  35  N.  Y.  385.  Tho 
agent  for  the  owner  of  land  purchased  a  tax  certificate,  and 
afterwards  took  the  tax  deed  to  himself.  Held,  that  he  would 
be  held  a  trustee  for  the  owner,  and  liable  for  the  rents  and 
profits:  Collins  v.  Rainey,  42  Ark.  531.  An  agent  makes  a 
purchase  outside  the  actual  purview  of  his  agency.  At  the  time 
it  was  made  he  assumed  to  act  for  his  principal  and  purchased 
for  his  benefit.  Held,  that  the  transaction  as  against  tho  agent 
will  inure  to  the  benefit  of  the  principal:  Watson  v.  Union  Iron 
and   Steel  Co.,   15  111.  App.  509.     An   agent   furnished   with 


loil 
thj 
to  I 
for 

tlxp 

thl 

Ki\ 

chl 

on 

haJ 

call 

to 

by 

ton 

bro 

prii 


*  Brown  v.  Post,  1  Hun,  303. 
'  Scott  V.  Mann,  3G  Tex.  157. 


*  Walker  r.  Carrington,  74  111.  44G. 

*  First  Bankv.  BisBuU,  2  MuCrary ,  73. 


Ill 


DUTIES   AND    LIAIHLITIES   OF   AGENT. 


H 


money  to  pay  off  nil  encumbrances  on  certain  land  fraudu- 
lently purchased  a  tax  deed  tliorcon.  JTcJd,  to  acujuire  no  title 
thereunder:  M'oodmnn  v.  Ihivi.^,  o2  Kan.  JMt.  A  employed  B 
to  purcliaHe  land  on  commission.  13  had  previously  negotiated 
for  a  purchase  on  his  own  account.  This  he  completed,  and 
Hold  to  A  at  an  advance,  not  disclosing  the  fact  tliat  he  was 
the  owner.  Held,  that  A  on  discovering  this  could  not  retain 
the  property  and  recover  the  advance  paid:  Hundvi'hind  v. 
Kilhourn,  8  Mackcy,  506.  A  stock-broker  i»  employed  to  pur- 
chase stock  for  a  customer.  He  cannot  buy  of  himself  to  fill  the 
order:  Tttus^nvj  v.  ILirl,  58  N.  Y.  425.  A  commission  merchant 
has  an  order  from  a  principal  to  purchase  cotton  for  him.  He 
cannot  fill  the  order  with  his  own  cotton  or  with  cotton  he  has 
to  sell:  Ikal  v.  MrKicrnan,  G  La.  407.  A  broker  was  authorized 
by  his  principal  to  buy  for  him  in  the  market  two  hundred 
tons  of  hemp.  He  drew  up  and  forwarded  to  the  jtriiicipal  a 
broker's  note,  there  being  no  seller  but  himself,  ircld,  that  the 
principal  was  not  bound:  Shannan  v.  Brandt,  L.  11.  G  Q.  B.  720.' 

§  94.  Agent  of  Both  Parties. — One  cannot  act  secretly 
as  agent  for  both  the  parties  to  a  contract  where  the 
matter  requires  the  exercise  of  discretion  and  judgment.' 
Such  a  contract  may  bo  repudiated  by  cither  party.' 
"The  principle  on  which  rests  the  well-settled  doctrine 
that  a  man  cannot  become  the  purchaser  of  property  for 
his  own  use  and  benefit,  which  is  intrusted  to  him  to  sell, 
is  equally  applicable  when  the  same  person,  without  the 
authority  or  consent  of  the  parties  interested,  undertakes 
to  act  as  the  agent  of  both  vendor  and  purchaser.  The 
law  does  not  allow  a  man  to  assume  relations  so  essen- 
tially inconsistent  and  repugnant  to  each  other.  The 
duty  of  an  agent  for  a  vendor  is  to  sell  the  property  at 
the  highest  price;  of  the  agent  for  the  purchaser,  to  buy  it 


'  "If  a  man  employ  another  as  broker 
to  go  into  the  market  ami  purchase 
goods  for  him  at  a  certain  price,  the 
other  could  not  under  such  authority 
make  himself  a  principal  in  the  con- 
tract df  sale  and  purchase  ":  Sharman 
V.  B;i!idt,  L.  R.  G  Q.  B.  720. 

^Copcland  v.  Ins.  Co.,  6  Pick.  204; 
Utica  Ins.  Co.  v.  Toledo  Ins.  Co.,  17 
Barb.  132;  New  York  Ins.  Co.  v.  Na- 
tional Ins.  Co.,  UN.  Y.  So;  Great  West- 


ern Ins.  Co.  V.  Cunliffe,  10  Eng.  Rep. 
5G1;  Rupp  V.  Sampson,  10  (iray,  .398; 
77  Am.  Dec.  41C;  Bellman  ''.  Loomis, 
41  Conn.  581 ;  Morison  v.  Thompson, 
L.  R.  9  Q.  B.  480;  Stewart  v.  Mather, 
32  Wis.  ;M4;  Grant  v.  Hardy,  33  Wis. 
COS;  In  re  Taylor  Orphan  Asylum,  36 
Wis.  534. 

^  Mercantile  Ins.  Co.  v.  Hope  Ins. 
Co.,  8  Mo.  App.  408. 


94 


PRINCIPAL  AND  AGENT. 


142 


for  the  lowest.  These  duties  are  so  utterly  irreconcilable 
and  conflicting,  that  they  cannot  be  performed  by  the 
same  person  ^»  ithout  great  danger  that  the  rights  of  one 
principal  will  be  sacrificed  to  prosecute  the  interests  of 
the  other,  or  that  neither  of  them  will  enjoy  the  benefit  of 
a  discreet  and  faithful  exercise  of  the  trust  reposed  in  the 
agent.  As  it  cannot  be  supposed  that  the  vc  dor  and 
purchaser  would  employ  the  same  person  to  act  as  their 
agent  to  buy  and  sell  the  same  property,  it  is  clear  that 
it  operates  as  a  surprise  on  both  parties,  and  is  a  breach 
of  the  trust  and  confidence  intended  to  be  reposed  in  the 
agent  by  them  respectively,  if  his  intent  to  act  as  agent 
of  both  in  the  same  transaction  is  concealed  from  them."* 
Nor  can  he  earn  and  receive  compensation  from  both.'' 
The  rule  is,  that  one  cannot  take  up  an  adverse  interest 
to  that  which  he  is  engaged  to  perform.  But  it  is  obvi- 
ous that  a  double  agency  may  be  undertaken  with  the 
consent  of  the  principal,  and  in  certain  cases  it  is  cus- 
tomary to  do  so.  Thus  brokers,'  or  a  middle-man  in  an 
exchange,*  may  act  for  both  parties,  and  receive  compen- 
sation from  each;*  and  so,  of  course,  where  each  party 


^Bigelow,  0.  J.,  in  Farnsworth  v. 
Hemmcr,  I  Allen,  494;  79  Am.  Dec. 
756. 

» Lloyd  V.  Calston,  5  Bush,  587; 
Watkins  v.  Cousall,  1  E.  D.  Smith, 
65;  Dunlopi'.  Richards,  2  E.  D.  Smith, 
181;  Pugsley  v.  Murray,  4  E.  D. 
Smith,  245;  Farnsworth  v.  Hemmer,  1 
Allen,  494;  79  Am.  Dec.  75G;  Walker 
V.  Oagood,  98  Mass.  348;  93  Am.  Dec. 
168;  Everhart  v.  Searle.  71  Pa.  St. 
256;  Place  v.  Greeaman,  6  N.  f. 
Su  J.  Ct.  681 ;  Meyer  v.  Hanchett,  .39 
Wis.  419;  Lynch  v.  Fallon,  11  R.  L 
311;  23  Am.  Rep.  458;  Schwartze  v. 
Yearly,  31  Mil.  270.  (In  Rice  v.  Wood, 
113  Mass.  133,  18  Am.  Rep.  459,  it 
wa^  held  that  a  '  roker  acting  for  both 
panes  in  effecting  an  exchange  of 
property  can  recover  compenbation 
from  neither  if  his  doable  employment 
is  not  known  or  assented  tobybotli.) 
Scribner  v.  Collar,  40  Mich.  375;  29 


Am.  Rep.  541;  Smith  v.  Townsend, 
109  Mass.  500;  Bell  v.  McC'ounell,  37 
Ohio  St.  396;  41  Am.  Rep.  528,  Illus- 
trations: A  broker  'vas  employed  by 
A  to  eell  his  farm.  He  cxohauj^cd  it 
for  lands  of  B,  receiving  a  commission 
from  A  for  his  services.  Held,  that 
he  could  not  recover  a  commission 
from  B;  also,  even  on  proof  of  a  prom- 
ise by  B  to  pay  him  a  commission: 
Raisin  v.  Clark,  41  Md  158;  20  Am. 
Rep.  66. 

'<^  Rewe  V.  Stevens,  3  Jones  &  S.  189; 
Spyer  v.  Fisher,  5  Jones  &  S.  9.3. 

♦  Mullen  V.  Keetzleb,  7  Bush,  253; 
Rupp  V.  Sampson,  16  Gray,  398;  77 
Am.  Dec.  416;  Siegel  v.  Gould,  7  Laus. 
177;  Orton  v.  Schofield,  01  Wis.  382; 
Green  v.  Robertson,  C4  Cal.  75. 

*  Alexander  v.  University,  57  Ind. 
466;  Lynch  w.  Fallon,  11  R.  I.  311;  23 
Am.  Rep.  458;  Meyer  v,  Hanchett,  39 
Wis.  419. 


W 

ta 

0 


■#:i^v 


142 


143 


DUTIES   AND    LIABILITIES   OP   AGENT. 


§94 


•ncilable 
by  the 
s  of  one 
erests  of 
enefit  of 
d  in  the 
dor  and 
as  their 
[ear  that 
1  breach 
i  in  the 
as  agent 
them."^ 
n  both.'' 
interest 
is  obvi- 
vith  the 
b  is  cus- 
n  in  an 
:;ompen- 
h  party 


528, 


Townsend, 

oimell,  37 

Illus- 

oyed  by 

anged  it 

onimission 

Held,  that 

ommission 

;  a  proi.i- 

mmission: 

20  Am. 

&  S.  189; 

93. 
Sush,  253; 
898;   77 
d,  7  Laus. 
SVis.  382; 

57  Ind. 
I.  311;  23 
chett,  39 


has  notice  that  he  is  acting  for  both,  and  each  agrees  to 
pay  him  a  commission.'  A  contract  made  by  a  person  as 
agent  of  both  parties  is  not  void,  but  only  voidable,  and 
must  be  repudiated  within  a  reasomble  timo,^  for  it  may 
be  ratified  and  made  valid  by  either  party .^  A  person 
who  voluntarily  employs  the  agent  of  another  cannot 
take  advantage  of  the  rule  of  law  forbidding  double 
agencies,*  nor  can  such  an  agent  set  it  up  for  the  purpose 
of  shielding  himself  from  liability  to  one  of  the  parties.^ 
An  agent,  or  servant,  on  a  fixed  salary,  who  sells  articles 
to  his  employers,  under  a  contract  with  the  owner  of  such 
articles,  for  a  remuneration,  his  employers  knowing  of  his 
interest,  can  claim  his  remuneration  from  such  owner." 


iRowe  V.  Stevens,  53  N.  Y.  G21. 
"The  general  rule  is  not  applicable  to 
a  case  in  which  a  man  ia  acting  as  the 
agent  of  both  the  vendor  and  pur- 
chaser, with  the  authority  and  consent 
of  the  parties  interested":  Alexander 
V.  Northwestern  etc.  Co.,  57  Ind.  4(36; 
Bell  V.  McConnell,  37  Ohio  St.  39G; 
41  Am.  Rep.  528;  .Toslin  v.  Cowee, 
56  N.  Y.  C2G;  Pnijslcy  v.  Murray,  4 
E.  D.  Smith,  24"  lloUing  Stock  Co. 
V.  Railroad  Co.,  3  hio  St.  450;  Adams 
Mining  Co.  v.  Scnter,  2G  Mich.  73; 
Capener  v.  Hogan,  40  Ohio  St.  20.3. 

'■'  Greenwood  v.  Spring,  54  Barb.  375; 
Bruce  v.  Davenport,  1  Abb.  App.  233. 

3  Walworth  v.  Farmers'  L.  &  T.  Co., 
IG  Wis.  629;  Stewart  v.  Mather,  .32 
Wis.   345;    Smith  v.   Townseud,   109 


Mass.  500;  White  v.  Ward,  2G  Ark. 
445. 

*  "Two  parties  may  always,  by  mu- 
tual consent,  no  matter  how  diverse 
their  interests,  malio  a  third  their 
agent.  It  is  true  that  if  A  have  <in 
agent,  that  agent  cannot,  without  A's 
consent,  act  as  agent  of  B  in  a  matter 
in  which  A's  interest  conflicts  with 
B's.  But  B,  who  selects  the  agent 
knowing  that  ho  is  the  agent  of  A, 
cannot  object  to  take  advantage  of 
his  own  wrong  in  giving  knowingly  to 
the  agent  a  trust  conilicting  with  liia 
duty  to  A":  Fitzsimmons  v.  Southern 
Expro'ss  Cc,  40  Ga.  330;  2  Am.  Rep. 
577. 

»  Cottom  V.  Holliday,  59  111.  176. 

«  Wright  V.  Welch,  3  McAr.  479. 


^*4. 


gOo 


PRINCIPAL   AND    AGENT. 


144 


CHAPTER  X. 


DUTIES  AND  LIABILITIES  OF  PRmCIPAL  TO  AGENT. 

§  95.  Right  of  agent  to  compensation  from  principal. 

§  90.  When  agent  cannot  recover  compensation. 

§  97.  Right  of  agent  to  reimburaemeat  from  principal. 

§  98.  When  agent  cannot  ask  reimbursement. 

§  95.    Right  of  Agent  to  Compensation  froir  i  rincipal. 

— An  agent  performing  services  for  a  principal  is  entitled 
to  compensation  from  him  therefor/  unless  he  is  a  gratui- 


»  Mangii-iu  V.  Ball,  43  Miss.  288;  5 
Am.  Il"P.  488;  Bri-gs  v.  Boyd,  5G  N. 
Y.  'JS9.  '  See  jots/,  I'urt  IV.,  Brokers. 
I;i  (inM  r.  (luikl,  15  Pick.  130,  Shaw, 
(J.  J.,  said:  "Some  of  the  court  are 
of  opinion  that  as  it  is  the  ordinary 
presumption,  between  strangers,  that 
upon  tlio  pcrforniiuice  of  useful  and 
valuable  services  in  the  family  of  an- 
other, it  is  upon  an  implied  promise  to 
piiy  as  much  a.i  such  services  are  reason- 
ably worth,  so,  after  the  legal  period 
of  cmaucipiition,  the  law  raises  a  simi- 
lar implied  promise  from  a  father  to  a 
daughter.  Other  members  of  the  court 
are  of  opinion  (confining  the  opinion  to 
tlie  case  of  dauglitei-s,  and  expressing 
no  opinion  as  to  the  case  of  sons  lal)or- 
ing  on  a  farm  or  otherwise  in  the  ser- 
vice of  a  fatlier)  that  tiiG  prolonged 
residence  of  a  daughter  in  he?  fatlier's 
family  after  twenty-one,  p'^rforming 
lior  share  in  the  ordinaiy  labors  of 
the  family,  and  receiving  the  protec- 
tion and  supplies  contemplated  in  the 
su[)po->ed  caac,  may  well  be  accounted 
for  upon  considerations  of  mutual  kiud- 
iicii  and  good-will,  and  mutual  com- 
fort and  convenience,  witliout  presum- 
ing tliat  there  wa?  any  understanding 
or  any  expectation  that  pecuniary  com- 
pensation was  to  1)0  made;  that  proof 
of  these  facts  alone,  therefore,  does 
not  raise  an  implied  promise  to  make 
any  pecuniary  compensation  for  such 
Bervices,  or  throw  on  the  defendant 
the  burden  of  proof  to  show,  affirma- 
tively, that  tlie   daughter  performed 


the  services  gratuitously,  and  wi  I  '.t 
any  expectation  of  receiving  wagc_ 
pecuniary  compensation,  but  with  &> 
view  to  the  share  she  might  hope  to 
receive  in  her  fatlier's  esta*^e,  r>r  other- 
wise. But  tlie  court  are  all  of  v]  nion 
that  practically  the  questii'i  ir  •.. ''  jnuch 
less  importance  tiian  at  iirsL  \:l,w  it 
would  appear.  Those  who  think  that 
the  law  raises  no  implied  promise  of 
pecuniary  compensation  from  the  mere 
perioriuance  of  useful  and  valuable  ser- 
vices, under  the  circumstances  sup- 
posed, are  nevertheless  of  opinion  that 
it  would  1)0  quite  competent  for  the 
jury  to  infer  a  promise  from  all  the 
circumstances  of  the  case;  and  that 
although  the  burtlen  of  proof  is  upon 
the  plaintlf,  as  in  other  cases,  to  show 
an  implied  promise,  the  jury  ought  to 
be  instructed  that  if,  under  all  the  cir- 
cumstances of  the  case,  the  services 
were  of  such  a  nature  as  to  lead  to  a 
reasonable  belief  that  it  was  the  un- 
derstanding of  the  parties  that  pecuni- 
ary compensation  should  be  made  for 
them,  then  the  jury  should  lind  an  im- 

Elicd  promise  and  a  qiKDitinn  meruit; 
ut  if  otherwise,  then  they  should  lind 
that  there  was  no  implied  promise. 
Th'j  cf  nclusion  that  the  (question  is  of 
less  practical  importance  than  might 
at  first  appear  is  foun<lcd  upon  the  ob- 
vious consideration  that  it  is  scarcely 
possiblo  that  a  case  can  bo  left  to  stand 
upon  the  mere  naked  presumption  aris- 
ing; froin  th;?  fact  of  thei)rolonged  resi- 
dence of  a  daughter  iu  the  family  of 


144 


145 


DUTIES   AND   LIABILITIES    OF   PRINCIPAL. 


§9r 


tous  agont,*  or  unless  the  nature  of  the  service  performed 
or  the  express  or  implied  understanding  between  the  pur- 
ties  show  that  no  claim  for  pay  was  intended.^    The  man- 


.  Wl    I       '.t 

wage. 

:    with   i> 

hopo  to 

nr  other- 

f  o3>inion 

iii  much 

b  view  it 

liiuk  that 

•omise  of 

the  mere 

liable  sor- 

Iccs   sup- 

iiion  that 

for  the 

all  the 

,11(1  that 

is  upon 

to  show 

lUght  to 

the  cir- 

services 

ad  to  a 

the  un- 

pecuni- 

lade  for 

.1  an  iin- 

tiicruit; 

luld  inul 

lironiise. 

on  is  of 

might 

the  ob- 

icaroL'ly 

o  stand 

Ion  aris- 

il  resi- 


lui 


ily  of 


her  father,  and  the  performance  of 
services.  There  must  of  necessity  be 
a  great  diversity  of  circumstances  dis- 
tinguishing one  caso  essentially  from 
another.  Such  a  continued  residenuo 
of  a  daughter  may  —  indeed  must  —  be 
regarded  under  one  of  these  three  as- 

1)ects:  she  may  be  a  servant  or  house- 
Lceper,  expecting  pecuniary  compensa- 
tion for  services;  or  a  boarder,  expect- 
ing to  pay  a  pecuniary  compensation  for 
accommodations  and  subsistence;  or 
she  may  be  a  visitor,  expecting  neither 
to  make  nor  pay  any  compensation. 
Perhaps  it  miglit  be  safe  to  consider 
the  latter  predicament  as  embracing 
the  larger  number  of  cases.  Now,  the 
circumstances  under  which  the  parties 
continue  to  reside  together,  and  which 
must  almost  necessardy  be  disclosed  in 
t!ie  progress  of  each  trial,  will  go  very 
far  to  show  in  which  of  these  relations 
the  daugliter  stood.  Such  considera- 
tions as  Iho  following,  among  many 
others,  would  arise:  What  is  the  state 
and  condition  of  the  family  as  to  afflu- 
ence ?  was  the  father  carrying  on  a 
business  or  engaged  in  an  employment 
usually  requiring  the  aid  of  hired 
females  ?  had  he  been  accustomed  to 
employ  suc!i  Ijcfom  the  daughter  came 
of  age  ?  did  he  empi  oy  sucii  afterwards  ? 
had  the  father  a  '.vife  living?  was  she 
capable  of  managing  her  family,  or 
was  he  a  widower?  did  the  daughter 
act  as  housekeeper?  had  the  father 
been  accustomed  to  employ  a  house- 
keeper on  wages  ?  did  he  eea  so  doing 
so  ?  were  there  one  or  two  or  more 
daughtcr.i  similarly  situated  ?  did  they 
share  in  t!io  labors  of  the  family,  or 
did  tlie  pliiintiff  exclusively  devotr 
herself  to  service  of  the  family?  had 
the  daughter  property  or  me.'ir.a  cf  licr 
own  to  support  herself,  or  had  she 
bocn  employed  on  wages  in  other  fam- 
ilie.i?  M;iny  other  considerations  of 
a  liire  kind  might  bj  suggested,  some 
and  )irobably  many  of  which  must  pre- 
sent tliemselves  in  each  case,  and  all  of 
which  it  would  be  proper  lor  9.  jury  to 
take  into  consideration  in  deciding  the 
question  of  an  iiuplied  promise  of  pecu- 
niary compensation  upon  either  aide. " 
Vol.  L-IO, 


^  Bartholomew  v.  Jackson,  20  Johns. 
28;  1 1  Am.  Dec.  2u7.  Oa  j  who  under- 
takes, as  a  mere  act  of  friendship,  to 
receive  a  note  from  another,  and  to 
deliver  it  for  collection  i:ito  the  liands 
of  an  attorney,  cannot,  after  the  death 
of  the  person  fro:n  whoni  ho  received 
it,  maintain  a  claim  again  it  his  estate 
for  services  voluntarily  rendered  in  the 
prosecution  of  the  suit  for  the  Ci.llec- 
tion  of  the  note:  Morrow  ?•.  Allison, 
39  Ala.  70;  Hill  v.  Wdliams,  G  Joncj 
Eq.  242. 

^  "In  respect  to  gratuitous  agents 
or  mandataries,  the  consideration  of 
their  rights  proparly  belong.i  to  a  trea- 
tise on  bailments,  and  need  not  bo 
touched  in  a  treati^je  on  agency.  In 
respect  to  agents  or  attorneys  in  fact 
merely  to  sign  a  deed  or  to  do  ,';o;no 
other  single  ministerial  act  for  an- 
other, it  is  not  usual  either  to  pay 
or  to  stipulate  for  pay  for  tlie  execu- 
tion of  such  fugitive  acts.  They  arc 
ordinarily  treated  as  acts  of  friendship 
or  benevolence,  and  are  performed 
from  a  mere  sense  of  duty  or  from  per- 
sonal regard,  and  are  wholly  of  a  gra- 
tuitous nature":  Story  on  Agency, 
sec.  324;  Hinds  f.  Ileniy,  30  N.  J.  \u 
32S;  Hill  r.  Williams,  0  Jones  Eq.  242; 
Eaton  r.  Banton,  2  Hill,  578;  Morrison 
V.  Orr,  3  Stew.  &  P.  4'J;  213  Am.  Dec. 
319.  A  renders  services  to  li  i  i  the 
hope  of  a  legacy  from  B,  and  n  lying 
polcly  on  B's  generosity,  li  .aes  leav- 
ing A  nothing,  j^  ha.;  no  action  against 
B  for  his  services,  but  cUhr  if  it  was 
understood  betvcen  A  and  B  that  B 
should  recoirpeiioc?  him  by  M'ill,  and 
he  docs  not:  Ilobimon  v.  Riiynor,  iS 
N.  Y.  494;  Martin  v.  Wriglit,  13 
Wend.  4G0;  28  A:a.  Dec.  408.  In  the 
last  ca;se  it  was  sail:  "A  reference  to 
some  oT  the  ca'-:e3  will  'iow  tlio  cir- 
euinstances  under  wliieh  .services  ren- 
dered shall  bo  considered  gratuitous. 
Tlio  case  o!"  0.sl)orn  i:  (rovernors  of 
Guy's  Hospital,  2  Strange,  72S,  i  j  often 
referred  to  on  uhis point:,  tliough  it  was 
only  a  nini  pnim  decision,  'ihat  was 
an  action  for  services  renderetl  to  Mr. 
Guy  in  his  stock  aflairs.  It  ajipeared 
as  if  Odboru  did  not  exiJcct  to  bo  paid,. 


n 


§05 


PRINCIPAL  AND   AGENT. 


146 


aging  agent  of  a  steamboat  company,  who  acts  as  captain 
of  one  oT  its  boats,  has,  in  the  absence  of  contract,  a  right 
to  compensation  for  liis  services  as  such.*  So  also  a  stock- 
holder in  a  joint-stock  company,  who  acts  as  trustee  and 
agent  of  the  company.^  A  tenant  in  common  of  lands, 
employed  as  agent  by  special  agreement  between  himself 
and  co-tenant  to  take  charge  of  the  land,  make  sales  thereof 
at  certain  prices,  receiving  a  commission  of  five  per  cent 
on  sales,  may  sue  his  co-tenant  for  the  services  rendered, 
in  respect  to  the  land,  outside  of  selling  it.'  One  who 
employs  an  agent  to  negotiate  a  contract,  and  afterwards, 
as  towards  the  other  contracting  party,  ratifies  the  con- 


but  to  be  cousidercil  for  it  in  the  will 
of  Guy;  antl  the  cliicf  juaticc  dii-ectccl 
the  jury  that  if  sucliwas  tlie  case,  they 
coukl  not  liud  for  the  plaiutitf,  though 
nothing  was  given  him;  that  they 
ehoultl  consider  how  it  was  under- 
stood by  t!io  parties  ab  the  time  of 
doing  the  business,  and  that  a  man 
who  expects  to  be  made  amends  by  a 
legacy  cannot  afterwards  resort  to  his 
action.  So  in  the  case  of  Le  Sage  v. 
Coussnmkcr,  1  Esp.  181),  Lord  Kenyon 
said  that  the  law  was  well  settled  that 
if  the  plaiiitiflF  had  performed  the  ser- 
vices without  any  view  to  reward  but 
to  a  legacy,  that  a  demand  for  services 
could  not  bo  sustained;  of  that  the 
jury  were  to  judge.  In  the  case  of 
Jacobson  v.  E.xccutors  of  Lo  Grange, 
3  Johns.  191),  the  plaintiff  lived  with 
his  uncle,  the  testator,  at  his  request 
eleven  years;  and  the  uncle  said  the 
plaintiff  should  be  one  of  his  heirs, 
and  proposed  to  plaintiff's  mother- 
in-law  to  give  him  tlireo  hundred  and 
fifty  pounds  in  land  as  a  compensa- 
tion for  his  services.  The  plaintiff  had 
never  made  any  claim  upon  the  testa- 
tor. The  jury  found  a  verdict  for  the 
plaintiff.  Van  Noss,  J.,  in  giving  the 
opinion  of  the  court,  intimates  that 
the  plaintiff  could  not  recover  if  the 
services  were  rendered  without  any 
view  to  compensation  other  than  such 
as  the  testator  chose  to  make  by  his 
last  will  and  testament;  but  he  also 
says  that  the  services  having  been  per- 
formed for  the  benetit  of  the  testator, 
'With  his  knowledge  and  approb  ,tion, 


the  law  implies  a  promise  to  pay,  un- 
less ib  can  be  shown  that  payment  v/as 
never  intended.     lu  Patterson  v.  Pat- 
terson, 13  Johns.   370,  380,  the  saine 
learned  judge  says  that  the  plaintiff"  is 
entitled  to  a  reward  for  his  services, 
unless  they  were  to  ba  performed  gra- 
tuitously.    He  cites  the  cases  I  have 
above  referred  to  in  Strange  and  Es- 
pinasse,  and  intimates  that  if  the  under- 
standing of  both  parties  was  that  the 
services  should  be  paid  for  by  a  provis- 
ion in  the  will,  a  right  of  action  would 
accrue,  provided  no  provision  should  be 
made.     So,  too,  in  Little  i'.  Dawson,  4 
Dall.  Ill,  the  rule  is  said  to  be  that  if 
the  services  were  rendered  merely  in 
expectation  of  a  legacy,  without  any 
contract,  express  and  implied,  but  re- 
lying solely  on  the  testator's  generos- 
ity, no  action  can  be  maijitained;  but 
in  that  case  the  testator  had  said  he 
meaujtoprovideforplaintiff'asachild; 
which  was  left,  as  a  matter  c.f  fact,  f^r 
the  jury  to  decide  whether  the  serv'.ccs 
were  gratuitous.     Ihesc  cases  surely 
go  far  enough  in  favor  of  the  defe.ul- 
ants.    It  was  a  question  for  the  referees 
in  this  case  to  decide  whether  the  sc"- 
viccs  were  intended  to  bo  paid  fan. 
Tiiey  have  found  that  compensation 
was  expected  and  intended  at  the  time 
they  were  rendered,  and  the  evidence 
fully  sustains  their  finding." 

'  New  Orleans  Packet  Company  r. 
Brown,  3G  La.  Ann.  138;  51  Am. 
Rep.  5. 

»  Spence  v.  Whitaker,  3  Port.  297. 

»  Thompson  v.  Salmon,  18  Cal.  632. 


146 


147 


DUTIES   AND    LIABILITIES   OF   PRINCIPAL. 


§95 


aptain 
L  right 
stock- 
iG  and 
lands, 
limself 
thereof 
er  cent 
[idcrcd, 
ne  who 
rwards, 
he  con- 

;o  pay,  im- 
ymciit  w;i3 
son  V.  Piit- 
,  the  same 
plaintiff  ii 
is  services, 
ioruied  gra- 
ISC3  I  have 
ige  anil  L-j- 
f  the  umlcr- 
as  that  the 
l>y  a  provis- 
3tiou  WOlllil 
in  shoukl  he 
Dawson,  4 
10  be  that  if 
|l  merely  in 
ithout  any 
|iecl,  but  rc- 
■'s  generos- 
aineil;  but 
d  said  lie 
.ajacliild; 
c.f  fact,  ff>r 
.ho6erv'.0C3 
.^es  surely 
;ho  dcfo.ul- 
lic  referees 
cr  the  80"- 
paiil  fon. 
ipensation 
t  the  time 
le  evidence 

Company  v. 
51    Am. 

J  Port.  297. 
Is  Cal.  632. 


tract  which  the  agent   obtains,  cannot   be  heard,  in   a 
subsequent  action    by  the   agent  for   the  compensation 
promised  for  his  services,  to  dispute  that  the  latter  suc- 
ceeded in  negotiating  a  valid  contract  as  desired.'     If  a 
person  acts  as  an  agent  without  autliority,  and  his  acts 
are  ratified,  he  is  entitled  to  the  same  compensation  and 
remedy  as  if  he  had  been  dul}'^  autliorized.^     An  allow- 
ance for  commissions  will  not  be  made  to  an  agent  who 
continued  to  manage  the  property  of  a  testator  witli  the 
expectation  of  a  legacy.''     Tiiat  a  prinoi[)al  recognized  a 
subagent  and  accepted  his  services  does  not  necessarily 
prove  an  agreement  to  pay  for  said  services.'*     Where  an 
agent  informed  his  principal  that  he  should  charge  no 
commissions  for  his  services,  he  wns  held  to  bo  precluded 
from  charging  commissions  during  the  life  of  the  [trin- 
cipal,  though  the  principal  had  recognized  the  agent's 
right  to  commissions.^     Where  an  agent  complains  to  his 
principal  that  the  terms  of  the  contract  are  too  onerous 
upon  him,  and  seeks  and  procures  a  modification  render- 
ing it  more  favorable  to  him,  the  utmost  good  faith  is 
required  from  him  in  such  negotiation;  and,  upon  any 
misrepresentation  shown,  the  courts  will  hold  the  modifi- 
cation void,  and  settle  the  accounts  and  dealings  of  the 
agency  according  to  the  original  contract."     A  general 
agent  for  an  insurance  company,  discharged  for  failure  to 
account  according  to  his  contract,  has  no  interest  in  pre- 
miums thereafter  to  be  collected  on  policies  issued  through 
his  agency.^     One  employed  to  find  a  customer  for  stock 
at  a  certain  price  is  entitled  to  his  commission,  although 
the  principal  sell  to  the  customer  found  at  a  lower  price, 
the    agent    having   nothing   to    do  with   the   reduction.' 

'  Wini)enny  v.  French,   18  Ohio  St.  ^  Higginson  v.  Fabrc,  3  Dcsaus.  Erj. 

4i'9.  89. 

-  V\'ilson  V.  Dame,  58  N.  H.  392.  «  Nelson    v.    Bowman,    29     ( ;  ratt. 

^  Grandin  v.  Reading,   10  N.  J.  Eri.  732. 

370.  t  T'lurnix  Mat.  Life  Ins.  Co.  /•.  Hoi- 

*  Homan  v.  Brooklyn  Life  lus.  Co.,  lowav,  51  Conn.  311. 

1 7  Mo.  App.  22.  8  Djxtcr  v.  Campbell,  137  M:us.^.  198. 


95 


PRINCIPAL  AND   AGENT. 


148 


Where  the  agent  has  agreed  to  leave  the  amount  of  his 
compensation  to  his  principal's  discretion  or  generosity, 
he  cannot  recover  more  than  the  principal  chooses  to 
allow  him.*  But  if  the  agreement  is  that  ho  is  to  be  al- 
lowed p  reasonable  compensation,  to  be  fixed  by  his  em- 
ployer, he  may  sue  for  a  reasonable  compensation  if  the 
employer  refuses  or  neglects  to  fix  it.*  Where  the  prin- 
cipal, hf  ag  an  agent  in  his  employ,  confers  upon  him 
additional  powers  which  involve  greater  duties,  with  no 
stipulation  for  additional  compensation,  the  agent  cannot 
recover  extra  wages  for  such  additional  service.'  In  the 
absence  of  an  express  contract  as  to  the  agent's  compen- 
sation, it  will  be  settled  by  proof  of  usage.*  But  a  usage 
giving  an  agent  the  profits  of  a  transaction  on  the  princi- 
pal's behalf  is  invalid.*  So  is  a  custom  among  insurance 
agents  that  tlicy  are  entitled  to  all  dividends  declared 
by  mutual  companies,  in  lieu  of  other  compensation,  for 
effecting  the  insurance.®  And  so  is  a  custom  allowing 
an  agent  to  charge  commission  to  both  vendor  and  pur- 
chaser.' Where  A  had  agreed  to  pay  B  "twenty  per  cent 
upon  all  original  or  first-year  premiums  collected  and 
paid  in  by  him,"  B  was  not  permitted  to  show  that  by 
the  usage  of  the  business  premiums  were  treated  as  "col- 
lected and  paid  in,"  although,  for  the  convenience  of  the 
assured,  tlicy  were  payable  in  subsequent  installments.® 
A  cus-tom,  when  goods  are  consigned  to  merchants  for 
sale,  and  again  consigned  by  them  to  others  to  sell,  for 
each  house  to  charge  a  commission  of  two  and  a  half  j^er 


*  An  agent  performs  work  for  a  com- 
mittee iiiuler  :>,  resolution  as  follows: 
"  Tiiat  any  service  to  be  port'orinc  by 
him  shall  be  taken  into  con.sideration, 
and  such  remiiaeration  be  maJe  as 
shall  be  deenie.i  right."  Ildil.  that 
no  acti>)ii  Would  lie  for  compensatiou 
against  the  committee:  Taylor  v. 
Brewer,  1  ^T^.a.  &  S.  290. 

-  St-    V  ion  Atcency,  sec.  325. 

*  Moreaia  v.  Dumagene,  2J  La.  Aao. 
230 


*  Lawson  on  Usages  and  Customs, 
sec.  151;  Brown  v.  Harrison,  17  Ala. 
774;  llaliscy  v.  Brown,  3  Day,  340. 

^  Diplock  V.  Blackburn,  3  Camp. 
43. 

«  Mim.  Cent.  R.  R.  Co.  v.  Morgan, 
52  Barb.  217. 

'  Raisii!  i\  Clark,  41  Md.  158;  20 
Am.  Rep.  CG;  Farnsworth  r.  Hemmcr, 
1  Allen.  404;  70  Am.  Dee.  75(). 

»  Kimball  v.  Erawner,  47  JIo.  398. 


th 

lit 
ht 

hi 


148 

;  of  his 

lerosity, 
)Oses  to 
to  bo  al- 
ius cm- 
n  if  the 
lie  prin- 
:>on  him 
with  no 
;  cannot 
In  the 
3ompen- 
a  usage 
3  princi- 
isu  ranee 
declared 
tion,  for 
allowing 
md  pur- 
per  cent 
ted  and 
that  by 
as  "col- 
e  of  the 
Iments.* 
Hits  for 
sell,  for 
lalf  per 

Customs, 
n,  17  Ala. 
oiCj. 
3    Camp. 

Morgan, 

,   158;   20 

Ilemmcr, 

.jti. 

lo.  398. 


149 


DUTIES   AND   LIABILITIES   OF   PRINCIPAL. 


§95 


cent,  the  usual  commission  for  selling  goods,  is  void  as 
against  common  reason  and  justice.'  So  is  a  custom  of 
factors  to  charge  both  commissions  and  interest  on  dd- 
vances.^  A  well-established  custom  among  life  insurance 
companies  and  their  agents  as  to  the  kind  and  extent  of 
property  the  agents  may  possess  in  the  lists  of  policies 
they  procure  is  admissible  to  explain  a  contract  between 
them.^  A  usage  by  which  the  seller  of  property  is  held 
liable  to  pay  a  commission  to  a  broker  whose  services  he 
has  accepted,  and  who  has  introduced  him  to  and  brought 
him  into  negotiation  with  an  ultimate  buyer,  and  who  is 
ready  to  continue  h^s  services  until  a  sale  is  effected,  is  a 
reasonable  one,  in  allowing  a  recovery  for  services  ac- 
cepted and  rendered,  even  though  the  sale  is  finally  ef- 
fected by  another  broker.*  In  an  action  on  a  promise  to 
pay  commission?  to  an  insurance  agent,  evidence  of  a 
usage  of  the  trada  to  pay  commissions  only  on  premiums 
actually  collected  is  admissible.^  In  the  absence  of  any 
contract,  the  court  in  fixing  the  compensation  of  an  agent 
will  have  regard  to  the  extraordinr ry  services  and  per- 
sonal sacrifices  of  the  agent,  as  well  as  the  benefits  re- 
ceived by  the  principal.*  An  agent's  commission,  wliero 
he  "agrees  and  obliges  himself  to  manage  a  vessel,  to  the 
best  advantage,  according  to  his  judgment,  for  the  owner," 
docs  not  depend  upon  the  profitable  result  of  the  adven- 
ture, if  he  discharges  his  duty  faithfully.'  An  agent  au- 
thorized to  draw  upon  his  employer  for  moneys  becoming 
duo  to  him — e.  g.,  expenses — may  maintain  an  action 
against  the  employer  for  maliciously  refusing  to  honor 
drafts  drawn  accordingly.* 


'  Spear  v.  Newell,  23  Vt.  159;  Bur- 
ton r.  Eliii,  23  Vt.  151. 

-  Sniotz  V.  Kennedy,  Riley,  218. 

^  Euswortii  V.  New  York  etc.  Ins. 
Co.,  7  A:n.  Law  Reg.  332. 

;  Loud  V.  Hull,  lUii  Mass.  404. 

•''  Mdl'T  V.  Insuranee  Co.,  1  Abb. 
N.  C.  470.  As  to  the  right  of  brokers 
to  couipuutiatiun  and  commissioas,  see 


post,  Part  rV.,  Brokers  and  Factors. 
As  to  construction  of  contracts  of  ser- 
vice as  to  compensation  or  salary,  see 
post.  Part  v..  Master  and  Servant. 

*  West  New  Jersey  Sooiety  v.  Mor- 
ris, Pet.  C.  C.  59. 

'  Stewart  v.  Rogers,  19  Md.  98. 

^  Levy  V.  Curtiss,  1  Abb.  N.  C. 
189. 


95 


PRINCIPAL  AND  AORNT. 


150 


Illustrations. — A  loan  was  effected  by  an  agent,  who 
charged  a  commission  for  the  service,  and  for  becoming  secu- 
rity for  the  repayment.  Held,  that  a  further  commission  was 
not  chargeblo  for  paying  over  the  money  to  his  principal,  or 
on  his  orders:  Colton  v.  Dunham,  2  Paige,  207.  An  agent 
acting  under  a  power  of  attorney,  duly  recorded,  which  pro- 
vided foi'  the  payment  of  the  costs  of  the  litigation  arising  in 
tlie  transaction  of  the  business,  held  entitled  to  a  compensa- 
tion for  his  services;  and  his  claim  is  superior  to  that  of  one  to 
whom  the  principal  has  assigned  the  fruits  of  the  litigation: 
Lane  v.  Coleman,  8  B.  Mon.  569.  A  commission  merchant 
in  Philadelphia,  who  was  to  receive  five  per  cent  for  sale  and 
guaranty,  sent,  without  direction  to  do  so,  some  of  the  goods  to 
New  York  and  Boston  for  sale,  and  paid  five  per  cent  for  sale 
and  guaranty.  Held,  that  a  charge  by  him  of  two  and  a  half 
per  cent  in  addition  was  inadmissible:  Van  DyJce  v.  Brown,  8 
N.  J.  Eq.  G57.  Several  joint  owners  of  a  cargo  appoint  one 
of  tlieir  number  as  their  agent  to  receive  and  sell  the  cargo  and 
distribute  the  proceeds.  Held,  tliat  ho  is  entitled,  under  such 
special  agency,  to  a  conmiission  or  compensation  for  his  ser- 
vices, as  a  factor  or  agent,  in  the  same  manner  as  a  stranger: 
Bradford  v.  Kimhcrley,  3  Johns.  Ch.  431.  D.  was  entitled  to  a 
comniiGsion  for  every  machine  sold  by  the  firm  of  A.  &  B., 
through  his  exertions,  and  after  he  had  begun  negotiations  for 
the  sale  of  a  machine  to  G.,  the  firm  dissolved,  and  A.  assumed 
for  his  sole  benefit  the  performance  of  all  existing  copartner- 
ship engagements,  and  subsequently  took  in  C.  as  partner, 
and  the  firm  of  A.  &  C.  sold  a  machine  to  G.,  as  the  result 
of  D.'s  original  negotiation.  Held,  that  D.  was  entitled  to 
his  commission,  and  could  maintain  an  actio:i  against  A. 
therefor,  who  was  liable  to  the  same  extent  as  if  ho  had  gone 
on  alone  in  the  business:  Sinclair  v.  Galland,  8  Daly,  5u8.  A 
marine  insuran-e  company  in  Nevv  York  employed  merchants 
in  England  as  their  agents,  to  settle  claims  and  grant  insur- 
ances, and  also  to  effect  reinsurances.  A  percentage  was  paid 
by  the  company  on  the  first  two  classes  of  business,  but  the 
agents  were  remunerated  as  to  the  reinsurances  by  the  broker- 
age allowed  to  them  by  the  underwriters.  They  charged  the 
company  the  full  amount  of  the  premiums,  but  were  allowed 
by  the  underwriters,  first,  five  per  cent  on  the  i)remiums;  and 
secondly,  twelve  per  cent  on  the  balance  (if  any),  payable  by 
them  to  the  underwriters  on  the  account  for  the  year,  crediting 
the  underwriters  with  the  premiums  (less  tlie  five  per  cent), 
and  debiting  losses.  This  was  according  to  the  usual  custom 
on  the  credit  system,  as  between  brokers  and  underwriters,  but 
the  twelve  per  cent  allowance  was  for  some  time  unknown  to 
the  company.    Held,  that  the  ngents  were  entitled  to  both  the 


150 


151 


DUTIES   AND   LIABILITIES   OF    I'RINCIPAL. 


§00 


percentages:  G)rat  Western  Ins.  Co.  of  N.  Y.  v.  Cunliff,  43  L.  J. 
Ch.  741;  L.  R.  0  Ch.  525;  31  L.  T.,  N.  S.,  GGl. 

§  96.    When  Agent  cannot  Ilecover  Compensation.  — 

There  are  cases  in  which  an  agent  is  prohibited  from  re- 
covering the  price  of  his  services.  They  arc,  first,  where 
the  service  was  an  illegal  one  ;^  second,  where  he  has 
been  gnilty  of  gross  negligence  or  unfaithfulness  in  the 
performance  of  his  duties,^  or  neglects  to  keep  accounts,' 
or  violates  his  instructions.*  If  an  agent  for  the  perform- 
ance cf  certain  services  for  which  a  salary  or  j'carly  sum 
is  to  be  allowed  him  neglect  to  keep  an  account  of  moneys 
received  by  him  in  his  agency,  and  several  annual  ac- 
counts are  settled  between  him  and  his  principal,  in  which 
considerable  amounts  of  money  previously  received  by 
him  are  omitted  to  be  credited  to  the  princij)al,  and  the 
omission  is  not  supplied  until  the  principal,  in  conse- 
quence of  information  received  from  others,  makes  inquiry 
of  the  agent  in  reference  thereto,  the  salary  or  yearly  sum 
for  the  years  in  which  such  omission  occurred  should  be 
disallowed.* 

Illustrations.  —  A  is  employed  by  B  as  a  "lobbyist"  to 
procure  the  passage  by  Congress  of  a  bill  to  pay  B  a  claim  he 
holds  against  the  government.     A  cannot  recover  pay  from  B 


1  McBratney  v.  ChauiUcr,  22  Kau. 
0)92;  Ciauo  v.  Wliittemore, /4  Mo. 
App.  510;  Faruira  v.  Gabjll,  89  Pa. 
St.  89;  I'aaie  v.  Franco,  2G  MJ.  4(3; 
S;!iith  V.  Bi.uvicr,  70  Pa.  St.  .";]1; 
Mardhall  r.  Baltimore  etc.  li.  Iv.  Co., 
IG  How.  314:  Vrniv  v.  Honk.  4  N.  Y. 
44'J;  Fuller  v.  Dame.  18  Pick.  472; 
Clippiiigf.r  r.  He2)l)augli,  5  Watts  &  S. 
.■Jlu;  4J  Am.  Dec.  519  (but  see  Oniics 
r.  Daucliy,  45  N.  Y.  Sup.  Ct.  85); 
Harris  v.  Roof,  10  Barb.  489;  Rose  v. 
Truax,  21  Barb.  3G1. 

'^  Sea  V.  Carpenter,  IG  Ohio,  412; 
Smith  c.  Crews,  2  Mo.  App.  2G9; 
Siuvyerr.  Mayhew,  51  Me.  398;  Tyrrell 
r.  Bulk  of  Lomloii,  10  H.  L.  2G;  I:i  re 
Owens,  7  I.  R.  Eq.  235;  Brannau  v. 
Strau.ss,  75  III.  235;  Short  v.  Millard, 
C8    111.    292;    White  v.    Chapman,    1 


Stark.  113;  Vcnuum  c.  Gregory,  21 
Iowa,  r,2J;  Clevokud  etc.  R.  R.  Co.  v. 
P;itti  ,011,  15  Itid.  70;  Porter  r.  Silvers, 
35  Iiid.  295;  Sumner  i:  Reicheniker, 
9  Kan.  320;  Segar  v.  rarrisb,  20 
Oratt.  072;  Prescott  v.  VViiite,  18  111. 
322. 

"'^"Smith  V.  Crews  2  Mo.  App.  2G9. 
But  see  Sampson  v.  Somerjet  Iron 
Works,  G  Cray,  120;  Braniian  v. 
Strausj,  75  111.  234;  Galliip  v.  Merrill, 
40  Vt.  133. 

*  Jonea  v.  Iloyt,  25  Conn.  3SG;  Iloyt 
V.  Sliipherd,  70  111.  SU9;  Myers  v. 
Walker,  31  111.  354;  Frascr  r.  Wyck- 
off,  03  N.  Y.  445.  Unlc^j  the  pri..ci- 
pal  ratiiies  his  comluct:  Beall  v.  Janu- 
ary, 02  Mo.  434. 

•"  Ridgway  V.  Ludlam,  7  N.  J.  Eq. 
123. 


§07 


PRINCIPAL   AND  AGENT. 


152 


for  this  service:  Tnst  v.  Chihl,  21  Wall.  441.  A  broker  sues 
his  customer  for  commissions  for  services  in  8tock-gamI)ling  for 
him.  IIo  cannot  recover:  Fareira  v.  Gahrll,  8'J  Pa.  St.  S9.  An 
attorney  in  the  conduct  of  a  suit  makes  a  Muiuler  hy  which  all 
his  previous  work  becomes  useless.  lie  cannot  recover  from  his 
client  for  what  he  has  done:  Brarcy  v.  Carter,  12  Ad.  &  E.  373. 
A  broker  in  negotiating  an  exchange  of  real  estate  neglected  to 
inform  one  of  the  parties,  until  the  time  limited  for  the  exchange 
had  expired,  that  the  other  refused  to  accept  one  of  the  lots  be- 
cause the  taxes  were  unpaid.  Held,  that  he  could  not  recover 
commission  for  his  services:  Fisher  v.  Dynes,  G2  Ind.  3i.S.  A 
steamboat  captain  kept  his  accounts  so  negligently  that  H  could 
not  be  seen  whether  he  or  the  owners  were  debtor  to  tl.e  other. 
Jfcldy  that  he  had  forfeited  his  right  to  compensation:  Smith  v. 
Crews,  2  Mo.  App.  269.  A  vessel  v/as  bought  by  an  association  of 
persons,  and  a  conveyance  taken  in  the  name  of  certain  others, 
as  their  agents.  Compensation  was  refused  to  such  agents,  be- 
cause of  their  misconduct:  The  Taranto,  1  Sprague,  170.  A 
was  employed  by  a  railroad  company  to  procure  subscriptions 
to  stock,  and  in  the  exercise  of  such  agency,  without  the  knowl- 
edge of  the  company,  received  reward  from  persons  subscrib- 
ing lands  for  stock,  for  procuring  their  lands  to  be  taken  by  the 
company.  Held,  that  the  agency  in  behalf  of  the  subscribers 
was  inconsistent  with  the  agency  for  the  company,  was  an  act  of 
bad  faith,  and  worked  a  forfeiture  of  all  right  to  compensation 
from  the  company:  Cleveland  etc.  II.  R.  Co.  v.  Pattison,  15  Ind.  70. 

§  97.  Right  of  Agent  to  Reimbursement  from  Princi- 
pal.—  An  agent  is  entitled  to  be  reimbursed  by  his  prin- 
cipal for  all  expenses  legally  and  properly  incurred  in  his 
behalf.*    In  equity  the  liability  of  a  principal  to  indemnify 


*  Ramsay  v.  Gardner,  1 1  Johns.  439; 
Child  V.  Morky,  8  Term  Rep.  610; 
Maddick  a.  Marshall,  16  Com.  B.,  N. 
S.,  387;  Wolff  v.  Horncastle,  1  Bos. 
&  P.  3'i;?;  Robinson  v.  Norris,  51  Hew. 
Pr.  442;  Ruffner  v.  Hewitt,  7  W.  Va. 
585;  White  v.  National  Bank,  102 
U.  S.  658;  Beach  v.  Branch,  57  Ga. 
3G2;  Scaring  r.  Butler,  69  111.  575; 
Elliott  V.  Walker,  1  Rawle,  126;  Col- 
loy  V.  Merrill,  0  Me.  50;  Wynkoop  v. 
Seal,  64  Pa.  St.  361 ;  Meara  v.  Adreon, 
31  Md.  229;  McCroskey  v.  Mabry,  45 
Ga.  327;  Hamilton  v.  Cook  Co.,  4 
Scam.  519.  In  Powell  v.  Trustees  of 
Nowburr;h,  19  Johns.  284,  Spencer, 
C.  J.,  faid:  "Damages  incurred  by  an 
agent,  or  iu  the  course  of  a  principal's 


affairs,  or  in  consequence  of  such  man- 
agement, are  to  bo  borne  by  the  prin- 
cipal. It  was  admitted  thab^vhere  an 
agent  on  a  journey  x)n  business  of  his 
principal  was  robbed  of  hij  own  money 
the  principal  would  not  be  answerable, 
because  carrying  his  own  money  was 
not  necessarily  connected  with  the 
business  of  his  principal.  So  if  ho 
received  a  wound  the  principal  is  not 
bound  to  pay  the  expense  of  the  cure, 
for  it  was  the  personal  risk  of  the 
agent.  The  distinction  appears  to  be 
between  those  cases  which  arise  natu- 
rally out  of  the  agency,  and  such  as 
are  casual  or  oblique,  not  proceeding 
directly  from  the  execution  of  the 
mandate." 


152 


153 


DUTIES   AND   LIABILTTIES   OP   PRINCIPAL. 


§97 


fines 


money 

[•erable, 

joy  was 

|th    tho 

if  ho 

13  not 


his  agent  is  not  confined  to  actual  losses,  but  extends  to 
all  the  liabilities  of  the  agent  incurred  on  belmlf  of  the 
princiiial.*  Judgment  against  the  principal  and  agent  ia 
favor  of  the  owner  of  chattels  tortiously  taken  by  tho 
agent  under  command  of  tho  principal  is  conclusive  upon 
tlic  principal  as  to  tho  ownership  of  tho  property,  in  an 
action  by  tho  agent  against  the  principal  upon  tho  im- 
plied promise  of  indemnity.*  Tho  agent  has  a  claim 
against  his  principal  for  the  costs  of  defending  his  princi- 
pal's property  against  a  lawsuit,'  or  other  peril,*  for  claims 
against  him  as  an  agent  for  which  he  was  personally 
liable^  for  acts  done  by  him  in  tho  course  of  his  agency, 
in  which  he  has  undertaken  a  liability  or  sustained  a 
damage."    A  party  acting  as   agent   or   employee   for   a 


*  Lacoy  v.  Hill,  Crowley's  Claim,  43 
L.  J.  Ch.  551;  22  Week.  Rep.  580; 
L.  U.  18  Eq.  182. 

'  Moore  v.  Appleton,  34  Ala.  147; 
73  Am.  Dec.  448. 

•'  Powell  V.  Trustees  of  Newburgh, 
19  Johns.  284;  D'Arcy  v.  Lyle,  5 
Biun.  4-11;  Hill  v.  Packard,  5  Wend. 
375;  Delaware  Ins.  Co.  v.  Delaunie,  3 
Binn.  205;  Frixione  v.  Tagliaferro,  10 
Moore  P.  C.  175. 

*  Wolif  V.  Horncastle,  1  Bos.  &  P. 
.323. 

''  Power  V.  Butcher,  10  Barn.  &  C. 
SC'.t;  Turner  v.  Jones,  1  Lans.  147. 
0;ic  wlio,  acting  as  agent,  insures  his 
principal's  property  in  a  company  for 
wliich  ho  is  also  agent,  is  entitled  to 
be  reimbursed  the  amount  of  pre- 
miums paid  out  by  him:  Rochester  v. 
Lcverin;;,  104  In d.  5G2. 

''  Marland  v.  Stanwood,  101  Mass. 
470;  Ramsay  v.  Gardner,  11  Johns. 
4r;'J;  Hdl  V.  Packard,  5  Wend.  375; 
Coventry  v.  Barton,  17  Johns.  142;  8 
Am.  Dec.  37G;  Allaire  v.  Ouland,  2 
Johns.  Cas.  54;  Avery  v.  Halsey,  14 
Pick.  174;  Moore  v.  Appleton,  26  Ala. 
C33;  Drummond  r.  Humphreys,  39 
Mc.  347;  Howard  v.  Clark,  43  Mo. 
344;  Tarr  v.  Northy,  17  Me.  113;  .35 
Au..  Dec.  232;  Nelson  v.  Cook,  17  111. 
443;  Grace  v.  Mitchell,  31  Wis.  533; 
11  Am.  Rep.  613;  Yeatman  v.  Corder, 
38  Mo.  337;  Levy  v.  Curtis,  1  Abb.  N. 


C.  189;  Saveland  V.  Green,  36  Wi.s.  012. 
In  Greene  v.  Goddard,  9  Met.  222,  it 
is  said:  "Where  an  iigent,  in  pursu- 
ing tho  instructions  of  liis  principal, 
and  acting  within  the  scoite  ot'  his  au- 
thority, becomes  persouiilly  liable  for 
the  performance  of  the  contract  he 
makes  for  his  principal,  and  without 
which  personal  liability  the  orders  of 
the  principal  cannot  bo  executed  at 
all,  or  not  so  well  executed,  and  this 
is  known  by  the  principal  at  the  time 
of  giving  his  instruction.s  and  creating 
the  agency,  if  a  loss  occur  to  the 
agent,  it  is  most  clear  tliat  ho  can  look 
to  the  princii)al  for  iudcuniity  for  the 
damage  sustained  by  him.  And  this 
rests  upon  those  sound  principles  of 
common  sense  and  mutual  justice  in 
the  transaction  f)f  buainess  upon 
which  the  law  merchant,  in  its  various 
branches,  is  founded;  and  wliicli  law, 
as  it  regulates  and  prescribes  the 
rights  and  duties  of  ])rincipal  and 
agent,  alike  furnishes  protection  to 
the  agent  when  he  sutfcrs  loss  though 
fidelity  to  his  employers,  and  gives 
redress  to  the  principal  wlio  sustains 
an  injury  from  the  breach  of  orders  or 
neglect    of    duty  by  agent.     In 

Ramsay  v.  Gardner,  jms.    439, 

the  plaintiff  indorsed  a  oill  drawn  by 
the  defendant.  Tlio  indorsement  was 
made  by  the  plaintiff,  m  agent  for  tlio 
defendant.     The    bill  was    returned, 


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PBINCIPAL  AND  AGENT. 


154 


number  of  heirs  in  the  prosecution  of  a  land  claim,  under 
an  agreement  and  contract,  may  withhold  the  payment 
of  so  much  of  the  proceeds  of  the  sale  of  the  land  which 
he  has  received  for  them  as  will  be  necessary  to  cover 
possible  liabilities,  on  account  of  suits  brought  by  settlers 
for  improvements  made  on  the  land,  unless  the  heirs  give 
satisfactory  security  against  loss  resulting  from  such  suits.* 
Under  an  agreement  to  collect  debts  and  apply  the  pro- 
ceeds to  the  payment  of  a  debt  due  from  the  principal  to 
the  ageni,  such  agent  is  entitled  to  deduct  from  the  pro- 
ceeds the  r-ite  of  exchange  between  the  place  of  collection 
and  the  ;  1:(  >  where  the  debt  duo  him  from  the  principal 
is  payable,  r.^ienses  of  collection  by  suit  or  otherwise, 
and  bis  rc:?-iori{tble  commissions.^  Where  an  agent  has 
a  general  cuthority  to  receive  and  sell  goods,  and  out 
of  the  proceeds  to  repay  himself  his  advances,  charges, 
and  commission,  the  costs  of  an  action,  with  a  reference 
thereof,  against  a  wrong-doer  who  withholds  the  posses- 
sion of  the  goods,  bona  fide  incurred  for  the  recovery  of 


and  the  plaintiflF,  as  imlorser,  paid  it, 
with  tho  postages,  protests,  and  twenty 
per  cent  damages.  He  brought  his 
action  to  recover  the  sums  so  paid; 
and  tho  court  held  that  as  he  had 
acted  as  the  agent  of  the  defendant, 
and  without  benefit  to  hi;nself,  the 
money  whicii  he  luid  paid  was  paid 
for  hid  principal,  and  that  he  was 
entitled  to  recover.  So  in  Stocking  v. 
Sago,  1  Conn,  ^y'22,  tho  court  held 
that  an  agent  who,  i.i  acting  faithfully 
for  his  principal,  is  subjected  to  ex- 
pe:ise,  is  to  be  reimburjed;  and  tiiat, 
if  ho  is  sueil  on  a  ccuitract  made  pur- 
suant to  his  authority,  tlie  law  im- 
plies a  proiui<je  by  the  principal  to 
mdenmify  him.  So  in  D'Arcy  v.  Lyle, 
6  Binn.  441,  tlie  court  approved  the 
doctrine  of  tlio  civil  l.iw,  that  where 
damages  are  incurred  by  an  agent  in 
the  management  of  the  business  of 
his  principal,  or  in  consequenco  of  it, 
the  principal  is  responsible  to  him  for 
the  damages  so  incurred.  See  also 
Powell  V.  Trustees  of  Newburgh,  19 
Johns.  t.'S4;  Cliild  v.  Morley,  8  Term 


Rep.  610.  So  in  Riggs  v.  Lindsay, 
7  Cranch,  500,  where  Riggs  give  an 
order  to  Lindsay  to  purchase  for  his 
account  a  quantity  of  salt,  and  to 
draw  as  directed  for  payment,  and 
tho  drawees  refused  to  ac-cj)t  the  bills 
which  Lindsay  drew,  and  he,  in  con- 
sequence of  the  non-acceptance,  was 
obliged  to  take  tliem  up  and  pay 
damages  thereon,  it  was  held  to  be  a 
payuK-nt  of  tho  debt  of  RiggJ,  who 
gave  tlie  order,  and  that  tlicru  \;xi  no 
good  reason  for  distinguishin;^  between 
the  damages  and  tho  principal  Kum. 
This,  then,  is  a  case  of  principal  and 
agent,  and  tho  agents  allege  ihat  in 
the  faithful  discharge  of  their  duty 
they  have  sustained  a  direct  loss,  as 
well  tljrough  tho  failure  of  tho  accep- 
tors of  tho  bills  to  pay  tliem  at  matu- 
rity, as  through  the  neglect  of  tho 
deleadaut  to  place  funds  in  the  hands 
of  tho  acceptors  to  pro\ide  for  their 
payment,  agreeably  to  his  promise." 

*  Bastable  v.  Uenegre,  22  La.  Ann. 
124. 

=•  Howe  V.  Wade,  4  McLean,  319. 


til 

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v. 


154 


155 


DUTIES   AND   LIABILITIES   OF   PRINCIPAL. 


§97 


the  goods,  are  legal  charges  upon  the  goous,  and  may  bo 
set  off  by  the  agent  in  an  action  brought  against  him  by 
hid  principal  for  the  balance  of  the  proceeds  of  the  goods.' 
An  agent  entitled  to  charge  for  expenses  may  recover 
the  fair  worth  of  his  board,  even  though  he  actually  paid 
nothing  for  it.'' 

Illistrations.  —  A  employs  B  to  buy  stock  for  hum.  B 
buys  the  stock  and  pays  for  it.  B  is  entitled  to  recover  what 
ho  has  paid  from  A;  Durant  v.  /?t/r/,  98  Mass.  IGl;  G'uhlinrjs 
v.  Scars,  103  Mass.  311;  nroini  v.  Phelps,  103  ^lass.  313.  An 
agent  innocently  sells  void  bonds  without  disclosing  his  prin- 
cipal, lie  can  recover  from  him  all  damages  incurred  by  him 
in  making  the  sale:  Maitland  v.  Martin,  8(3  Pa.  St.  120.  An 
agent  is  compelled  to  make  allowance  to  vendees  of  cotton  on 
.account  of  defective  packing.  lie  ma}'  recover  what  ho  paid 
from  his  principal:  Beach  v.  Branch,  57  Ga.  3G2.  A  railroad 
conductor  was  instructed  by  the  company  not  to  receive  for 
fare  a  certain  class  of  tickets.  A  passenger  presented  such  a 
ticket,  but  the  conductor  refused  to  receive  it  and  ejected  tho 
passenger.  The  latter  brougl)t  an  action  against  him  and  re- 
covered judgment.  Held,  that  the  conductor  had  a  right  to 
recover  against  the  company  the  amount  of  the  judgment  and 
the  damage  sustained  by  him:  Howe  v.  Buffalo  etc.  Ji.  It.  Co., 
37  N.  Y,  29S.*  R.  was  authorized  by  A.  to  make  bets  for  A.  in 
the  name  of  R.,  and  having  paid  the  moneys,  sued  A.  to  recover 
tho  same.  Held,  that  though  the  bets  were  not  recoverable  at 
law  against  R.,  and  Avere  revoked  before  paid,  yet,  having  paid 
them  to  save  himself  from  being  excluded  from  the  ring,  R. 
was  entitled  to  indemnity  from  A:  Head  v.  Anderson,  21  Cent. 
L.  J.  173.     Defendant  applied  to  plaintiff  to   know  how  ho 


19. 


'  Curtis  i:  Barclay,  7  Dowl.  &  R. 
WO;  T)  I!ar:i.  &  C.  141. 

'■'  Moore  i'.  Ilciniiiffton,  34  Earb.  427. 

^  "The  plaintiff,"  said  tho  court, 
"acted  ill  good  faith,  and  in  obedi- 
ence to  tho  defendant's  instructions. 
Ho  supposed  tho  company  to  possess 
the  authority  it  assumed,  and  ho  found 
himself  involved  in  a  serious  liability 
by  fidelity  in  discharge  of  a  duty  im- 
posed by  his  principal,  M'hcro  he  was 
wholly  free  from  intentional  wrong. 
Under  these  circumstances,  the  com- 
pany very  properly  assumed  the  bur- 
den of  dclending  his  act.  Whether 
the  judgment  recovered  against  him 
was  right  or  wrong  is  a  question  which 
does  not  arise  ou  the  present  appeal. 


If  it  was  right,  the  defendants  should 
have  paid  it  without  exposing  him  to 
imprisonment  for  an  act  done  in  good 
faith,  in  the  interest  and  by  th.c  or- 
ders of  the  company.  If  it  v/aj  wrong, 
tho  error  should  have  been  corrected 
by  a  review  of  the  judgment.  Tlio 
appellants  chose  to  abandon  the  de- 
fense and  i)ermit  him  to  bo  the  suf- 
ferer. The  court  btlow  was  right  in 
holding  that  the  plaintiff  was  entitled 
to  redress.  There  is  an  implied  obli- 
gation on  the  part  of  the  princip.il  to 
indemnify  an  innocent  agent  for  obey- 
ing his  orders,  where  the  act  wuhl 
have  been  lawful  in  respect  to  Ijoth 
if  tho  principal  really  had  the  author- 
ity wlucb  he  claimed." 


98 


PRINCIPAL  AND  AGENT. 


156 


ehould  draw  money  from  Scotland.  Plaintiff  advised  him  to 
draw  a  hill  and  send  it  to  plaintiff  to  bo  forwarded.  Defend- 
ant did  80,  and  plaintiff  indorewd  and  negotiated  the  bill; 
which,  however,  was  returned  protested,  and  plaintiff  had  to 
pay  twenty  per  cent  damages.  Held,  that  plaintiff,  having 
acted  as  the  agent  of  defendant  in  good  faith,  and  without  ex- 
pectation of  profit,  was  entitled  to  recover  back  this  loss  from 
defendant:  liamsay  v.  Gardner,  11  Johns.  439.  An  agent  pur- 
chased property  for  his  principal,  and  was  sued  and  arrested 
for  the  price  which  he  was  compelled  to  pay.  Held,  that  his 
principal  was  bound  to  reimburse  him  for  the  amount  paid,  and 
costs  and  attorney's  fees:  Clark  v.  Jones,  16  Lea,  351. 

§  98.    When  Agent  cannot  Ask  Reimbursement. — The 

disbursements  or  expenses,  however,  must  not  have  been 
made  without  cause,  or  beyond  the  agent's  authority  or 
instructions,*  or  after  his  authority  has  been  revoked;'' 
nor  must  the  agent  have  been  guilty  of  negligence  or 
unfaithfulness  in  his  agency.'  If  the  money  advanced 
by  the  agent,  or  the  liability  incurred  by  him,  were  ad- 
vanced or  incurred  for  an  illegal  or  immoral  purpose,  no 
suit  will  lie  by  the  agent  against  the  principal  for  reim- 
bursement,* unless  the  agent  had  no  knowledge  of  the 
illegality  of  the  transaction,  or  his  act  was  not  a  part  of  it.' 

Illustrations. — A  committee  of  a  town  to  build  a  road  ex- 
ceeded their  authority,  by  building  a  better  road  than  they 
■were  authorized  to  build.  Held,  that  the  town  was  not  bound 
to  reimburse  to  them  the  cost  of  such  road:  Keyes  v.  Wesiford, 
17  Pick.  273. 


*  Pickering  v.  Demerritt,  100  Mass. 
41o;  Day  i:  Holmes,  103  Mass.  307; 
Van  Dykj  v.  Brown,  8  N.  J.  Eq.  057; 
Schrack  r.  McKnight,  84  Pa.  St.  iB; 
Corbin  r.  American  Milli,  27  Conn. 
274;  71  Am.  Dec.  03;  Williams  v.  Lit- 
tledeld,  12  Wend.  362;  Howard  v. 
Tucker,  I  Barn.  &  Ad.  772;  Saveland 
V.  Green,  36  Wis.  612. 

^  Story  on  Ajjcncy,  sec.  349. 

'Dodge  V.  tileson,  12  Pick.  333; 
Montriou  v.  Jefferys,  2  Car.  &  P.  113. 
An  agent  who  neglects  to  insure  cargo 
shipped  to  him  as  directed  by  the 
owner  cannot  maintain  an  action  for 
a  premium  oi  insurance,  although  he 
would  have  bee!i  liable  to  the  owner 
in  damages  for  neglect  of  duty  in  case 


the  cargo  had  been  lost:    Storer  v. 
Eaton,  50  Me.  219;  79  Am.  Doc.  Oil. 

*  Armstrong  v.  Tolcr,  1 1  Wheat. 
258;  Kennett  v.  Chambers,  14  How. 
38;  Callagan  v.  Hallett,  1  Caines,  104; 
Graves  v.  Delaplaine,  14  Johns,  14C; 
Fareira  v.  Gabell,  89  Pa.  St.  89;  Ward 
V.  Van  Duzer,  2  Hall,  182;  Stebbins 
V.  Leowolf,  3  Cush.  137;  Trustees  r. 
Galatian,  4  Cow.  .S40;  St.  John  v.  St. 
John's  Church,  15  Barb.  346. 

*  Armstrong  r.  Toler,  1 1  Wheat. 
258;  Greenwood  v.  Curtis,  6  Mass. 
358;  4  Am.  Dec.  145;  Rosewarno  v. 
Billing,  15  C.  B.,  N.  S.,  316;  Moore 
V.  A{)pleton,  20  Ala.  033;  Drummond 
V.  Humphreys,  39  Me.  347;  Warren 
v.  Hewitt,  45  Ga.  501. 


156 


157        DUTIES  AND   LIABILITIES    TO   THIRD   PERSONS.       §  100 


CHAPTER  XL 

DUTIES    AND    UABILITIES    OF    AGENTS    AND    PRINCIPALS  TO 

TUIRD   PERSONS. 

1.  AoENTS.  —  (a)  On  Contracts;  (6)  For  Torta. 

(a)  On  Contracts. 

S   99.  Agent  to  bind  principal  must  executo  authority  in  his  name. 

§  100.  Instruments  under  seal. 

§101.  Instruments  not  under  seal. 

§  102.  Illustrations. 

§  103.  Wlien  agent  personally  bound  —  Dtscriptio  pereonae, 

§  104.  Agent  not  pcTHonally  liable. 

§  105.  Foreign  priucipal. 

§  106.  Irresponsible  principal. 

§  107.  AgL'nt  liable  where  principal  not  disclosed. 

§  108.  Agent  may  bind  himself  personally. 

§  109.  Notice  to  agent  not  to  pay  over  money  to  principal. 

§  110.  Liability  of  agent  acting  without  authority. 

(6)  For  Torts. 
S  111.     Agent  not  liable  personally  for  torta. 
§  112.     Exceptions. 

2.  Principals. 

§  1 13.     Liability  of  principal  on  agent's  contracts  —  "Lxw  already  discussed. 
§  1 14.     Liability  of  priucipal  for  agent's  torts. 

§  99.  Agent  to  Bind  Principal  must  Execute  Authority 
in  his  Name.  —  An  agent  must  execute  his  authority  in 
the  name  of  his  principal,  and  not  in  his  own.'  This  is 
an  old  rule,  which,  most  strictly  applied  to  the  execution 
of  sealed  instruments,  has  in  modern  times  been  greatly 
relaxed  even  as  to  them. 


§  100.  Instruments  under  Seal. — As  to  instruments 
under  seal,  in  order  to  bind  the  principal  the  instrument 
must  purport  to  be  made  and  sealed  in  the  name  of  the 

'Stackpole  r.  Arnold,  11  Mass.  27;    87;    Taylor  v.  Agricultural  Soc,  08 
6  Am.  Dec.   150;  Dennison  v.  Story,  I     Ala.  229. 
Or.  272;  Spencer  v.  Field,  10  Wend. 


§100 


PRINCIPAL   AND   AGENT. 


158 


princ'ipal/  In  equity,  however,  if  the  agent,  having  au- 
thority to  sign  a  scaled  instrument  for  another,  does  so  in 
his  own  name,  and  the  principal  receives  the  considera- 
tion, he  will  be  bound  to  make  good  his  implied  promise.^ 
The  deed  need  not  be  signed  with  the  name  of  the  attorney 
at  all;  the  name  of  the  principal  alone  is  sufficient  to  con- 
stitute a  proper  execution  by  an  attorney  or  agent.'  Where 
the  deed  purports  to  be  made  and  sealed  by  the  agent,  ho 
will  be  personally  liable,  even  though  he  is  described  as 
agent.*  But,  on  the  other  hand,  where  the  deed  purports 
to  be  the  deed  of  the  principal,  executed  by  the  agent  as 
such,  the  agent  is  not  bound,  though  through  informality 
of  execution  or  want  of  authority  the  principal  is  not 
bound.^     To  bind  the  principal,  no  exact  form  of  words 


'  Inhabitants  of  Noblcbon  v.  Clark, 
68  Mc.  87;  '^8  Am.  Rep.  22;  New  Eng- 
land Ina.  Co.  V.  Do  Wolf,  8  Pick,  oii; 
Stackpole  v.  AruoKl,  11  Mass.  27;  0 
Am.  Dec.  l')0;  Ecliols  v.  Cheney,  28 
Cal.  157;  Morrison  v.  Bowman,  21)  Cal. 
337;  Brinley  v.  Mann,  2  Cush.  337;  48 
Am.  Dec.  669;  El  well  v.  Sha  v,  16 
Mass.  42;  8  Am.  Dec.  126;  FuUam  v. 
West  Brooktiehl,  9  Allen,  1 ;  Stone  v. 
Wood,  7  Cow.  462;  17  Am.  Dec.  529; 
Townsend  v.  Corning,  23  Wend.  435; 
Briggs  V.  Partridge,  64  N.  Y.  358; 
21  Am.  Rep.  617;  Lutz  v.  Linthicum, 
8  Pet.  165;  Stinchfield  v.  Little,  1 
Gresnl.  231;  10  Am.  Dec.  65;  Hop- 
kins V.  MehaflFy,  11  Serg.  &  R.  126; 
Hancock  w.  Yunker,  83  111.  208;  Ein- 
stein V.  Holt,  52  Mo.  340;  Gruhbs  v. 
Wiley,  17  Miss.  29;  Webster  v.  Brown, 
2  Rich.  428;  City  of  Providence  v. 
Miller,  11  R.  1.  272;  Townsend?;.  Hub- 
bard, 4  Hill,  351;  Clarke  v.  Courtney, 
5  Pet.  319;  Martin  v.  Flowers,  8  Leigh, 
158;  Skinner  v.  Gunn,  9  Port.  305; 
Fire  Ins.  Co.  v.  Doll,  35  Md.  89;  Rocd 
V.  Latham,  40  Conn.  452;  Andrews 
V.  Estes,  11  Me.  267;  26  Am.  Due.  521; 
Harper  r.  Hampton,  1  Har.  &  J.  622; 
Heffernan  v.  Addams,  7  Watts,  121; 
Mears  v.  Morrison,  1  111.  223;  Sheldon 
V.  Dunlap,  16  N.  J.  L.  245;  Wood  r. 
Goodridge,  6  Cush.  117;  52  Am.  Dee. 
771 ;  Savage  v.  Rix,  9  N.  H.  263;  Morse 
V.  Green,  13  N.  H.  32;  38  Am.  Dec. 
471;  Peck  v.  Gardner,  9  Hun,  704. 


*  Dubois  ?'.  D^laware  etc.  Co. ,  4 
Wend.  285;  But  fv.  Kaulback,  8  K;in. 
668;  Kobbinsu.  .  ntler,  24  III.  387;  De- 
vinncy  v.  Reynolds,  1  Watts  i  S.  328; 
Lovejoy  v.  Richirdson,  68  Me.  3S0; 
Emory  v.  Joice,  70  Mo.  537;  Fouch 
V.  Wilson,  59  Ind.  93;  Clements  v. 
Macheboeuf,  92  U.  S.  418;  Yerby  v. 
Grigsby,  9  Leigh,  387;  McXaughten  v. 
Partridge,  11  Ohio,  223;  38  Am.  Dec. 
731. 

>  Forsyth  v.  Day,  41  Me.  382;  Hun- 
ter V.  Giddings,  97  Alass.  41;  93  Am. 
Dec.  54;  Dcvinney  V.  Reynolds,  1  Watts 
&  S.  328;  Bcrkcy  v.  Judd.  22  Minn. 
287.  But  SCO  Wood  v.  Goodridge,  6 
Cush.  117;  52  Am.  Dec.  771. 

*  Lutz  V.  Linthicum,  8  Pet.  165; 
Duvall  V.  Craig,  2  Wlicat.  45;  Fullam 
V.  West  Brooktield,  9  Allen,  1 ;  Tippets 
V.  Walker,  4  Mass.  595;  Taft  v.  Brews- 
ter, 9  Johns.  334;  Stone  r.  Wood,  7 
Cow.  453;  17  Am.  Dec.  529;  Wlnto  v. 
Skinner,  13  Johns.  307;  7  Am.  Dec. 
381 ;  Kiersted  v.  Orange  Co.,  69  N.  Y. 
343;  Doming  r.  Bullitt,  1  lilackf.  241; 
Quiglcy  V.  Do  Haas,  82  Pa.  St.  2tJ7; 
Hancock  v.  Yunker,  83  III.  208;  Mut- 
ton V.  Bulloch,  L.  R.  9  Q.  B.  572. 

*  Hopkins  v.  Mehaffy,  11  Serg.  &  R. 
126;  Taylor  v.  Shelton,  ,30  Conn.  122; 
Ellis  V.  Pulsifer,  4  Allen,  165.  C 
signed  his  name  to  a  sealed  instru- 
ment as  agent,  the  body  of  the  deed 
being  in  the  name  of  tlie  principal  (a 
corporation),  "by  their  ageat."  Held, 


fi;; 


158 


159       DUTIES  AND    LIABILITIES   TO  THIRD    TERSOXS.      §  100 


has  been  declared  necessary.     What  is  necessary  is,  that 
it  should    appear  that   the  agent   and    attorney  sign   as 


&R. 


tliat  C  was  not  pcraonally  liable:  A.b- 
bey  i:  Chase,  (i  L'ush.  C4.  "It  <loc'3 
iiotappear,"  said  Motcalf,  J.,"wlietliur 
tlio  (lcftnila:it  hail  authority  to  bind 
t!iu  Hadloy  Falls  Company,  by  deed 
or  otlierwiao.  But  in  tlie  view  which 
wo  take  of  tho  case,  that  question  is 
immaterial.  We  deem  it  very  mani- 
fest, on  inspection  of  the  instruinent 
in  suit,  that  it  was  the  intention  of 
the  defendant  to  bind  the  company, 
and  not  to  bind  himself;  and  that  tlic 
plu'  .tifif  must  have  so  understood  tlic 
coiuract.  And  if  this  had  been  a 
simple  contr.act,  executed  by  an  au- 
thorized agent,  the  law  would  have 
given  effect  to  that  intention.  The 
company,  and  not  the  defendant. 
Would  have  been  bound.  Tlie  author- 
ities on  this  point  arc  numerous  and 
decisive;  Northampton  Bank  v.  Pc- 
poon,  11  Mass.  288;  Andrews  v.  Ea- 
tcs,  II  Me.  'J70;  20  Am.  Dec.  521: 
Now  En-rland  Ins.  Co.  v.  Do  Wolf,  8 
Pick.  50^  Rice  v.  flovc,  22  Pick.  158; 
3.1  Am.  Dee.  724;  Bayloy  on  Bil.s,  2d 
Am.  ed.,  72,  73.  But  when  a  sealed 
instrument  is  executed  by  an  agent  or 
attiirney,  fcr  tho  principal,  tlic  strict 
technical  rule  of  tho  common  law, 
which  has  never  been  relaxed  in  Eng- 
land or  in  this  commonwealth,  requires 
that  it  bo  executed  in  the  name  of  the 

Iirincipal,  in  order  to  make  it  hi«  d.'cd: 
iriuley  V.  Mann.  2  Cus'i.  337;  4S  Am. 
Dee.  0G9.  'Insuchcase^,' says  Story,  J., 
'  tho  law  loolcs  not  to  the  interest  alone, 
but  to  tho  fact  whether  that  intent  has 
been  executed  in  such  a  manner  as 
to  possess  i\  I'jgal  validity ':  Clarke  i'. 
Courtney,  5  Pet.  350;  see  also  Locke 
v.  Alexander,  1  Hawks,  41 G.  Tho 
plaintiff's  counsel,  in  applying  this 
strict  rule  to  tho  instrument  in  suit, 
contends  that  it  does  not  bind  the 
Hadley  Falls  Company,  and  tliat,  as 
the  defendant  has  not  bound  the 
company,  be  has  bound  himself.  But 
in  deciding  whether  the  defendant  has 
or  has  not  bound  himself,  we  need 
not  decide  whether  ho  has  or  has 
not  boun<l  the  company.  For  it  does 
not  ncccssardy  follow  that  a  contract 
made  by  an  authorized  agent,  which 
does  not  bind  the  principal,  becomes 
tho  agent's  contract,  and  makes  him 


answerable  if  it  is  not  performed. 
This  depends  upon  the  legal  etl'jct  of 
tho  terms  of  the  contract.  If  tho 
ngont  employs  hueh  terms  as  legally 
import  an  undertaking  by  the  princi- 
pal only,  the  contract  is  tlio  princi- 
IialV,  anil  lie  alone  is  bduiid  by  it. 
iut  if  the  terms  of  the  contract 
legally  import  a  iierionjil  undertaking 
ot  the  ngeiit,  and  not  of  the  prin- 
cipal, then  it  is  tho  contract  of  tho 
agent,  and  lie  alono  is  answerable  for 
a  breach  of  it.  So  wlien  one  who 
has  no  authority  to  act  as  another's 
agent  assumes  so  to  act,  and  makes 
either  a  deed  or  n,  simple  contract 
in  the  name  of  the  other,  he  is  not 
personally  liable  on  the  covenants 
in  the  deed,  or  on  the  promise  in  tho 
simple  I  ontraet,  unless  it  contains  apt 
words  to  bind  him  per.sonally:  Stetson 
V.  I'attcn,  JMireeid.  358;  11  Am.  DlC. 
Ill;  Ballon  v.  Talbot,  llj  Mass.  4C1; 
8  Am.  Dec.  140.  Delius  v.  Cawthorn, 
2  Dev.  90.  The  only  remedy  ajjainst 
him  in  thiscommonwealt!i  ij  an  action 
on  tho  case  for  falsely  assuming  au- 
thority to  act  as  agent.  See  also  13 
Ad.  &  E.,  N.  R.,  744.  These  princi- 
ples lead  us  to  the  conclusion  that  the 
ruling  at  tho  trial  t)f  this  case  was 
wrong,  and  that  the  defendant  is  not 
chargeable  in  the  present  action.  Tlio 
instrument  sued  on  pur[iorts  to  be, 
and  was  intended  to  be  a  deed  intc)' 
partes,  namely,  the  Iladl  jy  I  alls  Com- 
pany and  the  plaintiff'.  Tlie  defend- 
ant, as  agent  of  tho  company,  signed 
his  own  name,  merely  adding  thereto 
the  word  'agent.' and  affixed  bis  own 
seal;  the  plaintiff  signed  his  name, 
and  affixed  his  seal;  an  I  tliesj  acts 
were  done  as  the  acts  of  tlie  parties 
before  named.  It  seems  to  iis  impos- 
sible to  charge  the  defendant,  on  this 
instrument,  as  on  a  contract  made  by 
him  with  the  plaintiff'.  If  any  words 
had  been  inserted  in  the  instrument 
expressing  the  defendant's  personal 
undertaking  to  fulfill  the  contract  on 
behalf  of  tho  company,  he  would  have 
been  personally  bound,  although  tho 
instrument  was  prepared  as  a  deed 
inter  pnrtcn:  Salter  r.  Kidgly,  Carth. 
70;  Holt,  210.  But  no  such  words  are 
found  in  tho  instrument." 


100 


PRINCIPAL   AND   AOENT. 


ICO 


agent  or  attorney  for  his  principal.*  The  most  proper 
luodo — and  ono  open  to  no  attack — would  bo  to  sign  the 
principal's  name,  adding,  "by  his  agent,  A  B."  But 
other  forms  have  in  adjudged  cases  been  declared  suf- 
ficient to  bind  the  principal;  e.  g.,  "For  A  B"  (prin- 
cipal), "C  D"  (agent).^  "Know  that  I,  M.,  for  myself, 
and  as  attorney  for  B,  by  his  duly  authorized  letters 
of  attorney."  ^  "  In  witness,  the  said  association,  by  J.  8., 
its  president,  has  hereunto  set  its  seal,  and  the  said  J.  8., 
president  as  aforesaid,  has  hereunto  set  his  hand." 
Signed,  "  J.  S.,  President."*  So  it  has  been  held  that  a 
deed  signed  in  the  name  alone  of  the  attorney  does  not 
bind  the  principal,  although  in  the  body  of  the  instru- 
ment it  is  stated  that  it  is  the  agreement  of  the  principal, 
by  A  B,  his  agent,  and  that  A  B,  as  attorney  of  the  prin- 
cipal, has  set  his  hand  and  seal.^  And  a  deed  which  in 
the  granting  part  uses  the  name  of  the  agent  is  not 
made  the  principal's  by  being  signed  "  C  D,"  attorney  to 
"A  B.""  And  the  same  general  rule  applies  where  a  deed 
is  to  bo  made  to  another  through  an  agent.  The  deed 
must  be  made  to  and  in  the  name  of  the  principal.  If 
the  conveyance  be  made  simply  to  the  agent,  the  princi- 
pal will  take  nothing;  though  in  equity  he  would  bo  held 
a  trustee  for  the  principal.^ 

Illustrations.  —  A  deed  was  in  form:  "I,  II.,  for  myself, 
and  as  nttorncy  for  T.,  and  G.,  wife  of  T.,  by  their  letters  of  at- 
torney under  their  hands  and  seals,  in  consideration  of  $1,850 
to  us  paid  by  L.,  do  sell  and  convey  to  L.  and  his  heirs  forever 
the  following,"  etc.  "And  we,  the  said  T.  and  G.,  do  covenant 
with  said  L.  that  we  are  rightfully  seised,"  etc.     "  In  witness 


1  Hunter  v.  Miller,  6  B.  Mon.  612; 
Martia  r.  Almond,  25  Mo.  313;  Mus- 
sey  V.  Scott,  7  Cash.  21G;  54  Am.  Dec. 
719;  Wilburn  v.  Larkin,  3  Blackf.  55. 

^  Wliarton  on  Agency,  sec.  289, 
citing  cases. 

*  McClure  v.  Herring,  post. 

*  Murphy  v.  Welch,  128  Mass.  489. 

*  Townsend  t'.  Corning,  23  Wond. 
435;  Fowler  v.  Shearer,  7  Mass.  19. 


*  Squier    v,   Norris,    1    Lans 
Copcland  v.  Insurance   Co.,  0 


282; 
Tic!;. 
198;  Martin  v.  Flowers,  8  LeijJih,  158; 
Bogart  V.  De  Bussy,  G  Johns.  94;  Tip- 
pct3  V.  Walker,  4  Mass.  595;  but  sco 
Tidd  V.  Eines,  2G  Minn.  201. 

'  Story  on  Agency,  sec.  151,  citing 
Clarke  v.  Courtney,  5  Pet.  319;  Fox  v. 
Frith,  10  Mees.  &  W.  131. 


w 
V. 


(. 

ii 

liJ 


IGO 


IGl        DUTIES    AND   LIABILITIES   TO   TRIUD   PERSONS.      §  102 


[myself, 

•s  of  at- 

$1,850 

forever 

^vcnant 

witness 

ins.    282; 
IG   Tic!;, 
li^h,  15S; 
194;  Till- 
but  SCO 

|l,  citins 
1;  Fox  V. 


whereof,  I,  II.,  in  my  own  riglit,  have  hereunto  pet  my  liand 
and  seal,  and  as  attorney  for  paid  T.  and  G.>  have  hereunto  set 
their  hands  and  seals."  To  tins  deed  were  subserilicd  the 
nanie.s  of  II.,  and  of  T.  and  CI.  hy  II.,  their  attorney  in  fiiet, 
with  seals  severally  aflixed  to  all  the  names.  Ildl,  that  the 
deed  was  suflicient  in  form  as  the  deed  of  T.  and  tJ.:  MrClvrc 
V.  Hcrrimj,  70  Mo.  18;  35  Am.  Kep.  404. 

§  101.  Instruments  not  under  Seal. — As  to  writings 
not  under  seal,  tho  rule  is  less  strict,  and  it  may  be  laid 
down  that  if  the  name  of  the  i)rincipal  appears  in  such  an 
instrument,  and  tho  intention  on  the  whole  is  to  bind  liini, 
he  will  bo  bound  though  the  agent  sign  only  liis  own 
name; '  especially  is  this  tho  case  as  to  commereial  con- 
tracts, negotiable  paper,  and  the  like,  tho  modern  rule  as 
to  those  being,  that  if  from  the  whole  instrument  it  can  be 
collected  that  the  intention  was  to  bind  the  [trineipal,  this 
construction  will  bo  adopted,  though  the  agent  may  not 
have  used  apt  words  to  do  so.'^ 

§  102.  Illustrations.  — Thus  negotiable  paper  in  the 
following  form  has  been  held  binding  on  the.  principal, 
e.  g.:  "I  promise  to  pay  J.  S.  or  order,"  signed  "pro  (J  D, 
A  B."^  "We  jointly  and  severally  promise,"  signed  "A 
and  B  for  C."^     A  note  signed  "  A  B,"  agent  for  "C  D.'"* 


'  New  Eupiland  Ins.  Co.  v.  Dc  Wolf, 
8  rick.  T)!);  koburtson  v.  Pope,  1  Ricb. 
Ml;  44  Am.  Dec.  207;  Fariiiera'  Bank 
i:  lily  Bank,  1  Doug.  (Micb.)  458; 
Aiulrc\v3  i\  Estcs,  1 1  Me.  2G7;  20 
A  1.  Dec.  i/-l;  Townsend  ?•.  Ilubbanl, 
4  Hill,  IJjJ;  I'iuckncy  r.  Haj^adorn,  1 
l)i;cr,  S'J;  14  N.  Y.  COO;  Evaas  v. 
Weill,  22  Vv'end.  324;  Nortbwcstern 
Di.ilillinj|  Co.  v.  Brant,  com.  C5S;  JS 
Am.  R  n.  031;  Douj^lasi  ?'.  Braiicb 
Ban!;  of  Mobile,  10  Ala.  Gj9;  Sayre  v. 
X:c1-.o1j.  7  Cal.  535;  08  Am.  Dec.  280. 
1 1  Webb  r.  Biu'kc,  5  B.  Mon.  51,  it  is 
sai  1  to  bo  well  settlcii  that  if  in  the 
boiiy  of  a  writing  A  B  P3  agent  binds 
< '  I),  and  then  signs  it "  A  B,  agent  for 
C  D,"  the  writing  will  bind  C  D. 

■'  Mcclianica'  Bank  v.  Bank  of  Co- 
lumbia, 5  Wheat.  320;  Pentz  r.  Stan- 
ton,  10   Wend.   271;    25    Am.    Dec. 
558;  Stanton  v.  Camp,  4  Barb.  274;    Am.  Dec.  14G. 
Vol.  L- 11 


Rice  V.  Cove,  22  Pick.  l.'S;  .13  Am. 
Doc.  724;  King  r.  Huidy.  2  111.  Aiiji. 
212;  llarkinsr.  Elwanh,  1  luwa,  4-!); 
Means  v.  vSworin.stciIt,  32  Iiid.  87;  2 
Am.  Rep.  .330;  Babcock  ?•.  li  iiian,  11 
N.  Y.  200;  Key  r.  Pai-;diaiii,  0  liar. 
&  J.  4)S;  Lacy  r.  l)ul)ii'jiie  (,'o.,  4.3 
Iowa,  510;  Matt  v.  llick~i,  1  Cow.  513; 

13  Am.  Dec.  550;  Mi  reliant,'  Hiiik  r. 
Hayc;;,  7  Hun,  530;  Rubert-i  r.  Button, 

14  Vt.  105;  Mann  r.  CliaiKiler,  0  Mass. 
335;  Andrews r.  Estcs,  11  Me.  2i»7;  20 
Am.  Dee.  521;  Davis  ?•.  Henderson, 
25  Miss.  541);  50  Am.  Dec.  220;  Ilaile 
r.  Peirce,  32  Md.  327;  3  Am.  Rep. 
139. 

"Long  V.  Colburn,  11  Mass.  97;  G 
Am.  Dec.  IGO. 

*Riee  v.  Gove,  22  Pick.  158;  33 
Am.  Dec.  724. 

^  Ballou  V.  Talbot,  IG  Ma.s8.  4G1;  8- 


§102 


PKINCIPAL   AND   AGENT. 


162 


"  By  authority  from  B,  I  hereby  guarautee  the  payment 
of  this  note,"  signed  hy  the  agent  in  his  own  name.*  "  I 
iintlertake  on  belialf  of  Messrs.  E.  &,  Co.  to  pay."* 
"S.  W.  P.  for  A.  and  K."='  "  W.  S.  for  himself  and 
G.  L."'  "II.  U.  Moore,  P.  D.  L.  Co."*  "  T.  M.,  agent 
for  P.  M.""     "Wo  promise  to  pay,"  signed  "  S.,  secy.," 

and  sealed  with  a  corporate  seal.'     "A.  B.,  agent  of  

Co.""  A  bank-check  with  "JEtna  Mills"  printed  on  the 
margin,  and  signed  "  F.,  treasurer.""  A  note  with,  in  the 
body,  the  words,  "  Wo  promise,"  and  signed  "  V.,  for 
N.  B.  &  Co."'»  A  note  drawn  to  "  C.  W.  Smith,  treasurer 
of  the  Indianapolis  Brick  Co."" 


'  New  England  Iiia.  Co.  v.  Do  Wolf, 
8  Pick.  CO. 

^  J'DWiiman  r.  Jones,  7  Q.  B.  103. 
»  King  v.  Handy,  2  111.  App.  212. 

*  Olcott  V.  Little,  l)  N.  11.  2o'J. 

*  Lacy  V.  Dulmquo  Lumber  Co.,  43 
Iowa,  f)10. 

"Hillr.  Miller,  70  N.  Y.  32. 

'  Means  V.  Swormstcdt,  32  Ind.  87; 
2  Am.  Rjp.  .S30;  Houghton  r.  First 
National  Bank,  20  Wis.  003;  7  Am. 
Rep.  107. 

»  Hovey  v.  Magill,  2  Conn.  080. 

*  Carpenter  v.  Farnsworth,  100  Mass. 
501;  8  Am.  Rep.  300.  In  this  case 
the  c(mrb  said-  'Tiiccaso  is  not  dis- 
tinguished from  those  in  which  similar 
instruments  have  been  held  by  this 
court  to  bo  tiie  contracts  of  tlio  prin- 
cipal only.  The  court  has  always  laid 
hold  of  any  indication  on  the  face  of 
the  paper,  however  informally  ex- 
pressed, to  enable  it  to  carry  out  the 
intentions  of  the  jjarties.  In  Tripp  v. 
Swanzcy  Paper  Co.,  13  Pick.  £91,  a 
•draft  not  naming  the  principal  other- 
wise than  by  conclud'ng,  'and  charge 
the  same  to  the  Swanzcy  Paper  Com- 
pany, yours  respectfully,  Joseph 
Hooper,  agent,'  was  held  to  bo  the 
draft  of  tlio  company.  In  Fuller  v. 
Hooper,  3  Gray,  334,  a  draft  with  the 
words,  'Pompton  Iron  Works,' 
printed  in  the  margin,  and  concluding, 
'  which  place  to  the  account  of  Pomp- 
ton  Iron  Works,  W.  Burtt,  a^ent,' 
was  held  to  bind  the  proprietor  of  the 
Pompton  Iron  Works;  and  in  Bank  of 
British  North  America  i\  Hooper,  5 
Gray,  507,  00  Am.  Dec.  390,  iu  which 


a  draft  concluding,  'and  charge  the 
same  to  account  of  propri(/tors  Pem- 
broko  Iron  Works,  your  liuiiiblo  ser- 
vant, Joseph  Barrell,'  without  other- 
wise naming  a  principal  or  disclojing 
the  signer's  agency,  was  held  to  bind 
him  only,  it  was  said  by  the  court  that 
in  Fuller  v.  Hooper  the  word.i  '  Pomp- 
ton Iron  Works,'  in  tho  margin  of  the 
draft,  fully  disclosed  the  principal,  and 
that  tho  draft  was  drawn  on  hij  be- 
half. So  in  Slawson  v.  Loring,  6  Al- 
len, 340,  343,  in  which  a  draft  having 
tho  words,  'Office  of  Portage  Lake 
Manufacturing  Company,  Hancock, 
Michigan,'  printed  at  the  top,  was 
signed  'I.  R.  Jackson,  agent,  Chief 
Justice  Bigelow,  said:  'No  ono  can 
doubt  that  on  bills  thus  drawn  the 
agent  fully  discloses  his  principal,  and 
that  the  drawer  could  not  be  personally 
chai'geablo  thereon. '  Tlio  instrument 
in  question,  therefore,  binds  tho  cor- 
poration, and  not  its  treasurer  per- 
sonally." 

»»  Cook  V.  Sanford,  3  Dana,  237. 

"  Vater  v.  Lewis,  30  Ind.  288;  10 
Am.  Rep.  29.  In  this  case  the  court  hu- 
morously observed:  "To say  that  the 
contract  was  not  with  tho  company, 
but  with  Smith  individually,  and  that 
his  designation  as  treasurer  was  merely 
a  description  of  him,  so  that  he,  being 
ono  only  of  all  the  great  family  of 
Smiths,  might  be  known  and  identi- 
fied as  the  payee  of  tho  note,  would  be 
a  j-orvcrsion  of  the  evident  intent  of 
tho  parties."  And  see  Babcock  v. 
Beaman,  1  £.  D.  Smith.  593. 


163       DUTIE3    AND   LIABILITIES  TO  TIIIUD    TLUSONS.       g   102 


Illustrations.  —  A  noto  was  in  this  form:  "tr'JS.OO.  Loc, 
Ai)ril  2(),  18r).S.  On  demand,  I,  as  treasurer  of  the  Congrega- 
tional Society,  or  my  Bueeet-Pors  in  olliec,  promise  to  pay  A.  J5., 
or  order,  twenty-tlireo  dollars,  value  received,  with  interest. 
8.  S.  11.,  treasurer."  Jfcid,  the  noto  of  the  Eoeiety:  Jha-lmr  v. 
Lee  Cong.  6W,,  8  Allen,  4G0.  A  promissory  noto  purporting  to 
ho  made  hy  the  inhahitants  of  »School  Distriet  No.  5,  in  a  town, 
was  signed  "A.  B.,  treasurer  of  Distriet  No.  5."  llchl,  the  promi.-^o 
of  tho  district:  Whitney  v.  Stow,  111  Mass.  308.  A  hill  of  ex- 
change, stamped  in  tho  margin,  "Pompton  Iron  Works,"  and 
concluded  thus,  "Which  phico  to  account  of  Pompton  Iron 
Works,  W.  Burtt,  agent."  Jlcld,  the  hill  of  tho  Pompton  Iron 
Works,  and  is  hinding  on  tho  person  carrying  on  husiness  in 
that  name,  if  Ikirtt  was  his  authorized  agent:  Fuller  v.  Hooper, 
3  Clray,  334.  A  draft  was  headed  "New  England  Agency  of 
the  Pennsylvania  Fire  Insurance  Company,"  having  tho  words 
"Foster  and  Cole,  General  Agents  for  tlic  New  England  States," 
printed  in  the  margin,  and  appearing  on  its  face  to  he  drawn 
upon  said  insurance  company  in  payment  of  a  claim  against  it. 
Held,  the  draft  of  tho  company,  and  not  of  Foster  and  Colo, 
although  it  is  signed  hy  them  in  their  own  names:  Chipman  v. 
Foster,  119  Mass.  189.  A  written  agreement  purporting  to  ho 
between  T.,  agent  of  the  steamship  A.,  of  tho  one  part,  and  G. 
of  tho  other  part,  and  signed  by  "T.,  agent,"  and  G.,  provided 
that  tho  party  of  tho  first  part  let  to  tho  party  of  tho  second  part 
a  certain  space  on  the  steamship  for  tho  conveyance  of  cattle; 
that  the  steamship  should  put  on  board  a  condenser  capable  of 
supplying  the  cattle  with  water;  that  the  captain  was  to  allow 
his  officers  and  crew  to  render  assistance  in  case  of  emergency, 
without  liability  to  tho  ship-owner;  that  tho  attendants  of  the 
cattle  were  to  have  passages  free  of  charge,  but  without  liability 
to  the  ship-owner;  and  that  the  steamship  was  to  have  a  lien  on 
tho  cattle  for  the  freight.  Held,  that  the  agreement  was  tho 
contract  of  the  steamship  and  her  owners,  and  not  of  T.  per- 
sonally: Goodcnough  v.  Thayer,  132  Mass.  152.  Tho  following 
agreement,  "I  have,  this  ninth  day  of  January,  1817,  hired  of 
A  the  following  slaves  for  tho  use  of  B,  and  agree,  on  behalf  of 
said  B.,  to  give  eighty  dollars  as  wages  for  each  of  the  said  ne- 
groes," etc.,  and  signed  "C."  Held,  not  to  bind  C  personally: 
Key  V.  Parnham,  G  liar.  &  J.  418.  Articles  were  purchased  for 
a  manufacturing  company,  of  which  A  was  the  agent,  who  gave 
a  due-bill  in  this  form:  "Due  E.  M.,  seventy-eight  dollars,  value 
received.  A,  agent  for  the  manufacturing  company."  Held, 
that  A  was  not  personally  liable  thereon:  McCall  v.  Clayton, 
Bush.  422.  A  contracted  with  B  for  grain,  and  the  price  of 
the  grain  was  to  be  paid  by  C,  who  signed  the  agreement  for 
A  thus:  "A,  by  his  agent  C."    Held,  that  it  was  the  contract  of 


§102 


PRINCIPi^ri   ANn   ACiENT. 


104 


the  principal:  Thnmjimn  v.  Chouteau,  12  Mo.  488.  A  boml  was 
eigiK'd  '"A  15,  for  V  D,"  and  t!i(Miainoof  A  U  was  not  niotitioixd 
in  tilt'  body  of  tliu  liond,  ndiicli  only  purported  to  bind  ("  D. 
Jlchl,  in  an  action  of  covenant  on  tbo  bond  against  A  1>,  tliat  l.o 
cxocutud  tbo  bond  as  agent  oidy,  and  tlipt  tlio  plaintid'  t-oulil 
not  recover:  (Jnih/a  v.  U'il'if,*.)  Sn)('d('8it  M.L'O.  I [.  contracted, 
in  writing,  as  tbo  agent  of  K.,  for  tbo  purcbaHo  of  goods  to  be 
delivered  at  a  future  tinio  to  bini  or  to  bis  principal.  It  was 
expressly  stated  in  the  contract  tbat  II.  was  contracting  as  an 
agent,  tbo  nr.nie  of  bii-i  prneipal  was  discloHcd,  and  tboro  was  an 
ucknowudijrnient  of  tbo  receipt  of  one  dollar  to  bind  tbo  princi- 
j)al.  K.  retused  to  receive  tlie  goods  wbt.ii  tendered.  Held,  tbat 
II.  was  nut  pijrsonallv  li:iLIo  to  tbo  vendor  upon  tbo  con- 
tract: MrClcrnriii  v.  ll'aU,  33  Md.  293.  .1  bill  of  excbange  was 
headed  with  the  name  of  a  banking  ofl'ice,  and  when  paid  was 
to  bo  charged  to  tbat  olTico,  and  was  signed  by  a  pjrson  as  agent. 
Held,  that  tbo  agent  was  not  personally  responsible  tbercoii: 
Sayrc  v.  Nirhnh,  7  Cal.  535.  A  bill  of  exchange  beaded,  "Ollice 
of  t!io  A  li  Co.,  and  concluding,  "Charge  sanio  to  account  of 
A  I)  Co.,  X,  Pres't,  V,  ^ec'y,  held  to  1)C  tbo  bill  of  tbo  com- 
pany: Hitchcock  V.  Buchanan,  105  U.  S.  41G.  A  lease  recites 
tbat  it  is  made  by  '"M.,  agent  of  I).,"  and  is  signed  in  tbo  eanio 
way.  IL'hl,  tliat  I).,  and  not  M.,  is  bound:  Avery  v.  Dnmjh- 
crty,  102  Ind.  443;  52  Am.  Rep.  G80.  A  chock  signed  by" A, 
'•V.  Pres't,"  and  by  C,  "Scc'y,"  was  given  to  a  i)arty  who  knew 
it  to  be  a  chock  of  tbo  corporation  of  which  A  and  C  were  rc- 
B])eotively  vice-president  and  secretary.  Jfeld,  not  to  bind  A 
and  C  personally:  Metralfv.  Williams,  104  U.  S.  93.  An  order 
drawn  upon  E.,  treasurer  of  the  N.  &  N.  W.  Pv.  11.  Co.,  witli  a 
direction  "to  change  to  February  estimates,"  was  accepted  by 
his  writing  upon  it,  "Accepted,  payable  on  return  of  March  esti- 
mates. E.,  Trcas."  Held,  that  E.  was  not  personally  liabU": 
Aviison  V.  Ewing,  2  Cold.  3GG.  James  Ilarter  and  S.  M.  Htran- 
ahaii  were  sued  as  joint  makers  with  the  Ocean  I\Ii:Mng  Com- 
pany of  a  note,  set  forth  in  the  complaint,  in  the  followi:;g 
form:  "Three  months  after  date,  the  Ocean  Mining  Company 
promise  to  pay  to  W.  G.  Bright,  or  order,  one  thousand  dollars, 
for  value  received,  with  interest  at  tbo  rate  of  tv/o  per  cent  per 
month.  (Signed)  James  Ilarter,  trustee,  S.  N.  Stranahan." 
Judgment  by  default  was  rendered  against  the  company  and 
II.  and  S.  Held,  that  this  judgment  was  erroneous;  that  the 
instrument  itself  sbov.cd  the  intention  of  II.  and  S.  to  bind  the 
company,  and  not  themselves,  and  that  they  were  not  personally 
liable:  Shaver  v.  Ocean  M.  Co.,  21  Cal.  45.  Three  person.^  hold- 
ing land  as  trustees  of  an  association  composed  of  themselves 
and  several  other  persons,  called  "the  B.  Company,"  entered 
into  two  contracts  with  the  i)laintiff,  which  by  the  articles  of 


104 
bond  was 

R'lltiolK'd 

iiul  C  1). 
},  tliat  1,0 
lid'  could 
iiitractL'd, 
uds  to  i)(' 

.       It  WUH 

iig  us  an 

ro  wuH  an 

10  priiH'i- 

Irhl,  that 

tlio  con- 

an^o  was 

paid  was 

as  agent. 

thereon: 

l/'Ollico 

3count  of 

the  ooin- 

*o  recites 

the  ^luuo 

'.  Doicjli- 

ed  by  A, 

/ho  knew 

were  ic- 

>  bind  A 

An  order 

,  witli  a 

pted  by 

reli  e?(i- 

liable: 

I.  Htran- 

ng  Coni- 

bllowi:;g 

ompiiny 

dollars, 

cent  per 

nahan." 

any  and 

that  the 

bind  the 

rsonally 

ns  hold- 

niselves 

entered 

tides  of 


1G5       DUTIES   AND    MAIJIUTIES  TO  THIRD   PERSONS.      §  103 

t!)e  trust  they  were  authorized  to  make  on  behalf  of  the  share- 
lidhJers,  Uoth  of  these  contracts  stated  on  their  face  that  they 
u(  re  made  by  the  trustees  "as  trustees  of  the  H.  Company," 
aiitl  were  both  signed  by  these  persons  "as  trustees  of  the  samo 
cDinpany."  Uy  the  first  contract  the  plaintifT  was  to  construct 
a  wharf  "for  said  company  on  their  land,"  on  tin;  line  of  a  dock 
or  canal,  "to  be  excavated  for  said  company";  and  "payments 
^hall  be  made"  ut  stated  times.  The  second  contract  recited 
t'"it  the  plaiTitifT  agreed  to  construct  a  canal  or  dock  "for  said 
<()ini)any  on  the  company's  land";  and  the  provision  as  to 
jiayments  was  substantially  like  that  in  the  first  contract. 
Jl'dd,  that  it  was  intended  by  these  contracts  to  bind  tin;  com- 
pany, and  not  the  trustees  personally,  and  that  they  were  sulli- 
cient  in  form  for  that  purpose,  and  that  the  addition  of  seals, 
being  unnecessary,  might  bo  disregarded  as  surplusage:  Cook  v. 
dray.  133  ivrass.  lOG. 

^  103.  "When  Agent  Personally  Bound  —  Peacriptio 
PersonsB.  —  But  there  arc  cases  which  hold  thut  where  in 
the  body  of  f!;r  instrument  there  is  nothing  to  show  an 
intention  to  bind  a  principal,  the  mere  signing  'asi  agent" 
for  a  described  principal  will  not  prevent  it  from  boinj;  a 
personal  contract  of  the  agent.'  And  where  no  idea  of 
agency  appears  on  the  face  of  the  instrument, — the  con- 
tract being  signed  by  the  agent,  in  his  own  name,  and 
tlio  principal  not  being  mentioned, — the  principal  is  not 
bound,  and  the  agent  is.^     And  the  agent  is  bound  even 


*  Qv.iglcy  V.  Do  Haas,  82  Pa.  St.  2G7; 
Hdliinjon  r.  Bank,  44  Ohio  St.  441; 
]l.f]';icr  V.  Browiicll,  70  Iowa,  591; 
Williams  r.  Robbins,  IG  Gray,  77;  77 
Am.  Dec.  3%;  Bickford  v.  tiauk,  42 
111.  pS;  89  Am.  Dec.  43G;  McClure 
r.  Livcrinorc,  78  Mo.  .390;  Exchange 
I!:;ii:i  V.  Lewis  Co.,  28  W.  Va.  273. 
All  iigeat  signed  a  bill  of  exchange, 
"T.  11.  T.,  agent  for  S.  T."  There 
was  nothing  in  the  body  of  the  bill 
vbich  hinted  at  a  principal.  IJeld, 
t'.Kit  the  agent  was  bound:  Tannatt  v. 
Rocky  Mountain  Bank,  1  Col.  278;  9 
All.  Rep.  15G.  A  note  was  signed 
"  For  13.  Ayres,  W.  B.  Ay  res."  IJeld, 
that  W.  B.  Ayres  was  bound:  Offutt  v. 
Ayrc«,  7  T.  B.  Mon.  35G.  A  promis- 
sory note  in  the  body  read  "we  pro"!- 
ise  to  pay,"  and  was  signed  "G.  M., 


treasurer  of  Mechanics'  Falls  Dairying 
Ass'n."  IM<1,  that  it  bound  G.  M.: 
Mellen  v.  Moore,  C8  Me.  390;  28  Ain. 
Rep.  77.  In  this  case  the  court  held 
that  there  was  no  difference  between 
the  words  "I  promise  "  and  "  w(!  prom- 
ise," in  the  body  of  au  instrument,  so 
far  as  a  personal  liability  was  con- 
cerned. In  the  body  of  a  bond  the  lan- 
guage used  was  "  I  promise  to  pay, "  no 
name  being  mentioned;  and  it  was 
signed  "H.  S.  L.,  for  C.  C,  presi.hnt 
of  the  Chester  Mica  and  Porcelain  Co." 
J/eld,  that  the  agent  was  individually 
liable:  Bryson  v.  Lucas,  84  N.  C.  080; 
37  Am.  Rep.  635. 

*  Wood  V.  Goodridge,  6  Cush.  117; 
52  Am.  Dec.  771;  Bartlett  r.  Tucker, 
J04  Mass.  33G;  G  Am.  Rep.  240;  Scpiier 
V.  Norris,  1   Lans.   282;    Galusha  v. 


§103 


PRINCIPAL   AND   AGENT. 


1G6 


though  h'^  iV.  flescribed  in  the  contract  as  agent,  if  lie  makes 
the  contract  in  his  own  name.*  And  this  is  so  even 
where  a  note  is  signed  as  "  agent,"  but  for  whom  is  not 
shown.  The  word  "agent"  in  such  cases  is  regarded  as 
mere  descriptio  pcrsonse.^  The  courts  think  it  better  that 
the  contract  should  be  enforced  as  it  reads,  than  to  per- 
mit evidence  to  be  gi"en  that  somebody  not  mentioned  at 
all  was  really  bound.  "When  a  man  has  deliberately  said 
in  writing,  *I  promise  to  pay,'  and  a  valid  consideration 
for  the  promise  is  shown,  right  an^^  justice  are  not  very 
likely  to  be  the  gainers  by  allowing  him  to  retract  and 
undertake  to  prove  that  he  did  not  actually  mean  'I  prom- 
ise,' but  that  he  meant,  and  the  other  party  understood 
that  he  meant,  that  some  third  party,  whose  promise  the 
■writing  does  not  purport  to  be,  undertook  the  payment. 
It  is  better  that  a  careless  or  ignorant  agent  should  some- 


Hitchcock,  29  Barb.  193;  Minard  r. 
I.Ica.l,  7  Wciul.  OS;  Bank  of  British 
Nortli  Amoiica  v.  Hooper,  5  Gray.  507; 
C3  Am.  Dec.  390;  AnJcrtoii  v.  fcjlioup, 
17  Ohio  St.  I'JS;  Williams  v.  llobbiiis, 
10  Gray.  77;  77  Am.  Dec.  390;  De 
Witt  V.  Walton,  9  N.  Y.  571 ;  Taber  v. 
Cannon,  8  Mot.  450;  Snelling  v.  How- 
iir.l,  51  N.  Y.  373;  Einstein  v.  Holt, 
52  Mo.  340;  Sradlee  v.  Boston  Mfg. 
Co.,  10  Pick.  347;  Bank  of  Rochester 
V.  Moutcath,  1  Denio,  402;  43  Am. 
Dec.  CSl. 

^  Stouo  V.  Wood,  7  Cow.  45L;;  17 
Am.  Dec.  529;  Hancock  v.  Fairfield, 
30  Me.  299;  HalU-.  Bradbury,  40 Conn. 
32;  Graham  v.  Campbell,  50  Ga.  258; 
Toledo  Agricultural  Works  v.  Heisser, 
51  Mo.  128;  Kenyon  v.  Williams,  19 
Ind.  45;  Arnold  v.  Sprague,  34  Vt. 
409;  Anderson  ?'.  Pearce,  30  Ark.  293; 
•SS  Am.  Rep.  39;  Sturdivant  v.  Hull, 
C9  .Me.  172;  8  Am.  Rep.  409;  Heuder- 
Bou  '•  Martin,  19  Ark.  447;  70  Am. 
Dec.  000. 

^  Peutz  V.  Stanton,  10  Wend.  271;  25 
Am.  Dec.  558;  Collins  r.  Buckeye  Ins. 
Co.,  17  Ohio  St.  215;  93  Am.  Dec.  012; 
Woodbury  V.  Blair,  18  Iowa,  572;  Bick- 
ford  V.  Bank,  42  111.  238;  89  Am.  Dec. 
430;  llathbun  r.  Budlong,  15  Johns.  1; 
Rand  V.  Hale,  3  W.  Va.  495;  100  Am. 


Dec.  761;  Tucker  Mfg.  Co.  v.  Fair- 
banks, 98  Mass.  101;  Merchants' Bank 
V.Hayes,  7  Hun,  530;  Hilljv.  Bannister, 
8  Cow.  31;  Fiskv.  Eldridge,  12  Gray, 
474;  Slawson  v.  Loring,  5  Allen,  310; 
81  Am.  Dec.  750;  Towno  v.  Rico,  \'22 
Mass.  07;  Winsor  i\  Grigirs,  5  Cu.h. 
210;  Hall  v.  Bradbury,  40  Conn.  32; 
Price  V.  Taylor,  5  Hurl.  &  N.  510; 
City  of  Detroit  v.  Jackson,  1  Doug. 
(Mich.)  115;  Powers  v.  Brigas,  79  111. 
493;  22  Am.  Rep.  175;  Burlingamc  ?•. 
Brewster,  79  111.  515;  22  Am.  Rep. 
177;  Chadsey  v.  McCreery,27  111.  Ci.'!; 
Drake  v.  Flewellcn,  33  Ala.  100;  Fow- 
ler V.  Atkinson,  6  Miau.  578.  A.  C. 
makes  a  promissory  note  which  he 
signs  "  A.  C,  agent.  '  This  binda  A.  C. 
only:  Willi^'ms  v.  Robbins,  1(3  Gray, 
77;  77  An.«»Dcc.  390.  H.  signs  a  nntc 
"D.  H.,  agent  for  the  churchman."  II., 
and  not  the  churchman,  i.3  bond :  Du 
Witt  V.  Walton,  9  N.  Y.  571.  But 
sec  Mott  V.  Hicks,  1  Cow.  513;  Green 
V.  Skcel,  2  Hun,  487;  Bank  of  Gon- 
nesee  v.  Patchin  Bank,  19  N.  Y.  317. 
And  aliter  where  the  agent  has  Jjcca 
in  the  habit  of  signing  notes  which 
have  been  regularly  paid  by  the  prin- 
cipal: Hovey  v.  Magill,  2  Conn.  680; 
see  15  Alb.  L.  J.  409;  IG  Alb.  L.  J. 
117,  345. 


166 


167       DUTIES   AND   LIABILITIES   TO   THIRD   PERSONS.      §  103 


times  pay  for  his  principal  than  to  subject  the  construc- 
tion of  valid  written  contracts  to  the  manifold  perversions, 
misapprehensions,  and  uncertainties  of  oral  testimony.'" 
The  word  "agent"  after  the  name  of  the  drawer  of  a  bill 
of  exchange  does  not  necessarily  relieve  him  from  per- 
sonal liability,  when  there  is  nothing  in  the  bill  to  indi- 
cate liis  principal.''  The  addition,  "Vestryman,  Grace 
Church,"  to  each  of  the  names  attached  to  a  note  does 
not  make  it  anything  but  the  note  of  the  individuals 
signing  it,  if  it  does  not  purport  to  bind  the  corporation.^ 

Illusthations. — A  promissory  note  was  indorsed,  "L.  R.,  re- 
ceiver." ITcld,  to  bind  L.  I',  personally:  Towne  v.  Rice,  122 
JIass.  G7.  A  lease  was  to  "C,  treasurer  of  the  Eagle  Lodge," 
and  signed  by  him,  "C,  treas."  Ildd,  to  bind  C.  personally: 
Scavcr  v.  Colnirn,  10  Cush.  324.  A  submission  to  nrhitration 
was  signed  "G.  G.,  agent."  Held,  to  bind  G.  G.  to  perform  the 
award;  the  name  of  the  principal  not  being  known  to  the  other 
party:  Winsor  v.  Griggs,  5  Cush.  210.  In  a  promissory  note 
no  principal  is  mentioned,  and  it  is  signed  "A  13,  agt."  Held, 
to  bind  A  B  only:  Williams  v.  liohbinft,  IG  Gray,  77;  77  Am. 
Dec.  396.  A  note  was  in  this  form:  "We,  the  prudential  com- 
mittee for  and  in  behalf  of  the  Baptist  Church  in  Loe,"  etc., 
signed  by  the  makers,  without  addition  to  their  names.  Held, 
to  bind  the  signers  personally:  Morcll  v.  Codding,  4  Allen,  403. 
A  contract  signed  by  G.  and  C.  individually,  employing  G.  as 
treasurer  of  the  I.  Company,  and  reciting  that  it  was  an  "un- 
derstanding had  with  G.  as  between  himself  and  C,  preisident 
and  representing  the  I.  Company."  Held,  to  bind  C.  personally: 
Guernsey  v.  Cook,  117  Mass.  548.  In  an  action  upon  the  note, 
"Sixty  days  after  date,  we  promise  to  pay  to  the  order  of  B. 
$342.25,  at  S.  B.  of  P.,  value  received,"  (signed)  "W.  S., 
president  Blanncrhassett  Oil  Co.,"  (indorsed)  "W.  II.  II.,  treas- 
urer,"—  held,  that  S.  and  II.  were  personally  liable  thereon: 
Scott  v.  Baler,  3  W.  Va.  285.  A  paper  acknowledging  receipt 
of  five  hundred  dollars,  to  be  used  to  buy  Spencer  rilles  for 
Company  I,  Forty-ninth  Regiment,  Missouri  Volunteers,  said 
money  to  be  returned  as  soon  as  the  county  bounty  is  i)aid  to 
said  company,"  aid  signed  by  B,  "Captain  Forty-ninth  Regi- 
ment, Missouri  Volunteers,  Commanding  Post,"  held,  to  create 
a  liability  personal,  and  not  as  agcni,  an  irresponsible  principal 

»  Sturilivant  r.  Hull,  69  Me.  172;  8  '  TiMon  v.  Barnard,  43  Mich.  376; 
Am.  Rep.  409.  38  Ani.  Rep.  197. 

"  Bank  v.  Cook,  38  Ohio  St.  442. 


§104 


PRIN'CIPAL   AND   AGENT. 


1G8 


IG 


being  disclosed  in  such  military  company,  and  not  to  1)0  ex- 
pluiiuible  by  parol  evidence:  Blakehj  v.  Bcnneckc,  59  Mo.  11)3. 
A  promissory  note  in  form,  "We  promise  to  pay,"  given  by 
trustees  of  an  incorporated  lodge  for  the  debt  of  the  lodge,  and 
signed  "A,  15,  C,  Trustees  Perry  Lodge,"  held,  the  individual 
note  of  tlie  signers,  and  not  the  note  of  the  lodge,  and  it  cannot 
be  shown  by  parol  that  it  was  intended  to  be  the  note  of  the 
lodge:'   WilliaviH  v.  Lafayette  Bank,  83  Ind.  237. 

§  104.  Agent  not  Personally  Liable.  —  An  agent  act- 
ing within  his  authority,  and  making  a  contract  in  the 
name  of  his  principal,  binds  the  latter,  and  incurs  no  per- 
sonal liability .'^  If  in  the  body  of  a  note  it  appear  that 
the  note  is  the  note  of  the  principal,  or  made  by  the 
signer  for  and  as  agent  of  the  principal,  it  is  the  note  of 
the  latter,  even  though  the  words  "  agent  for,"  or  the  like, 
arc  not  added  to  the  signature.'  Where  one  contracts 
with  or  sells  goods  to  an  agent  of  a  known  principal,  the 
principal,  and  not  the  agent,  is  liable  on  the  contract  for 
the  price,'*  unless  it  is  clear  that  the  vendor  sold  upon  the 
credit  of  the  agent  alone.®     Where  an  agent  does  not  dis- 


'  A  promissory  note  signed  by  A  as 
presiilcnt  cif  a  certain  nanieJ  corpora- 
tion, ami  by  B  as  "  secretary  j^ro  tern.," 
is  the  note  of  the  corporation,  altliough 
in  it3  body  it  says  "  v/t;  ])romise  to  pay," 
etc.:  Fanners  and  Mechanics'  Bank 
V.  Colby,  G4  Cal.  352.  An  instrument 
signed  "  B,  a-^'cnt,"  may  be  deemed  the 
contract  of  the  principal,  when,  from 
tho  body  of  the  instrument,  such  con- 
struction can  fairly  hr;  put  upon  it: 
Bradstrcct  r.  Baker,  14  R.  I.  54G. 

^  Owen  V.  Gooch,  2  Esp.  5G7;  Tiller 
V.  SpraiUev,  3D  Ga.  35;  MeClernan  v. 
Hull,  33  Md.  293;  Story  on  Agency, 
sec.  201;  Oclricka  v.  Ford,  23  How. 
41);  Pitman  v.  Kintner,  5  Blackf.  250; 
33  Am.  Dec.  409;  Simonds  v.  Heard, 
23  Pick.  120;  34  Am.  Dec.  41 ;  Hali  v. 
Huntoon,  17  Vt.  244;  44  Am.  Dec. 
332;  Davis  t'.  Burnett,  4  Jones,  71;  67 
Am.  Dec.  203;  Whitney  v.  Wyman, 
101  U.  S.  392;  Maury  v.  Ranger,  38 
La.  Ann.  485;  53  Am.  Rep.  197; 
Picrcy  v.  Hcdrick,  2  W.  Va.  458;  98 
Am.  I)ec.  774.  "The  general  princi- 
ple is,  that  an  agent  is  not  liable  to  be 


sued  wpon  cont;act3  made  by  him  on 
behalf  of  his  principal  if  tho  uamo  of 
his  principal  is  disclosed  and  made 
known  to  the  person  contracted  with 
at  the  time  of  entering  into  the 
contract " :  Rathbon  i\  Budlong,  15 
Johns.  1. 

a  Haskell  v.  Cornish,  13  Cal.  45. 

*  Meeker  v.  Claghorn,  44  N.  Y.  349. 
H.,  being  insolvent,  carried  on  busi- 
ness in  the  name  of  C.  K.,  wlio  had 
no  interest  in  the  profits,  but  allowed 
his  name  to  be  used.  F.  sold  to  H. 
goods,  the  purchase  being  made  in  the 
name  of  C.  K. ,  and  the  bill  was  made 
out  in  his  name.  Neld,  that  C.  K., 
and  not  H.,  was  liable:  Ferris  v.  Kil- 
mer, 48  N.  Y.  302. 

'•>  Ferris  v.  Kilmer,  48  N.  Y.  303; 
Butler  ?'.  Evening  Mail  Ass'n,  01  N. 
Y.  034;  Meeker  v.  Clagliorn,  44  N.  Y. 
349.  "No  rule  of  law  is  better  ascer- 
tained, or  stands  upon  a  stronger  foun- 
dation, than  tliis:  that  where  an  agent 
names  his  principal,  the  principal  is 
responsible,  not  the  agent.  But  for 
the  application  of  that  rule  the  agent 


ck 
aci 
by 
hi 


"g 


168 


109       DUTIES   AND   LIABILITIES   TO   THIRD   PERSONS.       §  104 


close  his  charactor  or  his  principal,  but  the  other  party 
actually  knows  both  at  the  time,  the  agent  is  not  bound 
by  the  contract,  unless  the  contract  is  such  as  would  bind 
him  at  all  events.'  Where  one  acting  professedly  as  tho 
agent  of  B  contracts  with  C  for  his  services,  C  cannot  re- 
cover, in  an  action  against  the  agent,  without  showing 
prima  facie  a  want  of  authority  in  the  agent  to  bind  B. 
In  such  case  the  onus  lies  on  C  to  show  the  want  of  au- 
thority in  tho  agent.''  A  railroad  freight  agent  cannot  be 
made  a  defendant  in  an  action  for  his  refusal  to  deliver 
up  freight  until  certain  charges  have  been  paid,  he  not 
claiming  to  control  the  property  except  as  the  agent  of 
the  company.^  A  contract  is  void  when  it  is  not  binding 
upon  the  principal  for  want  of  authority  in  the  agent  to 
make  it,  and  not  binding  on  the  agent  for  want  of  apt 
words  to  charge  him  personally.* 


Illustrations.  —  R.,  having  a  possessory  interest  in  certain 
premises  which  had  been  sold  under  a  foreclosure  decree,  cm- 
ploj^cd  M.  to  manage  tho  property  and  receive  all  its  proceeds, 
and  pay  them  over  in  certain  fixed  proportions  to  11.  and  S. 
Held,  thiit  M.  was  a  mere  agent  of  R.,  and  not  a  "  tenant  in  pos- 
session," and  therefore  not  liable  to  the  purchaser  nt  tho  sale 
for  the  rents  and  profits:  Shores  v.  Scott  River  Co.,  21  Cal.  135. 
Agents  were  employed  by  importers  to  pass  goods  througli  tho 
custom-house;  they  were  known  by  the  officers  of  the  customs 
to  be  agents;  they  removed  certain  goods  reported  to  be  free  of 
duty  and  sent  them  to  their  principals;  afterwards  it  was  dis- 
covered that  they  were  liable  to  duty,  and  an  action  for  tho 


must  name  his  principal  as  the  person 
to  be  responsible.  In  the  common 
case  of  au  upholsterer  employed  to 
furnitnh  a  house,  dealing  himself  in 
only  one  branch  of  business,  he  applies 
to  other  persons  to  furnish  those  arti- 
cIl'3  in  which  lie  does  not  deal.  Those 
persons  know  the  house  is  mine.  That 
is  e.\i)ressly  stated  to  them.  But  it 
does  not  follow  that  I,  thougli  the  per- 
son to  have  the  enjoyment  of  the  arti- 
cles furnished,  am  responsible.  Sup- 
pose another  case:  A  person  instructs 
an  attorney  to  bring  an  action,  who 
euiploys  bis  own  stationer,  generally 


employed  by  him.  The  client  has 
nothing  to  do  with  tho  sitatioufi-  if 
tho  attorney  becomea  i:i:iolve;it.  The 
client  pays  the  attorney.  TI  J  sta- 
tioner there  forr  has  no  roiiiedy  against 
the  client  ":  Lord  Erskiue,  in  Ex  parte 
Hartop,  12  Ve.i.  3.VJ. 

»  Chase  v.  Debolt,  7  111.  .Ill;  War- 
rcu  V.  Dickson,  27  111.  115;  Ilobeson  v. 
Chapman,  C  Ind.  S52. 

■■'  Plumb  V.  Milk,  I'J  Birb.  74. 

^McDougall  V.  Travis,  24  Hun, 
590. 

♦  Hall  V.  Crandall,  29  Cal.  5G7;  89 
Am.  Doc.  64. 


§105 


PRINCIPAL  AND   AGENT. 


170 


duty  was  brought  against  the  agents.  ITelcl,  that  they  were  not 
liable:  United  States  v.  Bevan,  Crabbe,  324.  A  commercial  firm 
publishes  a  notice  in  a  newspaper  that  a  certain  person  will  act 
as  their  agent.  Such  person  advertises  for  the  purchase  of  cot- 
ton in  the  name  of  the  firm.  Jlcld,  that  it  will  be  presumed 
Ihat  his  purchases  are  made  for  the  firm:  Hamilton  v.  Elmer,  20 
La.  Ann.  391.  A,  as  the  attorney  in  fact  of  B,  receives  money 
in  which  C  has  the  beneficiary  interest.  C  cannot  maintain  an 
action  against  A  for  the  money  so  received,  but  must  sue  B,  the 
principal:  Stephens  v.  Eakcr,  7  N.  J.  L.  1.  Defendant  took  a 
telegram  to  the  plaintiff,  a  surgeon  in  the  city  of  New  York, 
from  the  family  physician  of  the  defendant's  brother  in  Con- 
necticut, in  pursuance  of  which  telegram  the  plaintiff  went  to 
Connecticut  and  performed  a  surgical  operation  upon  the  de- 
fendant's brother,  the  defendant  accompanying  tlio  plaintiff  to 
Connecticut  and  paying  his  railroad  fares,  but  not  saying  or 
doing  anything  beyond  the  duties  of  an  agent.  Held,  not  liable 
for  the  services  performed  by  the  plaintiff  for  his  brother:  Huck 
V.  Amldon,  41  How.  Pr.  370. 

§  105.  Foreign  Principal. — In  England,  in  the  case 
of  an  agent  of  a  foreign  principal,  the  rule  was  that  the 
credit  was  presumed  to  bo  given  to  the  agent  even  where 
the  principal  was  known.'  The  American  courts,  after 
some  hesitancy,  refused  to  apply  this  principle  when  the 
principal  was  simply  a  "foreigner"  in  the  sense  of  resid- 
ing in  another  state  of  the  Union.^  And  the  well-estab- 
lished doctrine  at  the  present  day,  both  in  England*  and 
America,  is,  that  the  agent  of  a  foreign  principal  is  not, 
as  matter  of  law,  personally  liable,  but  it  is  a  question  of 
fact  for  the  jury,  to  bo  decided  on  the  terms  of  the  con- 
tract and  the  surrounding  circumstances.' 


^  Thomson  v.  Davenport,  9  Barn.  & 
0.  7S;  Story  oa  Agency,  sec.  '26S; 
New  Castle  Mfg.  Co.  v.  Red  River 
R.  R.  Co.,  1  Rob.  (La.)  145;  30  Am. 
Dec.  CSG;  McKenzic  v.  Ncvius,  22 
Mo.  138;  38  Am.  Dec.  291;  except 
where  the  contract  provided  that  the 
agent  shoull  not  ho  bound:  Ogleby 
V.  Yglcsias,  1  El.  B.  &  E.  930;  Peder- 
8on  V.  Lotiuga,  23  L.  T.  Rep.  207. 

''  Taiator  r.  Prcndergast,  3  Hill,  72; 
38   Am.    Dec.    CIS;    Kirkpatrick   v. 


Stainer,  22  Wend.  254;  Vawter  v. 
Baker,  23  Ind.  G3. 

^  Green  t-.  Kopke,  18  Com.  B.  549; 
Armstrong  v.  Stokes,  L.  R.  7  Q.  B. 
C03;  Mahony  v.  Kekule,  14  Com.  B. 
390. 

♦Oelricks  v.  Ford,  23  How.  49; 
Rogers  v.  March,  33  Me.  100;  GoM- 
sniith  V.  Manheini,  109  Masj.  187.  A 
contract  was  entered  into  i  i  New  York 
for  the  sale  of  stone  by  the  agent  of 
A.  F.,  who  lived  in  New  Brunswick. 


170 


171        DUTIES    AND    LIABILITIES   TC    THIRD    PERSONS.       §  106 


were  not 
rcial  firm 
n  will  act 
.SG  of  cot- 
Dresuuied 
iJhncr,  20 
c's  money 
intain  an 
uo  B, tho 
it  took  a 
2w  York, 

in  Con- 
'  wont  to 
1  the  dc- 
aintiff  to 
aying  or 
lot  liable 
er:  lluck 


he  case 
hat  tho 
11  where 
ts,  after 
hen  the 
f  rcsid- 
1-cstab- 
kP  and 

is  not, 
stion  of 

10  con- 

awter  i\ 

B.  510; 
7  Q.  B. 
Com.  B. 

low.  49; 
»G;  Goia- 

]S7.  A 
ew  York 

igent  of 
inswiek. 


§  106.     Irresponsible    Principal.  —  Where    tho    agent 
acts  for  an   irresponsible   i^riiicipal, — that  is  to  say,  a 


It  was  signed  "A.  F.,  by  K.,  agent." 
Ji'elif,  that  K.  wa.s  not  hound:  Bray  r. 
Kuitell,  1  Allen.  80.  Tlio  opinion  of 
Bigulow,  C.  J.,  iii  this  cast",  contains  a 
full  stu-tenicnt  of  thu  present  accepted 
l:i\v  as  to  foreign  principals,  "ihis 
action  ij  brought  to  recover  damages 
for  a  breath  cf  a  written  contract  of 
afi'reightiiient  entered  into  by  tho  de- 
feiuliin;.)  in  behalf  of  one  Charles  D. 
Archibald,  doing  business  under  tho 
name  and  stylo  of  the  Albert  Free- 
stone Quarries,  and  executed  by  sign- 
ing tho  same  with  the  busincits  name 
of  their  ]irincipal  by  themselvcj  as 
agents.  The  oidy  question  in  the  case 
ij,  whether  tho  defendants  caxi  'le  held 
liulib  on  this  contract.  The  plaintiff 
does  not  controvert  the  general  rule 
of  law,  that  an  agent  is  not  personally 
responsible  upon  an  instrnment  exe- 
cuted in  tho  naino  of  his  principal, 
But  he  rests  his  claim  against  the  de- 
fendants upon  tho  ground  that  tlie 
present  case  falls  within  a  recognized 
exception  to  the  rule,  because  the  de- 
fendants acted,  in  making  the  con- 
tract, in  behalf  of  a  foreign  principal, 
resident  'beyond  seas.'  It  is  cer- 
tainly true  that  some  of  the  earlier 
English  eases  seem  to  sanction  the 
doctrine  tint  where  an  agent  acts  for 
a  foreign  principal,  tho  presumption 
is  that  credit  is  given  exclusively  to 
tlic  agent,  and  he  only  is  liable  on 
contracts  entered  into  in  the  name  and 
o:i  behalf  of  bia  principal:  Gonzales  v. 
Sladen,  Bull.  N.  P.  130;  Do  Gaillon 
r.  L'Aigle,  1  Bos.  &  1".  SaS;  Thomson 
V.  Davenport,  9  Barn.  &  C.  84;  Smyth 
V.  Anderson,  7  Com.  B.  21.  Tho  same 
doctrine  lo  stated  in  l'alc;y  on  Agency, 
4tli  Am.  cd.,  218,  2  Livermoro  on 
Agency,  240,  and  especially  in  Story 
on  Agency,  sees.  208,  2'JO,  where  it  is 
enunciated  as  u.  general  rule,  that 
agents  acting  for  merchantj  residing 
in  a  foreign  country  arc  held  person- 
ally liable  on  all  contracts  made  by 
them  for  their  employers,  and  this 
without  any  distinction  whether  they 
describo  tiiemselvcs  in  tho  contract  as 
agents  or  not.  Wo  are  inclined  to 
think  that  a  careful  examination  of 
tho  cases  which  are  cited  iu  support 


of  this  supposed  rule  will  show  that 
tliii  stateiiient  is  altogetlier  too  broad 
and  coiMiireh(  nsive.  Certain  it  is, 
that  if  it  ever  was  received  as  a  correct 
exposition  of  tiio  law,  it  has  been  es- 
sentially modified  by  the  more  recently 
adjudged  cases.  It  doubtless  liail  its 
origin  in  a  custom  or  usage  of  trado 
existing  in  England,  by  wliich  the  do- 
mcotie  factor  or  agent  was  duemcd 
to  bo  tho  contracting  party  to  whom 
credit  was  exclusively  given;  and  it 
was  confined  to  cases  wliero  tlie  claim 
against  1  ho  agent  was  for  goods  sold, 
and  was  not  extended  to  written  in- 
struments. But  it  is  going  cpiite  too 
far  to  say  that  this  u  sage  or  custom  is 
so  ingrafted  into  the  common  law  as 
to  become  a  fixed  and  established  rule, 
creating  a  presumption  in  all  eases 
that  the  agent  is  exclusively  liable,  to 
the  entiro  exoneration  of  his  employer. 
Tho  more  reasonable  and  correct  doc- 
trine is,  that  when  goods  arc  sold  to 
a  domestic  agent,  or  a  contract  is  made 
by  him,  the  fact  that  he  acts  for  a  for- 
eign j)nncipal  is  evidence  only  that 
tho  agent,  and  not  tho  princi))al,  is  lia- 
ble. It  is  in  reality  in  all  cases  a 
question  to  whom  credit  was  in  Lict 
given.  Wiiero  goods  are  sold,  it  i^ 
certainly  reasonable  to  iiuppo;;c  that 
tho  vendor  trusted  to  the  credit  of  a 
person  residing  in  tho  same  country 
with  himself,  subject  to  laws  with 
which  he  is  familiar,  and  to  proccsa 
for  the  immediate  enforcement  oi  debt, 
rather  than  to  a  principal  residing 
abroad,  uniler  a  difl'erent  uy.;tein  of 
laws,  and  beyond  tho  juri.aliction  of 
tho  domestic  forum.  But  even  in  .such 
a  case,  the  fact  that  the  prineipul  is 
resident  in  a  foreign  country  is  only 
one  circumstance  entering  into  the 
question  of  credit,  and  is  liable  to  be 
ccntroUcd  by  other  facts.  So  in  tho 
case  of  a  written  contract:  it  dLpenda 
on  tho  intention  of  the  parties.  But 
this,  as  in  all  other  cases  of  written  in- 
struments, must  be  determined  mainly 
by  the  terms  of  tho  contract.  Tiiero 
may  be  cases  where  the  language  of 
the  contract  is  ambiguoui,  a;id  it  is 
doubtful  to  whom  the  parties  intended 
to  give  credit,  in  wliich  thj  circum- 


§107 


PRINCIPAL   AND   AGENT. 


172 


principal  against  whom  the  creditor  cannot  legally 
proceed, —  the  agent  will  be  personally  liable,  even 
though  he  contract  as  agent  for  a  known  and  described 
principal.* 


§  107.    Agent  Liable  where  Principal  not  Disclosed. — 

An  agent  who  does  not  disclose  the  fact  that  he  is  acting 
for  another  is  liable  personally  on  contracts  he  makes 


stance  that  the  principal  is  resident 
abroad  may  be  taken  into  consider- 
ation ia  detennining  the  question 
of  the  liability  of  the  agent.  But 
where  the  terms  of  the  contract  are 
clear  and  unambiguous,  it  must  bo 
deemed  the  Hnal  repository  of  the  in- 
tention of  the  parties;  and  its  con- 
struction and  legal  efi'eet  cannot  be 
varied  or  clianged  by  any  reference  to 
iacti  or  circunistauees  afifecting  the 
convenience  of  the  parties,  or  the  rea- 
sonableness of  the  contract  into  which 
they  have  entered.  In  such  a  case, 
therefore,  it  makes  no  difference 
•whether  the  principal  is  a  foreigner 
or  not.  If  by  the  language  of  the 
contract  the  agent,  and  not  the  princi- 
pal, is  bound,  such  must  be  its  con- 
struction; and,  oa  the  other  hand,  if 
it  clearly  binds  the  principal,  and  is 
in  form  a  contract  with  liiui  only,  the 
agent  must  be  exonerated  without  re- 
gard to  the  fact  that  the  principal  is 
resident  i:i  a  foreign  country.  This 
rule  can  work  no  hardship,  because 
parties  can  in  all  cases  make  their 
contracts  in  such  form  as  to  bind  those 
to  whom  they  intended  to  give  credit: 
Mahony  v.  KekukS  U  Com.  B.  3'JO; 
Green  v.  Kopke,  18  (?om.  B.  549;  Len- 
nard  v.  Robinson,  5  El.  &  B.  125; 
Kirkpatrick  t\  Stainer,  22  Wend.  244; 
2  Kent's  Com.,  Gth  ed.,  631,  note; 
Palcy  on  Agency,  4th  Am.  ed.,  248, 
note.  ThcbC  principles  are  decisive 
of  the  case  at  bar.  The  written  con- 
tract on  which  the  plaintiff  relies  con- 
tains no  words  from  wliich  any  intent 
to  bind  the  defendants  can  be  inferred. 
On  the  contrary,  it  is  executed  in  the 
precise  form  reijuired  by  law  to  bind 
the  principal  only  and  to  exonerate 
tne  agent.  The  name  under  which 
the  principal  conducted  his  business 


is  signed  by  the  defendants  as  his 
agents.  It  would  have  been  open  to 
nore  question  if  the  defendants  had 
signed  their  own  names  for  their  prin- 
cipal; but  the  contract  is  executed  by 
the  agents  in  the  precise  and  tcchniial 
form  in  which,  by  the  strictest  rule  of 
law,  it  should  be  signed  in  order  to  bind 
the  principal  only:  Story  on  Agency, 
sec.  153.  There  cpu  be  no  doubt  that 
if  the  principal  resided  in  this  country 
he  alone  could  have  been  sued  u  the 
contract.  In  like  manner,  ho  '  dy  is 
responsible,  although  a  foreigner,  be- 
cause he  is  the  sole  party  to  it,  and 
there  is  nothing  to  control  the  intent 
manifested  by  this  mode  of  executing 
the  contract.  The  defendants  are  in 
no  sense  parties  to  it,  and  are  not  lia- 
ble in  this  action  for  damages  occa- 
sioned by  the  neglect  of  their  principal 
to  comply  with  its  terras."  On  a  con- 
tract of  affreightment  executed  by  a 
foreign  agent,  but  disclosing  the  fact 
of  the  agency  and  the  name  of  the 

f>rincipal,  the  agent  is  not  personally 
iablc:  Maury  v.  Kanger,  38  Aa.  Ann. 
485;  58  Am.  Rep.  197. 

'  Story  on  Agency,  sec.  280-290; 
Thacher  v.  Dinsmore,  5  Mass.  299;  4 
Am.  Dec.  01;  Sumner  v.  Williarni,  8 
Mass.  102;  5  Am.  Dec.  83;  Robortii 
V.  Button,  14  Vt.  195;  Blakely  v.  Cor. 
necko,  59  Mo.  193;  Tassey  v.  Chun  . 
4  Watts  &  S.  141;  S9  Am.  Doe.  U ... 
A  signed  a  note  "aj  guardian  uf  l>  ' 
IMd,  that  A  was  personally  liablt. 
"  As  an  administrator, "said  the  court, 
"  cannot  by  his  promise  bind  the  estate 
of  the  intestate,  so  neither  can  the  guar- 
dian by  his  contract  bind  the  person  or 
estate  of  his  ward.  Unless,  therefore, 
the  defendant  is  liable  to  pay  this  no<-e, 
the  plaintiff  has  no  remedy":  Forster 
V.  Fuller,  6  Mass.  59;  4  Am.  Dec.  87. 


172 


173       DUTIES   AND   LIABILITIES    TO   THIRD    PERSONS.       §  107 


with  others.*  When  one  purchases  propert}',  he  hin<]s 
himself,  unless  he  discloses  a  principal  whom  he  can  and 
does  hind."  The  duty  is  upon  the  agent,  if  he  would  avoid 
personal  liahility,  to  disclose  his  agency,  not  upon  others 
to  discover  it.^  And  the  agent  is  liahle,  although  tho 
person  ho  deals  with  knows  he  is  an  agent,  hut  does  not 
know  who  his  principal  is.'  An  agent  of  an  unincorpo- 
rated company  is  not  discharged  from  his  liahility  to  pay 
for  work  done  for  him  hy  one  whom  he  has  employed 
without  disclosing  his  agency,  by  the  fact  that  after  tho 
work  was  performed  the  laborer  was  informed  by  another 
person  of  the  agency,  and  thereupon  altered  the  entry  in 
his  book  of  accounts  by  substituting  the  name  of  tho 
company  for  that  of  the  agent,  if  he  never  attempted  to 
enforce  his  claim  against  the  company,  and  did  not  know 
of  what  individuals  it  was  composed,  and  before  the  com- 
mencement of  his  action  against  Mie  agent  replaced  the 
name  of  the  agent  in  his  books  as  liis  debtor.''  Where  a 
person  contracts  with  another,  who  is  in  fact  the  agent  of 
an  undisclosed  principal,  he  may,  on  discovering  who  the 
principal  is,  resort  to  him  or  to  the  agent  with  whom 


I 


»  Taintor  v.  Prenclergast,  3  Hill,  72; 
38  Am.  Dec.  618;  Welch  v.  Goodwin, 
liji  I\lass.  71;  25  Am.  Ecp.  21;  Mc- 
Clellan  v.  Parker,  27  Mo.  1C2;  Wheeler 
V.  Heed,  36  III.  182;  Tauhing  v.  Scbrec, 
12  Bush,  198;  Winsor  v.  Griggs,  5 
Cush.  210;  Colton  v.  HoUiclay,  5'J  111. 
176;  Mauri  v.  Ilcffcnan,  1.1  Johns.  C8; 
Baldwin  v.  Leonard,  39  Vt.  2GD;  94 
Am.  Dec.  324;  Farrcll  v.  Campbell,  3 
Ben,  8;  Nixon  v.  Downey,  49  Iowa, 
106;  .loiies  V.  Ins.  Co.,  14  Conn.  501; 
Ualln  Bradbury,  40  Conn.  32;  Yough- 
iogheny  Iron  Co.  v.  Smith,  66  I'a.  St. 
340;  York  Co.  Bank  v.  Stein,  24  Md. 
477;  Wolflcy  v.  Rising,  8  Kan.  297; 
Pcntz  V.  Stanton,  10  Wend.  271;  25 
Am.  Dec.  558;  Newhall  v.  Dunlap,  14 
Mo.  180;  31  Am.  Dec.  45;  Bank  of 
British  North  America  v.  Hooper,  5 
Gray,  567;  66  Am.  Dec.  390;  Chand- 
ler y.  Coe,  54  N.  H.  567;  Brent  v. 


Miller,  81  Ala.  307;  Bridges  v.  Bid- 
well,  20  Neb.  185. 

'^  Button  V.  Winslow,  53  Vt.  430. 

3  Baldwin  V.  Leonard,  39  Vt.  260;  94 
Am.  Dec.  324. 

*  Paterson  v.  Gandasequi,  15  East, 
62;  Thomson  ?'.  Davenport,  9  Barn.  & 
C.  78;  Winsor  v.  Griggs,  5  Cush.  210; 
Falkncr  v.  Clark,  11  R.  I.  278.  And 
the  means  of  ascertaining  the  principal 
is  not  sufficient,  there  must  bo  actual 
knowledge:  Cobb  v.  Knapp,  71  N.  Y. 
348;  27  Am.  Rep.  51.  As,  for  instance, 
the  case  of  an  auctioneer;  from  tho 
nature  of  the  trade  it  is  known  that 
he  is  merely  an  agent,  yet  he  is  person- 
ally bound  where  ho  does  not  disclose 
his  principal:  Story  on  Agency,  sec. 
267. 

^  Hutchinson  v.  Wheeler,  3  Allen, 
577. 


§107 


PRINCIPAL   AND  AGENT. 


174 


IT 


he  has  dealt,  at  his  election/  provided  nothing  has  oc- 
curred in  the  mean  time  to  alter  the  relations  of  tlie  parties, 
or  the  creditor  has  not  been  guilty  of  laches.*  But  if 
after  knowing  all  the  facts  he  elects  to  hold  the  agent,  he 
cannot  afterwards  proceed  against  the  principal.'  Where 
the  vendor  at  the  time  of  the  sale  knows  the  principal, 
and  that  the  buyer  is  a  mere  agent,  and  gives  credit  to 
the  agent,  ho  cannot  afterwards  resort  to  the  principal.* 
There  must,  however,  bo  actual  knowledge  by  the  vendor 
who  the  principal  is;  merely  having  the  means  of  ascer- 
taining him  is  not  enough;*  nor  is  it  sufficient  that  the 
iieller  knew  that  the  buyer  was  an  agent,  if  he  did  not 
know  who  the  principal  was.®    Evidence  of  a  usage  of 


tri 
cii 

CXI 

fr( 


'  Kingsley  v.  Davis,  104  Mass.  178; 
Upton  i'.  Gray,  2  Mc.  373;  Raymond 
V.  CroWA  Mills,  2  Met.  324;  Clea- 
land  V.  Walker,  11  Ala.  1051);  Green 
V.  Skeel,  2  Hun,  485;  Carney  v. 
Dennison,  15  Vt.  400;  Coleman  v. 
First  National  Bank,  53  N.  Y.  388; 
Meeker  v.  Claghorn,  44  N.  Y.  349; 
Paterson  v.  Gandi\sequi,  15  East,  62; 
French  v.  JPricc,  54  Pick.  13;  Lovell 
V.  Williams,  125  M.\8s.  439;  Carroll  v. 
St.  Johns  Soc,  125  Maos.  505;  Hyde 
V.  Wolf,  4  La.  234;  23  Am.  Dec.  484; 
Beebee  v.  Robert,  12  Wend.  413;  27 
Am.  Dec.  132;  Episcopal  Churci.  v. 
Wiley,  2  Hill  Ch.  584;  30  Am.  Dtc. 
380;  Merrill  v.  Kenyon,  48  Conn.  31''; 
40  Am.  Rep.  174.  As  to  what  is  ao 
election  is  a  question  for  the  jury: 
Gardner  v.  Bean,  124  Mass.  347.  And 
see  Perkins  v.  Cady,  111  Mass.  -^iS; 
Beymer  v.  Bonsall,  79  Pa.  St.  298; 
Coleman  v.  First  National  Bank,  53 
N.  Y.  388;  Cobb  v.  Knapp,  71  N.  Y. 
348;  27  Am.  Rep.  51.  It  he  proceeds 
against  the  agent  knowing  all  the  facts, 
he  cannot  afterwards  resort  to  the  prin- 
cipal: Jones  V.  iEtnalns.  Co.,  14 Conn. 
501;  Kingsley  V.  Davis,  104  Mass.  178. 

*  Rathbone  v.  Tucker,  15  Wend. 
488;  Thomas  v.  Atkinson,  38  Ind.  248; 
Hooper  v.  Robinson,  98  U.  S.  528; 
Story  on  Agency,  sec.  449. 

'  Kingsley  v.  Davis,  104  Mass.  178; 
Cobb  V.  Knapp,  71  N.  Y.  348;  27  Am. 
Rep.  51. 

*  Paterson  v.  Gandasequi,  15  East, 


62;  Raymond  v.  Crown  Mills,  2  Met. 
324;  Paige  v.  Stone,  10  Met.  160; 
Hyde  v.  Paige,  9  Barb.  151;  Mary- 
land Coal  Co.  V.  Edwards,  4  Hun,  434. 

'  Raymond  v.  Crown  and  Eagle 
Mills,  2  Met.  324;  contra,  Lyon  v. 
Williams,  5  Gray,  557. 

*  Thomson  r.  Davenport,  9  Barn.  & 
C.  78.  In  this  leading  case  Lord  Ten- 
ter den  said:  "I  take  it  to  be  a  gen- 
eral rule  that  if  a  person  sells  gooda 
(supposing  at  the  time  of  the  contract 
he  is  dealing  with  a  princip.al),  but 
afterwards  discovers  tliat  the  person 
with  whom  he  has  been  dealing  is  not 
the  principal  in  the  transaction,  but 
agent  for  a  third  person,  though  he 
may  in  the  mean  time  have  debited 
the  agent  with  it,  he  may  afterwards 
recover  the  amount  from  the  real 
principal,  subject,  however,  to  this 
qualification:  that  the  state  of  the  ac- 
count between  the  principal  and  the 
agent  is  not  altered  to  the  prejudice  of 
the  principal.  On  the  other  hand,  if, 
at  the  time  of  the  sale,  the  seller  knows 
not  only  that  the  person  who  is  nom- 
inally dealing  with  him  is  not  princi- 
pal, but  agent,  and  aUo  knows  who  the 
principal  really  is,  and  notwithstand- 
ing all  that  knowledge,  chooses  to  make 
the  agent  his  debtor,  dealing  with  him, 
and  him  alone,  then,  according  to  the 
cases  of  Addison  v.  Gandasequi,  and 
Patterson  v.  Gandasequi,  the  seller  can- 
not afterwards,  on  the  failure  of  the 
agent,  turn  round  and  charge  the  prin- 


174 


175       DUTIES   AND   LIABILITIES   TO   THIRD    PERSONS.      §  107 


trade  that  a  person  purchasing  for  an  undisclosed  prin- 
cipal is  i^ersonally  liable  is  admissible.*  But  a  usage  to 
exonerate  an  agent  signing  a  contract  in  l»is  own  name 
from  liability  is  inadmissible." 


cipal,  having  onco  made  his  election  at 
tlio  time  hi)  hail  the  power  of  choosing 
hetweea  the  one  and  the  other.  The 
present  is  a  middle  case.  At  the  time 
of  the  dealing  for  the  goods  the  j  lain- 
tiffi  were  informed  that  McKune,  who 
caiuo  to  tliem  to  buy  the  goods,  was 
dealing  for  another, — tliat  is,  that  he 
wnj  an  agent, — but  they  were  not  in- 
formed who  the  principal  was.  They 
had  not,  therefore,  at  tiiat  time  the 
means  of  malting  their  election.  It  is 
true  that  they  might,  perhaps,  have 
obtained  those  means  if  they  had  made 
further  inquiry;  but  they  mad  no  fur- 
ther inquiry.  Not  knowing  who  the 
principr.l  really  was,  they  had  not  the 
pov/cr  at  that  instant  of  making  their 
election.  That  being  so,  it  seems  to 
mo  that  this  middle  case  falls,  in  sub- 
stance and  effect,  jwithin  the  first  propo- 
sition which  I  have  mentioned,  —  the 
case  of  a  person  not  known  to  be  an 
agent;  and  not  within  the  second, 
where  the  buyer  is  not  merely  known 
to  bo  agent,  but  the  name  of  his  prin- 
cipal is  also  known."  Mr.  Justice  Bay- 
ley  added:  ' '  Where  a  purchase  is  made 
by  an  agent,  the  agent  does  not  of  ne- 
cessity so  contract  as  to  make  himself 
fersonally  liable;  but  he  may  do  so. 
f  ho  does  make  himself  personally 
liable,  it  does  not  follow  that  the  prin- 
cipal may  not  bo  liable  also,  subject  to 
this  qualification;  that  the  principal 
shall  not  be  prejudiced  by  being  made 
personally  liable  if  the  justice  of  the 
case  is  that  he  should  not  be  person- 
ally liable.  If  the  plaintiff  has  paid 
the  agent,  or  if  the  state  of  accounts 
between  the  agent  here  and  the  prin- 
cipal would  make  it  unjust  tliat  the 
seller  should  call  on  the  principal,  the 
fact  of  payment  or  such  a  state  of  ac- 
counts would  be  an  answer  to  the 
action  brought  by  the  seller  where  he 
had  looked  to  the  responsibility  of  the 
agent.  But  the  seller  who  knows  who 
the  principal  is,  and  instead  of  debit- 
ing the  principal  debits  the  agent,  is 
considered,  according  to  the  author- 
ities which  have  been  referred  to,  as 


consenting  to  look  to  the  agent  only, 
end  i)  thereby  prechuled  fror.i  looking 
to  tho  principal.  But  there  .-.ro  cases 
which  establish  thij  po.Jlion,  that,  al- 
tliough  1.0  d'jbits  t!:e  agent  who  has 
contracted  in  eucIi  a  way  as  to  mal:e 
himself  personally  Lable,  yet,  unlets 
t];o  seller  iloes  Eoniclhinj  to  exonerate 
tho  principal,  and  to  say  that  l:o  will 
look  to  tlie  agent  only,  ho  i  >  r.t  liberty 
to  look  to  the  principal  v.  hen  that  prin- 
cipal is  discovered.  In  the  present 
case  tho  seller  knew  thr.t  tlicre  was  a 
principal;  but  there  is  no  authority  to 
show  that  mere  knowledge  that  there 
is  a  principal  de;;troy3  tho  right  of  the 
seller  to  look  to  tliat  princ'pal  as  soon 
as  ho  knows  vAm  tliat  princii)al  is,  pro- 
vided ho  did  not  know  wh.o  he  was  at 
the  time  when  tho  purchase  was  origi- 
nally made.  It  is  said  that  the  seller 
ought  to  havo  asked  the  name  of  t!;o 
principal,  and  charged  him  with  the 
price  of  tho  goods.  By  omittiu;,'  to  do 
so,  ho  might  have  lost  his  right  to 
claim  payment  from  the  principal,  had 
the  latter  paid  the  agent,  or  had  tl:o 
state  of  the  accounts  between  tho  prin- 
cipal and  the  agent  been  such  as  to 
make  it  unjust  that  the  former  shoul.l 
ho  called  upon  to  make  the  payment. 
But  in  a  case  circumstanceil  as  this 
case  h,  where  it  does  not  appear  but 
that  the  man  who  has  had  the  goods 
has  not  paid  for  them,  what  is  tho 
justice  of  tho  case?  That  he  should 
pay  for  them  to  tlie  seller,  or  to  the 
solvent  agent,  or  to  tho  estate  of  the 
insolvent  agent  who  has  made  no  ))ay- 
mcnt  in  respect  of  these  goods.  Tho 
justice  of  the  case  is,  as  it  seems  to 
me,  all  on  one  side;  namely,  that  the 
seller  shall  bo  paid,  and  that  the  buyer 
(tho  principal)  shall  be  the  person  to 

Eay  him,  provided  ho  has  not  paid  any- 
ody  else. " 

»  Humfrey  v.  Dale,  7  El.  &  B.  2CC; 
Fleet  V.  Murton,  L.  R.  7  Q.  B.  liiG; 
Hutchinson  v.  Tatham,  L.  R.  8  Com. 
P.  482. 

■••  Mageo  V.  Atkinson,  2  Mces.  &  W. 
440;  Trueman  v.  Loder,  11  Ad.  &  E.  689. 


§308 


PRINCIPAL  AND   AGENT. 


176 


Illustrations. — Ono  whose  namo  appears  on  a  store  sign  in 
the  namo  of  a  firm,  in  buying  goods,  does  not  disclose  the  fact 
that  ho  is  only  an  agent,  5>»^d  die  seller  supposes  him  to  be  a  part- 
ner. Held,  that  he  is  liable  for  the  price  of  the  goods:  Barilctt  v. 
Raymond,  lo9  Mass.  275.  In  an  action  by  li.  against  D.  for 
the  keeping  of  a  horse,  which  was  defended  on  the  ground  that 
kho  horse  belonged  to  T.,  who  was  to  pay  for  his  keeping,  the 
judge  instructed  the  jury  that  if  R.'s  servant,  with  whom  the 
hoisr  was  originally  left,  "  understood  that  the  horse  was  there 
for  T.  as  T.'s  horse,  and  at  his  charge,  and  that  T.  was  to  pay 
for  the  keeping,  R.  could  not  recover";  and  declined  to  instruct 
them  that  '"if  D.,  by  himself  or  his  agent,  left  the  horse  at  R.'s 
ctable,  R.  could  recover  unless  D.  notified  him  to  look  to  T.  for 
pay,  and  R.  agreed  to  look  to  T.  for  pay."  Held,  that  R.  had 
no  ground  of  exception:  Handall  v.  Donne,  9  Gray,  408.  An 
authorized  agent  makes  a  promissory  note  in  form,  "  I  promiso 
to  pay,"  etc.,  and  signs  as  agent  without  mentioning  his  prin- 
cipal. Held,  ho  is  liable  as  maker  of  the  note>  notwithstanding 
the  fact  that  the  payee  knew  ho  was  acting  as  such  agent  at  the 
time:  Collins  v.  Ins.  Co.,  17  Ohio  St.  215;  93  Am.  Dec.  G12. 
A  man  called  upon  one  of  several  partners  to  purchase  hay,  say- 
ing that  ho  v/as  purchasing  as  agent  for  another.  The  partner 
told  him  he  was  not  ready  to  sell  or  contract  hay  at  that  time; 
that  it  was  not  all  cut.  The  agent  left,  saying  that  he  would 
call  again.  lie  called  again,  four  weeks  later,  when  the  first- 
mentioned  partner  was  absent,  and  purchased  the  hay  from  an- 
other partner  without  disclosing  his  agency.  Held,  that  he  was 
personally  liable,  and  that  his  former  conversation  with  the  first 
partner,  being  no  part  of  the  negotiation,  was  not  notice  to  the 
firm:  Baldwin  v.  Leonard,  39  Vt.  2G0;  94  Am.  Dec. 


324. 


§  108.    Agent  may  Bind  Himself  Personally. — But  an 

agent  may  bind  himself  personally;  as,  by  an  express 
warranty  that  a  note  of  his  principal  is  genuine,^  or  by  a 
failure  to  disclose  that  he  is  acting  as  an  agent.'^     "  There 


>  Wilder  v.  Cowles,  100  Mass.  487. 

'Farrell  v.  Campbell,  3  Ben.  8; 
Welch  V.  Goodwin,  123  Mass.  71;  25 
Am.  Rep.  24;  Bickford  v.  Ban'.j,  42 
111.  238;  89  Am.  Dec.  430.  In  Holt 
V.  Ross,  C4  N.  i.  472,  13  Am. 
Rep.  015,  an  express  company  re- 
ceived a  draft  for  collection,  drawn 
upon  H.,  and  presented  and  collected 
it  without  disclosing  to  ll.  that  it  was 
acting  as  agent.  The  payee's  indorse- 
ment had  lieen  forged,  and  H.  was 


afterwards  compelled  to  pay  the 
amount  to  the  payee.  It  wa3  held 
that  H.  was  entitled  to  recover  what 
ho  had  paid  from  the  express  com- 
pany, because  it  had  not  disclosed 
ita  agency.  "The  express  company,  " 
said  Earl,  C,  "when  it  presented  the 
draft  to  the  plaintiffs  tor  payment, 
and  received  payui-at,  did  not  dis- 
close its  agency;  therefore  it  ia  liable, 
as  if  actually  principal  in  tho  transac- 
tion.   It  was  so   decided   in   Canal 


176 


177        DUT1E3   AND   LIABILITIES  TO   THIRD   PERSONS.      §  108 


pay  the 
vas  held 
her  what 


is  ono  rule,"  says  Shaw,  C.  J.,  "  well  established  by  the 
authorities,  and  defined  with  a  good  deal  of  certainty.  It 
is  this,  that  although  an  agent  is  duly  authorized,  and 
although  ho  might  avoid  personal  liability  by  acting  in 
the  name  and  behalf  of  his  principal,  still  if  by  the  terms 
of  his  contract  ho  binds  himself  personally,  and  engages 
expressly  in  his  own  name  to  pay  or  perform  other  obli- 
gations, ho  is  responsible,  althouglj  he  describe  himself 
as  agent."*  The  rule  is  well  stated  b}  Bramwell,  J.,  in  a 
late  English  case:^  "  A  person  who  is  acting  for  another, 
and  known  by  him  with  whom  ho  deals  to  bo  so  acting, 
may  and  will  bo  personally  liable  if  ho  contracts  as  a  prin- 
cipal, and  that  whether  ho  contracts  by  word  of  mouth  or 
in  writing.  The  difference  is,  that  if  the  contract  is  by 
word  of  mouth,  it  is  not  possible  to  say,  from  the  agent 
using  tho  words  'I'  and  *  me,'  that  he  meant  to  bind 
himself  personally;  whereas  if  tho  contract  is  in  writing, 
signed  in  his  own  name,  and  speaking  of  himself  as  con- 
tracting, the  natural  meaning  of  tho  words  is,  that  ho  binds 
himself  personally,  and  accordingly  ho  is  taken  to  do  so. 
It  is  well  settled  that  an  agent  is  responsible,  though 


Bank  v.  Bank  of  Albany,  1  Hill,  287. 
It  was  not  sufficient  that  tho  dufeml- 
a:it  acted  aa  agent;  to  shield  itself  from 
liability,  it  should  have  diiclosed  its 
a^'oiicy.  Such  is  the  rule  as  to  all 
agents.  To  shield  themselves  from 
liaViility  for  their  acts,  they  must  give 
the  namcj  of  their  principals.  Such 
ia  the  rule  i:i  reference  to  the  transfer 
of  negotiable  paper.  If  the  transferrer 
bo  only  an  agent,  if  he  did  not  at  the 
time  disclose  the  name  of  his  princi- 
pal, and  tho  bdl  or  note  proves  to  be 
a  forgery,  he  is  personally  liable  for 
the  consideration  received:  Gurney 
V.  Womcrbley,  4  El.  &  B.  133;  Morri- 
son V.  Currie,  4  Duer,  79;  2  Parsons 
on  Notes,  Gcc.  .^8.  It  matters  not  that 
t'.ic  general  business  of  the  express 
company  was  to  act  as  agent  for 
others.  It  could  have  owned  this 
draft,  and  have  collected  it  as  princi- 
pal. Knowledge  in  plaintiffs  that  de- 
fendant might  have  acted  as  agent 
Vol.  l.-r 


was  not  enough;  and  it  was  not  the 
duty  of  the  plaintiffs  to  inquire,  bcrore 
paying,  whether  the  defendant  was 
acting  as  principal  or  age:it.  It  wasj 
the  duty  of  defendant,  if  it  desired  to 
bo  protected  as  agent,  to  have  given 
notice  of  its  agency." 

•  Simouds  v.  Heard,  23  Piclc.  123; 
34  Am.  Dec.  41 ;  Barker  v.  ^leclianics' 
Ins.  Co.,  3  Wend.  94;  Collins  v.  Butts, 
10  Wend.  399;  Chandler  v.  Coo,  54 
N.  H.  StJl;  Mdls  V.  Hunt,  20  Wend. 
431 ;  Towle  v.  Hatch,  43  N.  H.  'i70; 
Southai'dv.  Sturtcvant,  109  Mass.  C90. 
"The  fact  that  tho  contract  is  ia  form 
the  personal  promise  of  C  is  very 
strong,  if  not  conclusive,  evidence  that 
it  was  entered  that  he  should  be 
bound  by  it"  :  Guernsey  v.  Cook,  117 
Mass.  548;  FuUam  v.  Inliabitants,  9 
Allen,  1;  Morell  v.  Codding,  4  Allen, 
403;  Fisher  v.  Haggerty,  3G  111.  128. 

^  Williamson  v.  Barton,  31  L.  J. 
Exch.,  N.  S.,  174. 


109 


PRINCIPAL  AND   AGENT. 


178 


known  by  tho  other  party  to  bo  an  agent,  if  by  the  terms 
of  the  eontract  ho  mukos  himself  tho  contracting  party." 
80  an  agent  wlio  reeeives  freight  consigned  to  him  is 
personally  liable  for  tho  charges,  —  on  tho  broad  principle 
that  he  who  accepts  a  thing  which  ho  knows  is  subject  to 
a  duty  or  charge  impliedly  contracts  to  tako  tho  duty 
and  cliarge  on  himself.*  But  it  is  otherwise  where  his 
agency  is  known,  and  there  is  no  stipulation  in  tho  bill 
ot  lading  that  the  consignee  shall  pay  freight.' 

I.'-LUSTRATioN8. — Tho  trcasurcr  of  a  club  agreed  to  rent  from 
the  plaintiff  a  piece  of  ground  for  tho  use  of  tho  club,  and  by 
an  agreement  in  writing  bound  himself  to  pay  tho  rent.  Hrhl, 
that  ho  was  personally  liable:  McWilliams  v.  Willis,  1  Wash. 
(Va.)  190.  H.  was  working  for  F.  and  Sons  r.t  a  stipulated 
price  per  diem,  and  was  employed  by  their  clerk  and  agent  to 
continue  working  after  hours  for  extra  compensation.     JTehl, 


•  Story  oa  Agency,  sec.  274;  Boston 
etc.  R.  R.  Co.  V.  Witchor,  1  AUoii, 
497;  Falkonberg  v.  Clark,  11  R.  I. 
278. 

'•'  Boston  etc.  R.  R.  Co.  v,  Witcher, 
I  Alloa,  407.  whuro  tho  law  is  thus 
stated  by  Bigelow,  C.  J.:  "Tho  coses 
in  which  uu  agent  has  been  held  liable 
to  pay  tho  freight  of  goods  consigned 
to  him  proceed  on  tho  ground  that, 
by  tho  terms  of  bills  of  lading,  as 
usually  drawn,  especially  in  cases  of 
transportation  by  water,  tho  consignee 
is  to  pay  the  freight.  In  other  words, 
tho  carrier  undertakes  to  deliver  the 
property  to  the  consignee,  'he  pay- 
ing freight  for  the  same.'  Whoever 
accepts  delivery  under  such  a  bill  of 
lading,  contracts,  by  implication,  to 
pay  tho  freight  due  on  them;  and  if 
the  name  of  tho  agent  only  is  inserted 
in  the  bill,  without  any  designation  of 
the  character  or  capacity  as  agent  for 
another  in  which  he  receives  the  goods, 
he  is  liable  individually  for  the  freight, 
because  ho  thereby  becomes  an  origi- 
nal contractor  to  pay  therefor.  These 
cases  rest  on  the  principle  that  ho  who 
accepts  a  thing  which  he  knows  to  bo 
subject  to  a  duty  or  charge,  for  which 
he  is  expected  to  pay,  thereby  con- 
tracts by  implication  to  take  tho  duty 
or  charge  on  himself:  Cock  v.  Taylor, 
13  East,  399;  Wilson  v.   Kymer,   1 


Mau.  &  S.  157;  Dougal  r.  Kemble,  3 
Bing.  383;  Amost'.  Tcmperly,  8  Mccs. 
&  W.  708.  But  no  case  can  bo  found 
which  goes  the  length  of  holding  that 
an  agent  is  liable  for  the  freight  of 
goods  sent  to  and  received  by  him, 
when  his  agency  is  known  to  tho  car- 
rier at  tho  time  of  tho  delivery  of  tlio 
goods,  and  when  there  is  no  stipula- 
tion in  the  contract  of  transportation 
by  wnich  tho  consignee  is  to  pay  tlio 
freight.  In  such  a  case,  the  essential 
elements  of  a  contract  aro  wantini,'. 
There  is  nothing  from  which  an  intent 
on  tho  part  of  tho  shipper  or  carrier 
to  charge  the  agent,  or  an  agreement 
by  the  agent  to  pay  the  freight,  can  he 
inferred.  A  mere  naked  consignment 
to  an  agent  docs  not  make  Iiim  liabb 
for  the  freight,  where  tho  agency  is 
known,  and  there  is  no  stipulation  that 
the  consignee  shall  pay  freight.  I:i 
the  caso  at  bar,  thero  is  nothing  to 
show  that  there  was  any  way-bill  cr 
other  document  by  which  tho  defend- 
ant, as  consignee,  was  to  pay  freight 
on  the  granite  which  the  plaintiffs 
transported.  It  was  carried  uy  them 
for  a  principal  whom  they  knew,  and 
it  was  delivered  to  the  defendant  with 
a  full  knowledge  that  he  received  it 
only  as  agent,  and  without  any  implied 
agreement  that  he  would  be  personally 
Uablo  therefor." 


178 

10  terms 
;  party." 
liiiu  is 
irinciplo 
ibject  to 
ho  (lutv 
lierc  his 
tlio  bill 


•cnt  from 

I,  nnd  by 
t.     Hrhl, 

1  Wash, 
tlpulatod 

ngcnt  lo 
1.     Ilchi, 

Keml)!e,  3 

\y,  8  Mcfs. 

u  bo  found 

oldiiig  that 

freight  of 

1(1  by  him, 

to  the  car- 

/ery  of  tlio 

no  Btipula- 

isportution 

to  i>ay  tho 

10  e33cutir.l 

wantin;,'. 

1  an  intent 

or  carrier 

agreement 

;ht,  can  be 

)nsignmcnt 

him  liablj 

agency  is 

lation  that 

eight.     I'.i 

nothing  to 

ay-bill  or 

ho  ilcieml- 

ay  freight 

plaintiCs 

I  uy  them 

inew,  and 

idant  with 

•eceivcd  it 

ny  implied 

personally 


179       PUTIE9   AND  LIABILITIES  TO  THTRD   PERSONS.      §  100 

that  tho  promiso  to  pay  extra  was  an  express  undertaking 
on  tho  part  of  tho  agent;  and  that  tho  suit  wa8  properly 
brought  against  him  to  recover  it:  l'lnhcr  v.  Ifcmirrfy,  'M  '',1. 
128.  Tho  defendant,  who  was  the  agent  of  one  S.,  tho  general 
agent  of  a  eteamsliip  eompanv,  sold  to  the  plaintiff  a  papnapo 
ticket,  disclosing  tho  name  of  liis  principal.  By  its  terms  thd 
ticket  was  good  for  one  year.  It  was  further  agreed  that  if  tho 
ticket  should  bo  returned  unused  within  that  time,  tho  money 
paid  therefor  should  bo  refunded.  Before  tho  expiration  of  tlio 
year  tho  plaintiff  told  tho  defendant  that  the  ticket  could  not 
bo  used  until  a  certain  time  after  the  expiration  of  tho  year, 
and  asked  if  it  Avould  hold  good  until  then.  Tho  defendant 
said  that  it  should,  and  that  if  it  was  not  then  used  he  would 
refund  tho  money.  The  ticket  was  not  used  within  the  time, 
and  was  afterwards  returned  to  the  defendant,  who  promised 
to  refund  tho  money,  but  did  not  do  so.  Jlcldy  in  an  action  for 
money  had  and  received,  that  the  above  facts  warranted  a 
finding  that  tho  defendant  personally  promised  to  refund  tho 
money;  and  that  tho  return  of  tho  ticket  was  a  sufTicient  con- 
sideration for  such  a  promise:  Coggins  v.  Murphy,  121  Ma&s. 
1G6. 

§  109.  Notice  to  Agent  not  to  Pay  over  Money  to  Frin- 
cipal. — An  agent  who  receives  money  from  his  principal 
may  be  notified  by  tho  payor  not  to  turn  it  over;  and  if 
such  notice  is  given  before  ho  pays  it  over  ho  will  bo  per- 
sonally liable,*  On  the  other  hand,  if  before  tho  notice 
he  has  in  good  faith  paid  over  the  money  to  his  principal 
he  will  not  bo  liable.^  It  is  necessary,  however,  that  the 
payor  should  have  a  legal  right  to  recall  the  money,'  and 
that  the  state  of  accounts  between  principal  and  agent 
shall  not  in  the  mean  time  have  changed.* 


'  Buller  V.  Harrison,  1  Cowp.  506; 
Mowatt  r.  McLolan,  1  Wencl.  173; 
Hearsay  v.  Pruyn,  7  Johns.  170;  La 
Fargo  V.  Kneeland.  7  Cow.  45G;  Gar- 
land V.  Salem  Bank,  9  Mass.  408;  C 
Am.  Dec.  8C;  Duffy  v.  Buchannan,  1 
Paige,  453;  White  v.  Coleman,  127 
Mass.  34;  Elliott  v.  Swartwout,  10 
Pet.  137. 

^  Langley  v.  Warner,  1  Sand.  209; 
Mowatt  V.  McLelan,  1  Wend.  173; 
Elliott  r.  Swartwout,  10  Pet.  137;  Mc- 
Donald V.  Napier,  14  Ga.  89;  Upehurch 
r.  Norsworthy,  15  Ala.  705;  Shipherd 


V.  Underwood,  55  111  475.  But  aliter 
if  tho  money  has  been  obtained  by  the 
agent  illegally  by  compulsion  or  ex- 
tortion: Fryo  V.  Loekwood,  4  Cow. 
45G;  Elliott  v.  Swartwout,  10  Pet.  187. 
Or  Ilia  authority  to  receive  it  was  void, 
and  ho  knew  it  to  be  so:  Story  on 
Agency,  sec.  301. 

^  Bank  ot  United  States  v.  Bank  of 
Washington,  G  Pet.  8;  Mowatt  v.  Mc- 
Lelan, 1  Wend.  173;  Colvin  v.  Hoi- 
brook,  2  N.  Y.  126. 

*  Story  on  Agency,  aec.  300. 


§110 


PRINCIPAL  AND  AGENT. 


180 


§  1 10.    Liability  of  Agent  Acting  without  Authority.  — 

An  agent  acting  without  authority — as,  for  example,  mak- 
ing a  contract  as  the  agent  of  his  principal,  which  is  not 
hinding  on  his  principal  because  ho  was  not  authorized 
—  is  liable  in  damages  to  tho  person  dealing  with  him  on 
Ihu  faith  that  ho  possessed  the  authority  assumed.*  There 
j.vo  decisions  which  hold  the  agent  personally  bound  by 
t!)C  contract  which  he  makes  without  authority  in  tho 
name  of  another.^  But  the  correct  view  is,  that  tho  agent's 
liability  is  upon  the  implied  warranty  of  authority  or  a 
bpccial  action  on  the  case,*  By  any  other  rule,*  "court? 
would  often  make  contracts  for  parties  which  neither  in- 
tended nor  would  have  consented  to  make.  The  contract, 
if  binding  upon  one  i)arty,  must  bo  binding  upon  both, 


1  Baltzen  v.  Nicolay,  53  N.  Y.  4G7; 
Collonr.  Wright,  8  El.  &  15.  047;  White 
V.  Madison,  2(3  N.  Y.  117;  Jcfts  v. 
York,  4  Cush.  371;  uO  Am.  Dec.  791; 
Jolinson  r.  Smith,  21  Coini.  C27;  Noyes 
V.  Loring,  55  Me.  408;  Mc(Airily  v. 
Rogers,  21  Wis.  197;  Bartlctt  v. 
Tucker,  104  Mass.  33G;  6  Am.  Rep. 
240;  Ranclell  v.  Trinien,  18  Com.  B. 
780;  Downman  v.  Jones,  9  Jiir.  454; 
Pitman  v.  Kitner,  5  BI:ickf.  250;  33 
Am.  Dec.  409;  Silliman  ;;.  Fredericks- 
burg R.  R.  Co.,  27  Gratt.  119;  Palmer 
V.  Stephens,  1  Dcnio,  471;  Lander  v. 
Castro,  43  Cal.  497;  Ballou  r.  Talbot, 
10  Mass.  401;  8  Am.  Dec.  140;  San- 
bora  v.  Neal,  4  Minn.  120;  77  A-.n. 
Dec.  502.  But  aliter  as  to  a  public 
ag"nt:  McCurdy  r.  Roger.?,  21  Wis. 
197;  Sanborn  r.  Xeal,  .svf;/)' '.  "Inour 
opinion,  the  weight  of  authority  h  de- 
cided by  tiiafcorio  who,  without  author- 
ity, c::ccute3  an  instrument  in  the  name 
of  another,  whose  namo  he  puts  to  it, 
and  adds  his  namo  only  asagent  for  that 
other,  cannoi;  be  treated  as  a  party  to 
that  instrument  and  be  sued  upon  it, 
unless  it  be  shown  that  he  was  the  real 
principal.  .  .  .  An  action  i:i  the 
nature  of  an  action  on  tho  case  Liy 
against  defendant  for  fal.icly  assuming 
authority  to  act  as  agent ":  ShctiieM  t'. 
Laduc,  10  Minn.  388;  10  Am.  R?p.  145. 

^  Wearot'.  Gove,  44  N.  II.  190;  Graf 
ton  Bank   v. 
Underbill  v. 


Flanders,  4  N.  II.  239; 
Gibsou,  2  N.  n.  352;  t> 


Am.  Dec.  88;  Mitchell  r.  Ilazen,  4 
Conn.  495;  10  Am.  Dec.  109;  Hampton 
V.  Spcckenagle,  9  Serg.  &  R.  212;  11 
Am.  Dec.  705;  Gillaspie  z\  V/csaon,  7 
Port.  454;  31  Am.  Dec.  715;  Brown  v. 
Johnson,  12  Smedes  &  M.  398;  51  Am. 
Dec.  118;  Keener  v.  Ilarrod, '.?  ?.!d.  C3; 
50  Am.  Dec.  703.  To  this  cffecc  wero 
several  early  New  York  cases:  Duseu- 
bury  r.  Ellis,  3  Johns.  Cas.  70;  2  Am. 
Dec.  144;  White  v.  Skinner,  13  Johns. 
307;  7  Am.  Dec.  381;  Rossitcr?;.  Rossi- 
tcr,  8  Wend.  494;  24  Am.  Dec.  C2; 
Collins  V.  Allen,  12  Wend.  ?50;  27  Am. 
Dec.  130;  and  other  cases  cited  in 
White  V.  Madison,  20  N.  Y.  1 17.  But 
these  early  cases  are  now  overruled: 
See  Walker  v.  State  Bank,  9  N.  Y. 
582,  and  Brightlcy's  note  585;  Dung 
V.  Parker,  52  N.  Y.  499;  Baltzen  v. 
Nicolay,  53  N.  Y.  407. 

^  Cases  ante:  Polhill  v.  Walter,  3 
Barn.  &  Adol.  114;  Abbey  r.  Cha:o.  0 
Cush.  54;  Bush  v.  Colo,  28  N.  Y.  201; 
84  Am.  Dec.  343;  Harper  v.  Little,  2 
Grccnl.  14;  11  An-..  Dec.  25;  Stetson 
V.  Patten,  2  Green'..  358;  11  Am.  Dec. 
Ill;  Long  ?•.  CoUniru,  II  Mass.  97;  0 
Am.  Dec.  100;  Trowbrid;j;c  v.  Scudder, 
11  Cush.  87;  Draper  v.  Massachusetts 
Co.,  5  Alka,  339;  Sherman  v.  Fitch, 
93  Mass.  03;  Duncan  v.  Niles,  32  111. 
532;  83  Am.  Dec.  293;  Shctfield  v. 
Laduo,  10  Minn.  388:  10  Am.  Rep.  145. 

*  Sclden,  J.,  in  White  v.  Madison, 
26  N.  Y.  117. 


180 


181       DUTIES  AND  LIABILITIES   TO  THIRD   PERSONS.      §  110 


lority. — 

)le,  mak- 
!li  is  not 
thorized 

him  on 
'  Thero 
>und  by 
r  in  the 
3  agent's 
ity  or  a 

"court? 
ither  in- 
lontract, 
)n  both, 

Ilazen,  4 
;  Hampton 
LI.  212;   11 
V/cs3on,  7 
i;  Brown  v. 
DS;  CI  Am. 
,\\VA.  03; 
2ffocc  were 
3s:  Duscu- 
70;  2  Am. 
i;{  Johns. 
!r?;.  Rossi- 
Dec.  C2; 
50;  CT  Am. 
ciLcil  iu 
117.     But 
ovcrruLJ: 
9  N.  Y. 
8o;  Dung 
[Jaltzca  1". 

Walter,  3 
C!<a;o.  6 

'i.  Y.  2(31; 
Llitlc,  2 

);  Stctoou 

Am.  Dec. 

ass.  97;  0 
iSciulder, 

acliusotts 

V.  Fitch, 

93,  .32  111. 

cffield   V. 

Rep.  lij. 

Madison, 


and  where  burdensome  conditions  precedent  were  to  bo 
IKjrformed  by  the  party  contracting  with  the  assumed 
agent,  before  performance  could  bo  demanded  of  the  other 
party,  or  wherv'  the  agent  should  undertake  to  sell,  lease,  or 
mortga"-"  the  property  of  the  assumed  principal,  or  where 
credit  should  be  given  which  the  responsibility  of  the 
agent  would  not  justify,  great  injustice  might  result  from 
such  a  rule.  In  those  cases,  and  I  think  in  all  cases  where 
one  pretending  to  be  an  agent  has  contracted  as  such 
without  authority  from  the  principal,  the  party  contracted 
with,  on  learning  the  facts,  must  have  the  right  to  repu- 
diate the  contract,  and  to  hold  the  assumed  agent  im- 
mediately responsible  for  damages,  without  waiting  for 
the  time  when  an  action  might  be  maintained  on  the 
contract  itself;  and  the  damages  must  be  measured,  not 
by  the  coatract,  but  by  the  injury  resulting  from  the 
agcuu'rf  want  of  power.  Whenever  a  person  enters  into  a 
contract  as  agent  for  another,  he  warrants  his  own  author- 
ity, unless  very  special  circumstances  or  express  agree- 
ment relieve  him  from  that  responsibility.^  An  action 
upon  such  warranty  must  always  be  appropriate  where 
personal  liability  attaches  to  an  agent  in  consequence  of 
his  contracting  without  authority.  In  such  action  the 
plaintiff  would  be  relieved  from  the  necessity  of  showing 
performance  of  condition"  precedent,  and  from  the  delay 
which  the  terms  of  the  contract  might  require,  if  the 
remedy  were  limited  to  an  action  on  the  contract;  and  if 
special  damages  should  be  incurred  in  consequence  of  the 
agent's  failure  to  bind  his  principal,  such  as  the  costs  of 
an  unsuccessful  action  against  the  principal  to  enforce  the 
contract,  they  might  be  recovered.""    And  he  is  liable, 


'  Smout  V.  Ilbery,  10  Meea.  &  W.  9, 
10;  Pc.lhill  V.  Walter,  3  Barn.  &  Adol. 
114;  Joiikius  r.  Hutchinson,  1.3  Ad.  & 
E.,  N.  S.,  744;  Jefts  v.  York,  10  Cush. 
395;  9  N.  Y.  685;  Story  on  Agency, 
SCO.  164. 

''  Quo  who,  without  authority,  as- 
sumes to  act  as  agent  of  another,  and 
makes  cither  a  deed  or  a  uimplo  coa- 


tract in  the  uame  of  the  latter,  is  not 
personally  liable  on  the  covenants  in 
tho  deed  or  on  the  promise  in  the  sim- 
ple contract,  unless  it  contain  apt 
words  to  bind  him  personally,  and  tho 
only  remedy  against  him  is  an  action 
on  the  case  for  falsely  assuming  author- 
ity to  act  as  agent:  Duncan  v.  Niles, 
32  IlL  532;  83  Am.  Dec.  293. 


§110 


PRINCIPAL  AND  AOENT. 


182 


even  though  he  bona  fide  believed  at  the  time  that  he  had 
authority.*  This  statement,  though  found  in  many  of  the 
cases,  is  too  broad.  The  better  test,  according  to  a  late 
author,''  is,  whether  the  agent  has  stated  as  true  what  he 
did  not  know  to  be  true,  omitting  at  the  same  time  to  give 
such  information  to  the  other  contracting  party  as  would 
enable  him  equally  with  himself  to  judge  as  to  the  author- 
ity under  which  he  proposed  to  act.'  Therefore  where 
the  authority  of  the  agent  has  been  revoked  bj'  the  death 
of  his  principal,  unknown  to  both  parties,  the  agent  is  not 
liable.*  And  to  render  the  agent  liable,  the  unauthorized 
contract  must  have  been  such  a  one  as  could  have  been 
enforced  against  the  principal  had  it  been  authorized  by 
him.°  Where  he  acts  under  a  public  statute,  the  person 
with  whom  he  deals  will  be  held  to  a  knowledge  of  the 
powers  it  confers,  and  consequently  is  presumed  to  know 


'  Collen  y.  Wright,  8  El.  &  B.  647, 
and  cases  citetl  wife;  Story  on  Agency, 
eec.  2G4;  Smout  v.  Ilbery,  10  Mees.  & 
W.  1;  Jefts  V.  York,  10  Cush.  392; 
Bank  of  Hamburg  v.  Wray,  4  Strob. 
87;  51  Am.  Dec.  659;  Dale  v.  Donald- 
son Lumber  Co.,  48  Ark.  188;  3  Am. 
St.  Rep.  224. 

*  Evans  on  Agency,  303. 

'  "  One  assuming  to  act  as  agent  for 
anotbcr  without  authority  does  not 
necessarily  render  himself  liable.  It 
is  when  ho  knowingly  or  carelessly  as- 
sumes to  act  without  being  authorized, 
or  conceals  the  true  state  of  his  au- 
thority, and  falsely  leads  the  party 
with  whom  he  thus  contracts  to  repose 
in  his  authority,  that  he  may  bo  liable. 
If  he  enters  into  the  contract  in  the 
name  and  as  the  agent  of  another,  and 
does  it  honestly,  fully  disclosing  all  the 
facts  touching  the  authority  under 
which  ho  acts,  so  that  the  one  con- 
tracted with,  from  such  information  or 
otherw  ise,  is  fully  informed  of  the  au- 
thority possessed  or  claimed  by  him, 
he  is  not  liable  on  the  ground  of  deceit 
or  for  misleading  the  other  party.  It 
is  material  in  such  cases  that  the  party 
complaining  of  a  want  of  authority  in 
the  agent  should  be  ignorant  of  the 
truth  touching  the  agency.    If  he  has 


a  full  knowledge  of  the  facts,  or  if 
such  facts  as  fairly  and  fully  put  him 
upon  inquiry  for  them,  and  he  fails 
to  avail  himself  of  such  knowledge  or 
the  means  of  knowledge  reabonably 
accessible  to  him,  he  cannot  say  that 
he  was  misled,  simply  on  the  ground 
that  the  party  assumed  to  act  as  agent, 
without  authority  in  the  absence  of 
fraud  ":  Newman  v.  Sylvester,  42  Ind. 
106;  Aspinwall  v.  Torrance,  1  Lans. 
381;  Tiller  v.  Spradley,  39  Ga.  35; 
Carriger  v.  Whittington,  2G  Mo.  311; 
72  Am.  Dec.  212;  McCubbin  v.  Gra- 
ham, 4  Kan.  397;  Ogdeu  v.  Raymond, 
22  Conn.  379;  58  Am.  Dec.  429. 

♦  Smout  V.  Ilbery,  10  Meerj.  &  W.  1. 

*  Baltzen  v.  Nicolay,  53  N.  Y.  407; 
Dung  V.  Parker,  52  N.  Y.  494.  A, 
falsely  representing  himself  as  author- 
ized by  B,  made  a  parol  contract  for 
the  leasing  of  B's  store  to  C  for  tlie 
term  of  two  years.  C  thereupon  in- 
curred expense  in  procuring  fixtures 
for  the  store.  Held,  that  the  contract, 
being  void  by  the  statute  of  frauds,  was 
not  enforceable  against  B  if  A  had  the 
authority,  and  A  was  not  liable  iu 
dr* mages:  Dung  r.  Parker,  52  N.  Y. 
494;  Bozza  v.  Kowe,  30  111.  198;  83 
Am.  Dec.  184;  McKubin  v.  Clarksou, 
5  Minn.  247. 


182 


183       DUTIES   AND   LIABILITIES   TO  THIRD   PERSONS.      §  110 


that  the  agent  was  exceeding  his  authority.^  And  if  the 
principal  is  liable,  notwithstanding  the  agent's  want  of 
authority,  no  action  will  lie  against  the  agent."  Thus,  for 
example,  if  the  principal  afterwards  ratify  his  unauthor- 
ized act.  "  If  his  employers  ratify  his  unauthorized  act 
in  signing  their  name,  the  signature  becomes  theirs,  and 
the  note  becomes  theirs  when  executed,  for  the  ratification 
relates  back  to  the  execution.  The  plaintiffs  have  got 
what  they  bargained  for,  and  have  no  longer  any  cause 
of  action  for  damages  against  the  agent.  This  would  not 
hold  good  of  course  in  cases  in  which  such  suit  for  dam- 
ages had  been  brought  before  ratification,  nor  in  any  cases 
in  which  injury  had  resulted  to  plaintiffs  from  defendant's 
act  before  ratification,  or  in  which  the  effect  of  making  the 
ratification  thus  relate  back  would  be  to  put  the  plaintiffs 
in  a  worse  position  than  they  would  otherwise  have  been 
in  in  consequence  of  such  unauthorized  act  of  defendant.'" 
So  one  who  induces  another  to  exceed  his  authority  can- 
not hold  him  personally  liable  on  the  anauthorized  con- 
tract.* 


'  McCnrdy  v.  Rogers,  21  Wis.  197; 
91  Am.  Dec.  468. 

'^  Landon  v.  Proctor,  39  Vt.  78.  An 
agent  of  a  corporatiou  "ivas  authorized 
to  sign  "all  notes  and  business  paper 
of  the  corporation."  Ho  gave  accora- 
inoilation  notes  for  other  purposes  in 
the  corporation's  name,  which  passed 
into  the  hands  of  a  lomijhh'  hoMer  for 
value.  Held,  notwithstanding  his 
want  of  authority,  the  corporation 
was  liable  on  the  notes,  and  the  agent 
could  not  be  sued:  Bird  r.  Daggett,  97 
Mas3.  494.  "The  plaintiff,"  said  the 
court,  "  as  a  bona  fide  bolder  for  value  of 
note.'d  taken  before  maturity,  can  re- 
cover against  the  corporation,  notwith- 
standing any  want  of  authority  of  tho 
agent  to  execute  these  particular  notes 
for  the  purposes  for  which  they  were 
given.  For  the  defendant  was  ex- 
pressly authorized  'to  sign  all  notes 
and  business  paper  of  the  company.' 
Tlie  plaintiff,  therefore,  in  valid  notes 
agaiubt  tho  corporation,  has  all  that  he 


expected  to  obtiiin,  and  all  that  the 
defendant  undertook  t^  give.  V^hat 
injury,  then,  has  bo  sustained?  The 
notes  cannot  be  at  once  binding  upon 
the  corporation  tmd  tho  agent.  The 
representation  of  tho  agent's  authority 
to  give  them  for  the  company,  wliethcr 
made  expressly  or  merely  implied  from 
the  moile  of  signature,  was  couse- 
quently  immaterial.  The  tort  of  an 
agent  who  has  falsely  assumed  au- 
thority which  ho  did  not  have  '  is  a 
proper  subject  for  speci;d  action,  in 
whi.h  damages  will  be  recovered  ac- 
cording to  the  injurj'  sustained': 
Bullou  v.  Tall)ot,  10  Masj.  401;  8  Am. 
Dec.  140.  The  measure  of  damages  is 
not  necessarily  the  precise  amount  of 
the  notes.  Where,  as  in  the  jtresent 
case,  the  plaintiff  has  snfi'ered  n(.-thing, 
he  can  recover  nothing." 

^  Sheffield  V.  Laduc,  10  Minn.  .S8S; 
10  Am.  Rep.  145. 

*  Aspinwall  v.  Torrance,  1  Lans. 
.381. 


§111 


PRINCIPAL  AND   AGENT. 


184 


§  111.    Agent  not  Liable  Personally  for  Torts. — An 

agent  who,  in  tho  discharge  of  his  duties,  is  guilty  of  an 
act  of  negligent  omission,  whereby  another  person  is  in- 
jured, is  not  personally  responsible,  "The  maxim  respon- 
deat superior  prevails;  the  principal  is  liable  for  tho 
injury,  and  the  agent  is  then  liable  to  the  principal  for 
damages  which  the  latter  may  have  sustained."*  An 
agent  or  servant  who,  acting  by  his  master's  direction, 
and  without  knowing  of  any  wrong,  or  being  guilty  of 
gross  negligence  in  not  knowing  of  it,  assists  the  master 
in  disposing  of  property  which  the  latter  has  no  right  to 
dispose  of,  is  not  thereby  rendered  liable  for  a  conversion 
of  tho  property."  And  an  agent  is  not  personally  liable 
for  the  negligence  or  misfeasance  of  those  whom  he  has 
retained  for  the  service  of  his  principal  by  his  consent  or 
authority;  unless,  indeed,  the  particular  acts  are  done  by 
the  orders  or  directions  of  the  agent.^ 


til 
L 


ti 

hi 

ac 

of 

hi 

liJ 


Illustrations.  — An  agent  of  a  factor  fails  to  transmit  the 
orders  of  a  third  person  to  his  principal,  as  to  the  sale  of  cot- 
ton consigne'i  by  such  third  person  to  his  principal.  Ho  is  not 
liable  personally  to  the  third  person:  Reid  v.  Ilumber,  49  Ga. 
207.  An  agent  having  tho  care  of  real  estate  for  a  non-resident 
owner  neglected  to  keep  the  floor  of  one  of  his  buildings  in  re- 
pair, whereby  a  person  rightly  there  was  injured.     Held,  that 


^  Wharton  on  Agency,  sec.  535. 
"If  third  persona  are  injured  by  the 
negl  ;ct  of  a  known  agent,  the  rule  is 
respondent  mipcrior,  and  generally  the 
action  must  bo  brouglit  against  the 
pri.icipal:  Denny  v.  Manhattan  Co., 
2  Deiiio,  IIG;  5  Dcnio,  115.  The  rule, 
it  is  believed,  is  universal  that  a 
known  agent  is  not  responsible  to 
third  persons  for  acts  done  by  him  in 
pursuance  of  an  authority  rightfully 
conferred  on  him.  The  very  notion 
of  an  agency  jjroceeds  upon  the  sup- 
position tliat  what  a  man  may  In.w- 
lully  do  by  a  substitute,  when  per- 
formed, is  done  by  himself,  and  tho 
individuality  of  tho  agent,  so  far,  is 
merged  in  that  of   the  principal.     It 


is  also  settled,  if  anything  can  be  es- 
tablished as  authority,  that  an  agent 
is  not  liable  to  third  persons  for  an 
omission  or  neglect  of  duty  in  tho 
matter  of  his  agency,  but  that  tho 
principal  is  alone  rnsponsiblo":  Colvin 
V.  Holbrook,  2  N.  Y.  129;  Hall  v. 
Lauderdale,  4G  N.  Y.  70;  Henshaw  v. 
Noble,  7  Ohio  St.  231;  Montgomery 
Bank  v.  Albany  Bank,  7  N.  Y.  459; 
Brown  Paper  Co.  v.  Dean,  123  Mass. 
2(57;  Dayton  v.  Pease,  4  Ohio  St.  80; 
Nussbaum  v.  Heilbron,  G3  Ga.  312; 
Brown  v.  Lent,  20  Vt.  533;  Labadie 
V.  Hawley,  61  Tex.  177;  48  Am.  Rep. 
278. 

»  Leuthold  t-.  Fairchild,  35  Minn.  99. 

'  Story  on  Agency,  sec.  313. 


185       DUTIES   AND   LIABILITIES   TO  THIRD   PERSONS.       §  112 

the  agent  was  not  personally  liable:   Delaney  v.  Rochereau,  34 
La.  Ann.  1123;  44  Am.  Rep.  456.' 


§  112.  Exceptions. — But  to  this  rule  there  are  excep- 
tions: 1.  Where  the  agent  is  not  merely  acting  as  the 
hand  of  the  principal,  but  is  invested  with  authority  to 
act  in  the  matter  according  to  his  discretion.^  The  sale 
of  stolen  property  of  another  by  an  agent  for  the  benefit  of 
his  principal  ovidences  conversion;  and  to  make  the  agent 
liable,  it  is  not  necessary  that  ho  use  the  proceeds  for  his 
own  benefit.'     2.  Where  the  agent's  act  is  one  of  negli- 


'  "  The  theory," said  the  court,  "on 
which  tho  suit  rests  is,  that  agents 
aro  liable  to  third  parties  injured  for 
Ihjir    non- feasance.      In    support    of 
that  doctrine,  both  tho  common  and 
tlic  civil  law  are  invoked.     At  com- 
mou  l:ivv,  an  agent  is  personally  i^ 
spou'^iblo  to  third  parties  for  doing 
something   which    he    ought    not    to 
have  done,    but  not    for    not    doing 
something   which   he   ought  to  have 
done,   the    agent    in  the  latter  case 
being    liable    to  his    principal    only. 
For  non-feasance,  or  mere  neglect  in 
the  performance  of  duty,  the  respon- 
sibility therefor  must  arise  from  some 
express  or  implied  obligation  between 
pirticular  parties  standing  in  privity 
of  luw  or  contract  with  each  other. 
No  man  is  bound  to  answer  for  such 
violation  of  duty  or  obligation  except 
to  those    to  whom    he   has    become 
directly  bound  or  amenable  for  his 
conduct.     Every  one,    whether  he  is 
principal  or  agent,  is  responsible  di- 
rectly to  persons  injured  by  his  own 
ne£'lir;euro    in    fulfilling    obligations 
re3tiiig  upon  him  in  his    individual 
character,  and  which  the  law  imposes 
upon  him,    independent  of  contract. 
No  man  increases  or  diminishes  his 
obligations  to  strangers  by  becoming 
an  agent.     If,    in   tho  course   of  his 
agency,  he  comes  in  contact  with  the 
jicrson  or  property  of  a  stranger,  ho  is 
liable  for  any  injury  he  may  do  to 
either,  by  his  negligence,  in  respect 
to  duties  imposed  by  law  upon  him 
in  common  with  all  other  men.     An 
agent  h  not  responsible  to  third  per- 
sons for  any  negligence  in  the  per- 


formance of  duties  devolving  upon 
him  purely  from  his  agency,  since  ho 
cannot,  as  agent,  be  subject  to  any 
obligations  toward  third  persons  other 
than  those  of  his  principal.  Those 
duties  are  not  imposed  upon  him  by 
law.  He  has  agreed  with  no  one, 
except  his  princii)al,  to  perform  them. 
In  failing  to  do  so,  he  wrongs  no  one 
but  his  principal,  who  alone  can  hold 
him  responsible.  The  whole  doctrine 
on  that  subject  culminates  in  the 
proposition,  that  wherever  tho  agent's 
negligence,  consisting  in  his  own 
wrong-doing,  therefore  in  an  act,  di- 
rectly injures  a  stranger,  then  such 
stranger  can  recover  from  the  agent 
damages  for  the  injury:  Story  on 
Agency,  308,  309;  Story  on  Bailments, 
1(55;  Shearman  and  Rediield  on  Negli- 
gence, 111,  112,  ed.  1874;  Kvans  on 
Agency,  notes  by  Ewell,  437,  438; 
Wharton  on  Negligence,  78,  83,  535, 
780.  It  is  an  error  to  su[iposo  that 
the  principle  of  tho  civil  hiw  on  the 
liability  of  agents  to  third  persons  is 
dififerent  from  those  of  the  common 
law.     It  is  certainly  not  broader." 

^  Harriman  v.  Stowe,  57  Mo.  93; 
Bliss  V.  Schaub,  48  Barb.  339;  Blake 
V.  Ferris,  5  N.  Y.  48;  Ildliard  v.  Rich- 
ardson, 3  Gray,  349;  C3  Am.  Dec.  743; 
Milligan  v.  Wedge,  4  Ad.  &  E.  737. 
Bell  V.  Josslyn,  3  Gray,  :J09,  63 
Am.  Dec.  741,  cited  under  tlie  next 
exception,  is  considered  by  Mr. 
Wharton  (Wharton  on  Agency,  sec. 
537)  to  properly  fall  under  this  excep- 
tion. 

*  Koch  V.  Branch,  44  Mo.  542;  100 
Am.  Dec.  324. 


§112 


PRINCIPAL  AND   AGENT. 


186 


gent  commission;  a  misfeasance  as  distinguished  from  a 
non-feasance.  In  the  words  of  Lord  Holt  in  a  much 
quoted  case:^  "For  a  neglect  in  him,  they  can  have  no 
remedy  against  him,  for  they  must  consider  him  only  as 
a  servant,  and  then  his  neglect  is  only  chargeable  on  his 
master  or  principal;  for  a  servant  or  deputy  quatcnits 
such  cannot  be  charged  for  neglect,  but  the  principal 
only  shall  be  charged  for  it;  but  for  a  misfeasance  an 
action  will  lie  against  a  servant  or  deputy,  but  not  quate- 
nus  a  deputy  or  servant,  but  as  a  wrong-doer.'"^  3.  Where 
the  agent  acts  willfully  or  maliciously,'  even  if  he  be  a  vol- 
untary and  gratuitous  agent.*  4.  Where  the  agent  acts 
fraudulently."  Thus  an  agent  is  personally  liable  for  de- 
ceit and  false  representations  made  by  him."  One  falsely 
and  fraudulently  asserting  that  he  is  authorized  to  act  as 
the  agent  of  another,  or  knowingly  and  fraudulently  ex- 
ceeding his  authority,  is  liable  to  those  dealing  with  him 
on  the  faith  of  his  representations  for  the  damages  which 
they  may  suffer  thereby.'  The  remedy  is  not  against 
the  professing  agent  on  the  contract,  but  is  by  an  action 
against  him  for  the  fraud  and  deceit.*  If  a  party,  falsely 
assuming  the  character  of  agent,  sells  property  and  re- 
ceives the  consideration,  the  purchaser  may  recover  back 


'  Lane  v.  Cotton,  12  Mod.  488. 

-  Horner  v.  Lawrence,  37  N.  J.  L. 
4G;  Campbell  v.  Portland  Sugar  Co., 
G-2  Me.  552;  IG  Am.  Kep.  503;  Nowell 
V.  Wright,  3  Allen,  IGG;  Gilmore  r. 
Driscoll,  122  Mass.  208;  23  Am.  Rep. 
312;  Parsons  v.  Winchell,  5  Cush. 
592;  L2  Am.  Dec.  745;  Osborne  v. 
Morgan,  1J]0  Mass.  102;  39  Am.  Rep. 
437;  overruling  Albro  v.  Jaquith,  4 
Gray,  99. 

"Wharton  on  Agency,  sec.  541; 
Wright  V.  Wilcox,  19  Wend.  343; 
Vauderbilt  v.  Richmond  Turnpike  Co., 
2  N.  Y.  478,  480;  51  Am.  Dec.  315; 
Isaacs  V.  Third  Av.  R.  R.  Co.,  47  N.  Y. 
)22;  7  Am.  Rep.  418;  Horner  v.  Law- 
rence, 37  N.  J.  L.  4G;  Johnson  i'.  Bar- 
ber, 5  Gilm.  425;  50  Am.  Dec.  416. 

*  Hammond  v,  Hussey,  51  N.  H.  40; 
12  Am.  Rep.  41. 


»Spraight3  t'.  Hawley,  39  N.  Y. 
441;  100  Am.  Dec.  452;  Reed  v.  Peter- 
son, 91  111.  297. 

"Wharton  on  Agency,  sec.  541; 
Hedden  v.  Griflin,  130  Mass.  229;  49 
Am.  Rep.  25. 

'  Godwin  v.  Francis,  L.  R.  5  Com. 
P.  295;  Jcfts  V.  York,  4  Cush.  371; 
50  Am.  Dec.  791;  10  Cush.  .392;  El- 
more i'.  Brooks,  G  Heisk.  45;  Richard- 
son V.  Kimball,  28  Me.  4G3;  Wright 
V.  Eaton,  7  Wio.  595. 

*  Abbey  v.  Chase,  G  Cush.  54;  Jefta 
V.  York,  10  Cush.  392;  Noyes  v.  Lor- 
ing,  55  Me.  408;  McCurdy  r.  Rogers, 
21  Wis.  197;  91  Am.  Dec.  408;  Bart- 
Ictt  V.  Tucker,  104  Mass.  336;  6  Am. 
Rep.  240;  contra.  Palmer  r.  Stephens, 
1  Denio,  471;  Grafton  Bank  v.  Flan- 
ders, 4  N.  H.  239. 


til 

dl 

ce 


187       DUTIES  AND  LIABILITIES   TO  THIRD  PERSONS.      §  112 


the  money.*  5.  An  agent  doing  an  illegal  act  cannot 
defend  himself  by  showing  that  what  he  did  was  in  ac- 
cordance with  the  orders  of  his  principal,  or  solely  for  his 
principal.  He  has  no  right  to  obey  illegal  orders,  or  to 
do  illegal  acts  for  others.^ 

Illustrations.  —  An  agent  having  the  general  management 
of  a  liouse  owned  by  another  negligently  directed  water  to  be 
let  into  the  house,  the  pipes  of  which  were  out  of  repair, 
whereby  damage  ensued  to  the  tenant.  Held,  tbat  he  was 
personally  liable:  Bell  v.  Josselyn,  3  Gray,  309;  G3  Am.  Dec. 
Hl.^  A  carpenter  while  at  work  in  a  wire  factory  of  a  company 
putting  up  partitions  was  injured  by  a  tackle-block  and  cbain 
falling  on  him,  which  had  been  placed  tbere  by  the  superin- 
tendent of  tbe  factory,  and  not  properly  secured  and  protected. 
Held,  that  the  superintendent  was  liable  in  damages:  Osborne 
V.  Morgan,  130  Mass.  102;  89  Am.  Rep.  437.*    An  agent  fraud- 


•  Long  V.  Uickingbottoin,  28  Miss. 
772;  CI  Am.  Dec.  118. 

'^  Thorp  V.  Burling,  11  Johns.  285; 
Richardson  r.  Kimball,  28  Me.  4(53; 
lirowa  V.  Howard,  14  Johns.  120; 
Edgerly  v.  Whalan,  lOG  Mass.  307; 
McPartland  v.  Read,  11  Allen,  231; 
Buraap  i:  Marsh,  13  111.  535;  John- 
son v.  Barber,  5  Gilm.  425;  50  Am. 
Dec.  410;  Josselyn  v.  McAllister,  22 
Mich.  300;  Gaines  v.  Brigga,  9  Ark. 
40;  Elmore  v.  Brooks,  G  Heisk.  45; 
Perminter  v.  Kelly,  18  Ala.  716;  54 
Am.  Dec.  177;  Crane  v.  Onderdonk, 
C7  Barb.  47;  Kimball  v.  Bdlings,  55 
Me.  147;  1)2  Am.  Dec.  581;  Baker  v. 
Wasson,  53  Tex.  157;  Lee  v.  Mathews, 
10  Ala.  682;  44  Am.  Dec.  498. 

^  "Assuming  that  he  was  a  mere 
agent, "  said  the  court,  ' '  yet  the  in- 
jury for  which  this  action  is  brought 
was  not  caused  by  his  non-feasance, 
but  by  his  misfeasance.  Non-feasance 
is  the  omission  of  an  act  which  a  per- 
son ought  to  do;  misfeasance  is  the  im- 
proper doing  of  an  act  which  a  person 
might  lawfully  do;  and  malfeasance  is 
the  doing  of  an  act  which  a  person 
ought  not  to  do  at  all:  2  Inst.  C'ler. 
107;  2  Dane  Abr.  482;  1  Chittv's 
Pleadings,  6th  Am.  ed.,  151;  1  Chitty's 
Guueral  Practice,  9.  The  defendant's 
omission  to  examine  the  state  of  the 
pipes  in  the  house  before  causing  the 
water  to  be  let  on  was  a  non-feasance. 
But  if  he  had  not  caused  the  water  to 


be  let  on,  tbat  non-feasance  would  not 
have  injured  the  plaintitf.  It  be  had 
examined  the  pipes  and  left  thcni  in  a 
proper  condition,  and  then  caused  the 
letting  on  of  the  water,  there  would 
have  been  neither  non-feasanee  nor  mis- 
feasance. As  the  facts  are,  the  non- 
feasance caused  the  act  done  to  be  a 
misfeasance.  But  from  which  did  the 
plaintiff  suffer  ?  Clearly  from  the  act 
done,  which  was  no  less  a  misfeasance 
by  reason  of  its  being  preceded  by  a 
non-feasance."  In  a  New  York  case 
this  doctrine  was  applied  to  a  case 
where  an  agent  intrusted  with  the 
control  of  stock  for  a  specific  purpose 
misapplied  it:  Crane  v.  Oaderdoiik,  67 
Barb.  47. 

*  "  It  is  often  said  in  the  books, "  said 
Gray,  C.  J.,  in  this  case,  "that  an 
agent  is  responsible  to  third  persons 
for  a  misfeasance  only,  and  not  for 
non-feasance.  And  it  is  doubtless  true 
that  if  an  agent  never  docs  anything 
towards  carrying  out  his  contract 
with  his  principal,  but  wholly  omits 
and  neglects  to  do  so,  the  i)riiicipal  is 
the  only  person  who  can  maintain  any 
action  against  him  for  the  non-feasance. 
But  if  the  agent  once  actually  under- 
takes and  enters  upon  the  execution 
of  A  particular  work,  it  is  his  duty  to 
use  reasonable  care  in  the  manner  of 
executing  it,  so  as  not  to  cause  any 
injury  to  third  persons  which  may  be 
the  natural  consequence  of  his  acta; 


§112 


PRINCIPAL   AND  AGENT. 


188 


ulently  represented  that  the  title  to  his  principal's  property  was 
absolute  when  he  knew  it  was  only  a  life  interest.  The  agent 
was  held  personally  liable:  Campbell  v.  Hillman,  15  B.  Mon. 
508;  Gl  Am.  Dtc.  195.  An  insurance  agent  represented  to 
plaintifF  Avhen  he  was  taking  a  policy  on  his  house  that  the 
clause  proliibiting  the  keeping  of  petroleum  would  not  affect  the 
policy.  The  plaintiff  sustained  a  loss,  and  could  not  recover  on 
account  of  the  clause  as  to  petroleum.  Held,  that  the  agent  was 
personally  liable  in  damages  for  the  misrepresentation :  Kroeger 
V.  Pitcairn,  101  Pa.  St.  311;  47  Am.  Rep.  718.*    A,  the  president 


and  ho  cannot,  by  abandoning  its  exe- 
cutio;i  midway  and  leaving  things  in 
a  dangerous  condition,  exempt  nim- 
eelf  from  liability  to  any  person  who 
BuU'crs  injury  by  reason  of  his  having 
Eo  left  thcin  witliout  proper  safeguards. 
Tliiu  is  not  non-feasance,  or  doing  noth- 
ing; but  it  is  misfeasance,  doingimprop- 
crly :  Uipia'.i,  in  Dig.  9, 2, 27,  9;  Parsons 
V.  VVinchell,  5  Cush.  592;  52  Am.  Dec. 
74i);  Bell  v.  Josselyn,  3  Gray,  309; 
C3  Am.  Dec.  741;  Nowell  v.  Wright,  3 
Allen,  ICG;  SO  Am.  Dec.  C2;  Horner 
r.  Lawrence,  37  N.  J.  L.  46.  Negli- 
gence and  unskiUfulness  in  the  man- 
agement of  iullammablo  gas,  by  reason 
of  which  it  cscopes  and  causes  injury, 
can  no  more  bo  considered  as  mere  non- 
feasance within  the  meaning  of  the  rule 
relied  on  than  negligence  in  the  con- 
trol of  fire,  as  in  tho  case  in  the  Pan- 
dects; or  of  water,  as  in  Bell  v.  Josse- 
lyn; or  of  a  drawbridge,  as  in  Nowell 
V.  Wright;  or  of  domestic  animals,  as 
in  Paisons  v.  Winchell,  and  the  case 
in  New  Jersey.  In  tho  case  at  bar, 
the  negligent  hanging  and  keeping 
by  the  defendantj  of  the  block  and 
chains  in  such  a  place  and  manner  as 
to  be  in  danger  of  falling  upon  persons 
underneaih  was  a  misfeasance,  or  im- 
proper dealing  with  instruments  in 
the  defendants  actual  use  or  control, 
for  wliich  they  are  responsible  to  any 
person  lawfully  in  the  room  and  in- 
jured by  the  fall,  and  who  is  not  pre- 
vented by  his  relation  to  the  defend- 
ants from  maintaining  the  action." 

'  Kroeger  v.  Pitcairn,  lOl  Pa.  St. 
311;  47  Am.  Rep.  71S.  "It  was  not," 
said  the  court,  "until  after  the  prop- 
erty was  destroyed  that  he  was  unde- 
ceived. Jle  then  discovered  that  in 
consequence  of  defendant  having  ex- 
ceeded his  authority  he  was  without 
remedy  against  the  company.  Has 
he  any  remedy  against  the  defendant, 


by  whose  unauthorized  act  he  was 
placed  in  this  false  position?  Wo 
think  he  has.  If  the  president  or  any 
one  duly  authorized  to  represent  the 
company  had  acted  as  defendant  did, 
there  could  be  no  doubt  as  to  its  liabil- 
ity. Why  should  not  the  defendant 
bo  personally  responsible,  in  like  man- 
ner, for  the  consequences,  if  he,  assum- 
ing to  act  for  the  company,  overstepped 
the  boundary  of  his  authority,  and 
thereby  misled  tho  plaintiff  to  his  in- 
jury, whether  intentionally  or  not? 
The  only  diflFerence  is,  that  in  the  latter 
the  authority  is  self-assumed,  while  in 
the  former  it  is  actual;  but  that  can- 
not be  urged  as  a  sufficient  reason  why 
plaintiff,  who  is  blameless  in  both 
cases,  should  bear  the  loss  in  one  and 
not  in  the  other.  As  a  general  rule, 
'whenever  a  party  undertakes  to  do 
any  act  as  the  agent  of  another,  if  he 
does  not  possess  any  authority  from 
tho  principal  therefor,  or  if  ho  exceeds 
the  authority  delegated  to  him,  he 
will  bo  personally  liable  to  tho  person 
with  whom  he  is  dealing  for  or  on 
account  of  his  principal ':  Story  on 
Agency,  sec.  2C4.  The  same  principle 
is  recognized  in  Evano  on  Agency,  301 ; 
Wharton  on  Agency, sec.  524;  2  Smith's 
Lead.  Cas.  380,  note;  1  Parsons  on 
Contract,  67;  and  in  numerous  adjudi- 
cated cases,  among  which  are:  Hamp- 
ton V.  Speckenagle,  9  Serg.  &  R.  212, 
222;  11  Am.  Dec.  704;  Layng  v.  Stew- 
art, 1  Watts  &  S.  222,  220;  McConn  v. 
Lady,  10  Week.  Not.  Cas.  493;  Jeftsu. 
York,  10  Cush.  392;  Baltzen  v.  Nico- 
lay,  53  N.  Y.  467.  In  the  latter  case 
it  is  said,  the  reason  why  an  agent  is 
liable  in  damages  to  the  person  with 
whom  he  contracts,  when  he  exceeds 
his  authority,  is  that  the  party  dealing 
with  him  is  deprived  of  any  remedy 
upon  the  contract  against  the  princi- 
pal.   The  contract,   though  in  form 


O 

t 
h 

A 
A 


188 


189       DUTIES  AND  LIABILITIES   TO  THIRD   PERSONS.      §  112 


rsons  on 

adjudi- 

Hanip- 

R.  212, 

i\  Stew- 

cConn  V. 

Jef  ts  V. 

V.  Nico- 

;ter  case 

agent  is 

son  with 

exceeds 

dealing 

remedy 

princi- 

lu  form 


of  a  political  dub,  managed  a  display  of  fire-works  in  the  street, 
the  coist  of  which  was  raised  by  a  fe-ubt^cription  being  paid  by 
him.  One  of  the  firo-works  exploded  and  injured  B.  //</(/,  that 
A  was  personally  liable:  Jcnne  v.  SvHon,  43  N.  J.  L.  257;  o\) 
Am.  Rep.  578.'  Forsyth,  the  ov/ner  of  a  strip  of  woodland 
through  which  a  railroad  ran,  having  procured  the  wood  to  bo 
cut,  employed  Horner  to  haul  it.  Ilorncr,  in  order  to  reiich  said 
woodland,  obtained  permission  from  Lamb,  the  owner  of  an  ad- 
joining Held,  where  the  hogs  of  Lawrence  were  being  pastured, 
to  pass  through  the  field,  and  to  open  a  gap  in  the  fence  at 
a  certain  place,  with  directions  to  close  it  np  after  he  went  in 
and  after  he  came  out,  as  the  hogs  and  cattle  in  the  field  might 
get  through  on  the  railroad  and  get  killed.  Ilorncr  passed 
through  with  his  teams,  leaving  the  gap  open  while  the  wagons 
were  being  loaded,  but  closing  it  when  he  went  out;  the  liogs 
escaped  through  the  gap,  and  one  was  killed  and  the  other  in- 
jured on  the  railroad.  Held,  that  the  leaving  down  the  bars  by 
Horner  was  an  intentional  and  willful  violation  of  his  authority, 
and  a  misfeasance  for  which,  as  a  servant  or  agent  for  Forsyth, 
he  cannot  claim  exemption  against  the  party  injured:  Homer 
v.  Lawrence,  37  N.  J.  L.  4G. 


that  of  tho  principal,  is  not  his  in  fact, 
and  it  is  but  just  that  the  loss  occa- 
sioned by  there  being  no  valid  contract 
with  him  should  be  borne  by  tho  agent 
who  contracted  for  him  without  au- 
tliority.  In  Layng  v.  Stewart,  1 
Watts  &  S.  222,  22G,  Mr.  Justice  Hus- 
ton says:  'It  is  not  worth  while  to  be 
learned  on  very  plain  matters,  'ihc 
cases  cited  show  that  if  an  agent  goes 
beyond  his  authority  and  employs  a 
person,  his  principal  is  not  bound,  ami 
in  such  case  the  agent  is  bound. '  Tho 
plaintiff  in  error,  in  McConii  v.  Lady, 
supra,  made  a  contract,  believing  he 
had  authority  to  do  so,  and  not  in- 
tending to  bind  himself  personally. 
The  jury  found  ho  had  no  autiiority  to 
make  the  contract  as  agent,  and  this 
court,  in  afErming  tho  judgment,  said: 
'It  was  a  question  of  fact  submitted 
to  the  jury  whether  the  plaintitF  i.i 
error  had  authority  from  tho  school 
Ijoard  to  make  tho  contract  as  their 
agent.  They  found  ho  had  not.  He 
was  personally  liable,  whether  ho  made 
the  contract  in  his  own  name  or  in  the 
name  of  his  alleged  principal.  It  is  a 
mistake  to  suppose  that  tho  only  rem- 
edy was  an  action  against  him  for  the 
wrong.  The  party  can  elect  to  treat 
the  agent  as  a  principal  in  the  con- 
tract.    Tho    casca   ia  which    agents 


have  been  adjudged  liable  personally 
have  sometimes  been  classilicd  as  fol- 
lows, viz.:  1.  Where  tlio  agent  makes 
a  faloC  represe;itation  of  hi.i  authority 
with  intent  to  deceive;  2.  Where, 
with  knowledge  of  his  want  of  author- 
ity, but  without  intending  any  fraud, 
ho  assumes  to  act  as  though  he  wcro 
fully  authorized;  and  .3.  Where  ho 
un  lertakes  to  act  liomi  Jt'/c,  believing 
he  ha3  authority,  but  in  fact  has  none, 
as  ia  the  caiic  of  an  agent  acting  under 
a  forged  power  of  attorney.  As  to 
cases  fairly  brought  within  cither  of 
the  lirfit  two  classes  there  cannot  bo 
any  doubt  as  to  the  personal  liability 
of  tlio  self-constituted  agent,  and  his 
liability  may  be  enforced  cither  by  an 
action  on  the  case  for  deceit,  or  by 
electing  to  treat  him  as  principal. 
While  the  liability  of  agents  in  cases 
belonging  to  the  third  class  has  some- 
times been  doubted,  the  weight  of 
authority  appears  to  be  that  they  are 
also  liable." 

^  "It  can  signify  notliing,"  said  tho 
court,  "that  he  was  acting  in  his  offi- 
cial capacity  as  the  presidcntof  this  cor- 
poration, for  all  the  participants  in  the 
creation  of  a  public  nuisance  are  liable 
to  answer  for  its  ill  effects,  without  re- 
gard to  tiie  fact  tliat  they  in  sucli  affair 
were  but  the  agents  of  other  persons." 


§113 


PRINCIPAL  AND  AGENT. 


190 


§  113.  Liability  of  Principal  on  Agent's  Contracts — 
Law  Already  Discussed. — A  principal  is  bound  by  tho 
acts  of  his  agent  done  within  the  scope  of  his  real  or 
apparent  authority.  The  persons  dealing  with  an  agent 
have  therefore  tho  same  right  against  the  principal — sub- 
ject to  the  qualification  in  the  first  sentence — that  they 
would  have  had  had  they  dealt  with  him  personally. 
The  questions  to  be  determined  are  sim^/iy  these:  Had 
the  agent  a  real  authority  to  make  the  contract?  If  not, 
had  he  an  apparent  authority?  Was  he  hold  out  by  the 
principal  as  having  such  authority?  Did  tho  principal 
afterwards  ratify  the  agent's  act  and  accept  its  benefits? 
The  answer  to  these  questions  determines  the  principal's 
liability  to  third  persons,  and  the  law  a«  to  them  has  been 
already  discussed  in  tho  previous  chapters  on  authority 
to  agent'  and  ratification.*  A  principal  may  also  be 
liable  on  contracts  made  by  an  agent,  though  he  is  not 
known  at  the  time  by  the  other  party  to  be  an  agent. 
This  liability  has  been  treated  in  a  former  section  of  this 
chapter  relating  to  the  liability  of  an  agent  of  an  undis- 
closed principal.'  A  principal  who  has  executed  a  con- 
tract for  the  sale  of  lands,  and  authorized  an  agent  to 
receive  an  installment  of  purchase-money  under  the  con- 
tract, and  given  the  purchaser  to  understand  that  the 
balance  was  to  be  paid  to  such  agent,  cannot  repudiate 
the  agency  and  refuse  to  execute  the  deed  because  the 
agent,  to  whom  the  purchaser  has  paid  the  whole  of  the 
purchase-money,  is  unable  to  pay  it  over  to  tho  princi- 
pal.* That  a  person  knew  when  he  entered  into  a  con- 
tract in  writing  not  under  seal,  purporting  on  its  face  to 
be  made  on  the  other  part  by  A  and  signed  by  "A. 
agent,"  that  A  was  in  fact  contracting  as  agent  for  B,  will 
not  prevent  him  from  maintaining  an  action  against  B 
on  the  contract.' 


*  Ante,  p.  25. 

*  Ant.e,  p.  31. 

*  Ante,  §    107. 


♦  Hand  v.  Jacobus,  25  N.  J,  Eq.  154. 
'  Byington  v.  Simpson,    134  Mass. 
169;  45  Am.  Bep.  314. 


191        DUTIES   AND    LIABILITIES   TO  THIRD    PERSONS.      §  114 

§  114.    Liability  of  Principal  for  Agent's  Torts.— A 

principal  is  liiiblo  civilly  for  the  frauds  and  deceits  of  his 
agent  in  the  course  of  his  employment,  whetiier  author- 
ized or  known,  or  not.'  So  also  a  principal  is  bound  by 
the  false  representations  of  an  agent  inducing  a  purchase 


»  Durst  V.  Burton,  47  N.  Y.  1G7;  7 
Am.  Rep.  4':8;  Lobdell  v.  Baker,  1 
Mot.  202;  35  A-n.  Dec.  358;  Bc.inett 
V.  Judson,  21  N.  Y.  238;  New  York 
etc.  R.  R.  Co.  V.  Schuyler,  34  N.  Y. 
30;  Concord  Bank  v.  (»rcr;f;,  14  N.  H. 
331;  Crump  v.  U.  S.  Mining  Co.,  7 
Gratt.  352;  50  Am.  Dec.  110;  Mun- 
dorflf  V.  VVickersham,  03  Pa.  St.  87; 
3  Am.  Ren.  531;  Udell  v.  Atherton,  7 
Hurl.  &  N.  172;  Swift  r.  Winterbot- 
tom,  L.  R.  8  Q.  B.  244;  Mackay  v. 
Commercial  Bank,  30  L.  T.,  N.  S., 
180;  Reeves  v.  State  Bank,  8  Ohio  St. 
405;  Jeffrey  v.  Bigclow,  13  Wend. 
518;  28  Am.  Dec.  470;  Sandford  r. 
Handy,  23  Wend.  200;  White  v.  Saw- 
yer, 10  Gray,  58();  Brokaw  v.  New  Jer- 
sey R.  R.  Co.,  32  N.  J.  L.  328;  90  Am. 
Doc.  059;  Peebles  v.  Patapsco  Guano 
Co.,  77  N.  C.  233;  24  Am.  Rep.  447; 
Rhoda  V.  Annis,  75  Me.  17;  40  Am. 
Rjp.  354;  Reynolds  v.  Witto,  13  S.  C. 
5;  30  Am.  Rep.  078;  Erie  City  Iron 
Works  V.  Barber,  100  Pi.  St.  125;  61 
Am.  Rep.  508;  Gcrhardt  v.  Boatman's 
Sav.  Inst.,  38  Mo.  00;  90  Am.  Dec. 
407.  He  is  not  liable  criminal'y,  how- 
ever, as  to  be  arrested  for  a  fraudulent 
d"')t  made  by  the  agent:  Hathaway  v, 
Johnson,  55  N.  Y.  93;  14  Am.  Rep. 
18G.  An  agent  of  a  firm  sold  a  quan- 
tity of  meal  which  ho  fraudulently  as- 
serted to  bo  linseed  meal.  Held,  the 
firm  was  liable  in  an  action  of  deceit: 
Locke  V.  Stearns,  1  Met.  500;  35  Am. 
i^oc.  382.  "The  deceit,"  said  Shaw,  C. 
J.,  "  was  done  for  the  defendant's  bene- 
fit, by  their  agent  acting  under  their 
onlers  in  the  conduct  of  their  general 
business,  and  responsible  to  them; 
and  when  one  party  must  suffer  by 
the  wrong  and  misconduct  of  another, 
it  is  more  reasonable  that  he  should 
sustain  the  loss  who  reposes  the  con- 
fidence in  the  agent,  than  he  who  has 
given  no  such  confidence:  Hem  v. 
Nichols,  1  Salk.  289.  The  point  is 
well  illustrated  by  the  law  of  insur- 


ance, where  the  party  is  always  held 
responsible  dinlilei;  for  the  fraudnloiit 
misrepresentation  or  other  deceit,  or 
for  the  negligence,  of  his  agent:  Fitz- 
hcrbert  v.  Mather,  1  Term  Rep.  12. 
But  tlio  rule  is  not  confined  to  ca^ca 
of  insurance,  in  relation  to  which  a 
somewhat  stricter  morality,  perhaj)8, 
is  held  to  prevail;  but  it  is  laid  down 
as  a  general  rulo  of  the  common  law, 
that  the  principal  is  civilly  rcj^ponsi- 
bio  for  the  acts  of  his  agent:  Doe  r. 
Martin,  4  Term  Rep.  0(5.  Iii  a  late 
case,  in  wliieh  it  was  held  that  a  mas- 
ter was  liable  for  the  acts  of  his  ser- 
vant in  a  case  qi(ani  criminal,  — a.^  for 
penalties  incurred  by  a  violation  of 
the  revenue  laws,  —  it  was  taken  for 
granted,  on  all  sides,  that  for  deceit 
m  articles  sold  by  u  servant  i:i  t!iu 
shop  of  his  master,  or  for  acts  done  in 
the  manufacture  of  articles  in  the 
manufactory  usually  carried  on  l)y 
the  master,  the  latter  is  answerable: 
Attorney-Genernl  v.  Siddon,  1  Tyrw. 
41;  1  Cromp.  &  J.  220.  The  rule 
proceeds  upon  the  ground  that  tiie 
servant  is  acting  within  the  scope  of 
his  authority,  actual  or  constructive. 
The  case  of  a  sheriff  who  is  liable 
eiviliter  even  in  an  action  of  trespass, 
for  the  misconduct  of  his  deputy,  is 
another  familiar  application  of  the 
same  rule:  Grinnellr.  Phillips,  1  Mass. 
530.  The  rule  is  laid  down  geucrally, 
in  a  recent  compilation  of  good  au- 
thority, that  though  a  principal,  in 
general,  is  not  liable  criminally  for 
the  act  of  his  agent,  yet  ho  is  civilly 
liable  for  the  ne;;lect,  fraud,  deceit,  or 
other  wrongful  act  of  his  agent  i;i  the 
course  of  his  employment,  though  in 
fact  the  principal  did  not  authorize 
the  practice  of  such  acts;  but  tho 
wrongful  or  unlawful  acts  must  bo 
committed  in  the  course  of  the  agent's 
employment:  3  Chitty  on  Law  of 
Commerce  and  Manufacturers,  209, 
210." 


§114 


PRINCIPAL  AND   AOENT. 


192 


or  aalo.*  Where  the  agent,  on  behalf  of  his  principal, 
performs  an  unauthorized  act,  yet  if  the  principal  has 
put  the  agent  in  a  position  to  mislead  innocent  parties, 
ho  is  responsible  to  them.''  A  principal  who  employs  an 
agent  to  do  an  illegal  act  is  responsible  for  any  injury 
done,  whether  the  agent  acts  ignorantly  or  knowingly.' 
The  owner  of  a  yacht  does  not,  by  giving  the  master  of 
the  yacht  the  control  of  a  gun  and  ammunition,  become 
responsible  for  their  careless  use,  it  not  being  part  of  the 
master's  duty  to  discharge  the  gun.*  A  principal  is  like- 
wise liable  for  tlie  nei^ligence  of  his  agent.® 

Illustrations. —  A  principal  directed  his  agent  to  get  a  team 
of  horses,  intending  Ihat  ho  should  first  obtain  the  owner's  per- 
mission, which  ho,  through  a  misunderstanding,  failed  to  do, 
but  took  them  without  leave,  and  in  using  them  killed  one. 
Held,  that  the  principal  was  liable  for  the  value  of  the  horse: 
Moir  y.  JTopHm,  16  111.  313;  63  Am.  Dec.  312.  An  agent 
authorized  to  sell  a  flock  of  sheep  sells  a  portion  of  it  with 
knowledge  that  the  sheep  arc  diseased,  and  docs  not  commu- 
nicate the  fact  to  the  purchaser.  The  principals,  though  they 
have  no  actual  notice  of  the  fraud,  are  responsible  in  a  civil 
action  for  damages  to  the  purchaser:  Jeffrey  v.  Bigclow,  13 
Wend.  518;  28  Am.  Dec.  476.  The  plaintiff's  marc  jumped 
over  the  defendant's  fence  into  his  field.  The  defendant  being 
away  from  home,  his  wife  requested  a  relative  to  turn  the  mare 
out.  After  trying  in  vain  to  catch  the  marc,  he  threw  a  stone  at 
her  and  broke  her  leg.  Held,  that  the  defendant  was  not  liable 
for  the  injury;  the  act  of  violence  by  which  the  loss  was  occa- 


»  Sand  ford  v.  Handy,  23  Wend.  2G0; 
North  River  Bank  v.  Aymar,  3  Hill, 
2G-2;  Bennett  v.  Judsim,  21  N.  Y.  238; 
New  York  etc.  R.  R.  Co.  v.  Schuyler, 
3i  N.  Y.  SO;  Law  v.  Grant,  37  Wi.s. 
648;  Graves  v.  Spier,  58  Barb.  349; 
ElwoU  V.  Chambcrliu,  31  N.  Y.  611; 
Haskit  V.  Eliott,  58  Ind.  493;  Bowers 
V.  Johnson,  18  Miss.  1G9;  Lawrence  v. 
Hand,  23  Miss.  103;  Muudorff  v. 
VVickersham,  63  Pa.  St.  87;  3  Am. 
Rop.  531;  National  Life  Ins.  Co.  v. 
Minch,  5  Thomp.  &  C.  545;  Fogg  v. 
Griffin,  2  Allen,  1;  Upton  v.  Tribil- 
cock,  91  U.  S.  45;  Reynolds  v.  Witte, 
13  S.  C.  5;  36  Am.  Rep.  678;  Tapg  v. 
Tennessee  Bonk,  0  Hcisk.  479;  Eilen- 


berger  v.  Mut.  Ins.  Co.,  89  Pa.  St.  464; 
Veazio  v.  Williams,  8  How.  134; 
Hunter  r.  Hudson  River  Iron  Co.,  20 
!>a.,b.  507;  Tome  v.  Parkcraburg  etc. 
R  r.  Co.,  39  Md.  30;  17  Am.  Rip. 
540;  Henderson  v.  San  Antonio  R.  R. 
fV.,  17  Tex.  560;  67  Am.  Loc.  675; 
Wright  V.  Calhoun,  19  Tex.  420. 

»  Davidson  v.  Dallas,  8  C;d.  227. 

'  Hynes  v.  Jungren,  8  Kan.  391; 
Enoa  V.  Hamilton,  24  Wis.  658. 

*  Haack  v.  Fearing,  5  Rob.  (N.  Y.) 
528. 

"  Kline  v.  R.  R.  Co.  37  Cal.  400;  99 
Am.  Dec.  282.  See  Part  V.,  Master 
and  Servant,  post,  and  Divison  III., 
Bailments. 


192 


193       DUTIES    AND    LIABILITIES    TO   THIRD    PERSONS.       §  114 


eioned  not  being  done  in  the  execution  of  the  authority  given 
by  the  wife:  Cantrdl  v.  Colwcll,  13  Head,  471.  Defendant  wrote 
to  his  clerk  authorizing  him  to  draw  for  $75.  Tjjo  clerk  al- 
tered the  $75  to  $175,  nhowed  the  letter  thus  altered  to  pUiintiir, 
who  thereupon  iiulorped  the  clerk's  draft  for  $150.  PlaiiitifT 
had  to  pay.  Held,  that  ho  could  recover  $75  of  defendant: 
Wihon  V.  lirnrdxh'ijy  20  Neb.  1 19.  The  owner  of  a  farm,  bound 
under  the  statute  to  build  u  divison  fence,  intrusted  the  work 
to  the  occupant,  who  did  it  so  iniproperly  that  horses  on  the 
adjoining  farm  were  injured  by  the  fence.  Held,  that  the 
owner  was  liable:  Roney  v.  Aldrich,  44  Hun,  320. 
Vol.  L-13 


g§  115,  116 


PRINCIPAL  AND  AGENT. 


194 


CHAPTER  XII. 

DUTIES  AND  LIABILITIES  OP  THIRD  PERSONS  TO  PRINCIPALS 

AND  AGENTS. 

§  115.  Rights  of  principal  against  third  persons. 

§  1 16.  Principal  may  enforce  agent's  contracts. 

§  117.  Subject  to  frauds  and  misrepresentations. 

§  1 18.  And  equities. 

§119.  Contracts  under  seal. 

§  120.  Exclusive  credit  given  to  agent. 

§  121.  Principal  may  recover  money  wrongfully  paid  by  agent. 

§  122.  May  sue  for  torts  to  his  property  in  agent's  hands. 

§  123.  Agent  ordinarily  cannot  sue  on  his  contracts. 

§  124.  Exceptions — When  agent  may  sue. 

§  125.  Agent's  right  to  sue  controllable  by  principal 

§  115.    Rights  of  Principal  against  Third  Persons. — 

The  rights  of  the  principal  against  third  persons  may  be 
considered  under  four  heads,  viz.:  1.  His  right  to  sue 
upon  contracts  of  the  agent;  2.  His  right  to  recover 
money  wrongfully  paid  or  applied;  3.  His  right  to  fol- 
low property  wrongfully  conveyed;  4.  His  right  to  sue 
for  torts  generally. 

§  116.    Principal  may  Enforce  Agent's  Contracts. — 

The  acts  or  contracts  of  an  agent  which  bind  his  prin- 
cipal impose  upon  third  parties  corresponding  obliga- 
tions; and  therefore  the  principal,  whether  disclosed  or 
undisclosed,  is  entitled  to  the  rights  and  benefits  arising 
from  such  acts  or  contracts,  and  may  enforce  th  .)se  rights 
by  action  against  such  third  parties.^    As  soon  as  an 


» Miller  v.  Lea,  35  Md.  396;  6  Am. 
Rfcp.  417;  Lamson  Mfg.  Co.  v.  Russell, 
112  Mass.  3S7;  Taintor  v.  Prendergast, 
3  Hill,  72;  38  Am.  Dec.  618;  Beards- 
ley  V.  Duntloy,  69  N.  Y.  577;  Frazier 
V.  Erie  Bank,  8  Watts  &  S.  18;  Conk- 
lin  V.  Leeds,  58  111.  178;  Barker  v. 
Garvey,  83  111.  184;  Bassett  v.  Lederer, 
1  Hun,  274;  Barry  v.  Page,  10  Gray, 


398;  Brewster  v.  Saul,  8  .^a.  296;  Gra- 
ham  V.  Duckwall,  8  Busu,  12;  Win- 
chester V.  Howard,  97  Mass.  303;  93 
Am.  Dec.  93;  Hunter  v.  Giddings,  97 
Mass.  41;  93  Am.  Dec.  54;  Culver  v. 
Bigelow,  43  Vt.  249;  Foster  v.  Smith, 
2  Cold.  474;  88  Am.  Dec.  604;  Wood- 
ruff V.  McGehee.  30  Ga.  Ii38;  Small 
V.  Attwood,  1  Younge,  407;  State  v. 


105       DUTIES   AND   LIABILITIES   OP  THIRD   PERSONS.      8  116 


agent  has  closed  a  contract  and  paid  for  property  with  his 
principal's  money,  the  principal  has  the  right  to  main- 
tain an  action  in  his  own  name  on  matters  growing  out 
of  the  transaction.'  A  principal's  right  to  sue  upon  his 
agent's  contract  is  established  if  the  agent  notifies  the 
other  party  that  he  must  account  to  the  principal;  such  a 
notification  operates  as  an  equitable  assignment  of  the 
agent's  interest  in  the  contract.^  Notes  payable  to  the 
order  of  an  agent,  and  mortgages  accompanying  them, 
are  transferable  by  the  principal.'  Upon  the  sale  of 
personal  property  by  parol,  the  title  may  vest  in  an  un- 
disclosed principal  for  whom  the  apparent  purchaser  is 
negotiating  as  agent,  and  the  principal,  though  unknown 
to  the  seller,  may  vindicate  by  suit  in  his  own  name  his 
rights  in  the  property.*  When  an  agent,  duly  authorized, 
sells  property  belonging  to  his  principal,  and  gives  the 
purchaser  a  receipt  in  his  own  name,  without  stating  his 
agency,  acknowledging  the  payment  of  part  of  the  price, 
and  promising  to  deliver  the  property  at  certain  times. 


Torinus,  26  Minn.  1;  37  Am.  Rep. 
39o;  Do  Voss  v.  Richmond,  18  Gratt. 
3.38;  98  Am.  Dec.  647;  Willard  w. 
Buckingham,  36  Conn.  395;  Machiaa 
Hotel  Co.  V.  Coyle,  35  Me.  405;  Wil- 
son V.  Codman,  3  Cranch,  204;  Kelley 
r.  Munson,  7  Mass.  319;  Braden  v. 
Louisiana  Ins.  Co.,  I  La.  220;  20  Am. 
Dec.  277;  Earle  v.  De  Witt,  0  Allen, 
531 .  (See  Weed  v.  Saratoga  R.  R.  Co., 
19  Wend.  5.34.)  An  agent  iu  Boston 
of  a  principal  in  Maine  sold  goods  to 
a  person  in  Boston,  disclosing  his  jjrin- 
cipal.  The  purchaser  became  insol- 
vent, and  was  given  a  discharge  under 
the  state  laws.  Held,  that  this  was 
no  bar  to  an  action  by  the  principal 
for  the  price  of  the  goods:  Ilsley  v. 
Merriam,  7  Cush.  242;  5i  Am.  Dec. 
721.  An  agent  makes  proof  of  his 
principal's  claim  ag",inst  the  estate  of 
a  decedent.  It  is  afterwards  attaclied 
by  a  creditor  of  the  ag'>nt.  The  prin- 
cipal can  come  in  and  ^.  ove  his  right 
to  the  claim  as  against  a  creditor:  Gage 
V.  Stimson,  26  M  inn.  64.  Thus  a  princi- 
pal may  sue  in  his  own  name  on  a  non- 
negotiable  note  made  in  bia  behalf  aud 


for  his  benefit,  but  payable  to  hia 
agent:  National  Life  Ins.  Co.  i:  Allen, 
116  Mass.  398.  A  note  made  to  one 
as  agent  upon  a  consideration  advanced 
by  the  principal  may  be  sued  on  by 
the  principal:  Bank  of  Genesee  v. 
Patchin,  19  N.  Y.  312;  Ahton  v. 
Heartman,  2  Ala.  699;  Garton  i\  Union 
City  Bank,  34  Mich.  279;  Pratt  v. 
Topeka  Bank,  12  Kan.  570;  and  see 
note  to  Arlington  v.  Hinds,  1  D.  Chip. 
431,  in  12  Am.  Dec.  704,  where  all  the 
cases  arc  reviewed;  Newport  Mechan- 
ics' Mfg.  Co.  V.  Starbird.  10  N.  H.  123; 
34  Am.  Dec.  145. 

'  Odessa  Bank  i'.  Jennings,  18  Mo. 
App.  651.  The  right  of  the  principal  to 
assert  his  ownership  in  notes  taken  by 
hia  agent  in  disregard  of  instructions 
cannot  be  questioned,  there  being  no 
intervening  rights  affected:  South 
Bend  Iron  Works  v.  Cottrell,  31  Fed. 
Rep.  254. 

■■«  Dustin  V.  Radford,  57  Midi.  163. 

'  Caldwell  v.  Meshew,  44  Ark. 
564. 

*  Tainter  v.  Lombard,  53  Me.  369; 
87  Am.  Dec.  552. 


§116 


PRINCIPAL  AND   AGENT. 


196 


places,  and  prices  specified,  the  principal,  on  proving,  by 
parol,  his  property  and  the  authority  of  the  agent,  may 
maintain  an  action  in  his  own  name  for  the  balance  of 
the  price,  subject  to  any  equities  which  the  purchaser 
may  have  against  the  agent.^  Such  right  is  not  afifected 
by  the  fact  that  the  agent  also  is  entitled  to  sue,^  or  that 
the  principal  was  unknown  or  undisclosed  when  the  con- 
tract was  made,^  or  that  the  agent  acts  under  a  commission 
del  credere.* 


^  Huntington  v.  Knox,  7  Cush.  371. 

^  Evau3  on  Agency,  390;  Story  on 
Agency,  sec.  4'JO;  Beebo  v.  Robert, 
12  Wiiiid.  413;  27  Am.  Dec.  132;  New 
Jersey  Steam  Nav.  Co.  v.  Merchants' 
Bank,  G  How.  381;  Elkins  v.  Boston  etc. 
R.  R.  Co.,  19  N.  H.  ?A-2;  51  Am.  Dec. 
184.  Tlio  owner  of  goods  which  have 
been  intrusted  to  an  agent  for  a  special 
purpose,  and  have  been  wrongfully 
sold  by  hiin,  cannot  maintain  an  ac- 
tion of  contract  against  the  purchaser 
for  goods  soMand  delivered:  Berkshire 
Glass  Co.  V.  Wolcott,  2  Allen,  227;  79 
Am.  Dec.  781. 

"  Evans  on  Agency,  39G;  Talntor  v. 
Prendergast,  3  Hill,  72;  33  Am.  Dec. 
618;  Ilslcy  v.  Merriam,  7  Cush.  242; 
54  Am.  Dec.  723;  Small  v.  Attwood, 
1  Younge,  407;  Bryant  v.  Wells,  50 
N.  H.  153;  Walter  v.  Ross,  2  Wash. 
C.  0.  283;  Hicks  v.  VVhitmore,  12 
Wend.  548;  Tutt  v.  Brown,  5  Litt.  1 ; 
15  Am.  l>ec.  33;  Uilpia  v.  Howell,  5 
Pa.  St.  41;  45  Am.  Dec.  720.  In  a 
lease  for  a  year  not  under  seal,  after 
the  name  of  the  lessor  were  the  words 
"  agents  as  landlords."  JJeld,  that  the 
real  owners  of  the  premises  for  whose 
benefit  the  lease  was  made  might  sue 
for  the  rent:  NicoU  i\  Burke,  78  N.  Y. 
580.  "Tlie  principle  is  well  settled 
that  if  the  agent  possess  due  authority 
to  make  a  written  contract  not  under 
seal,  and  ho  makes  it  in  his  own  name, 
whether  he  describes  himself  as  agent 
or  not,  or  whether  the  principal  be 
known  or  unknown,  his  principal  may 
be  made  liable,  and  will  bo  entitled  to 
sue  thereon  in  all  cases,  and  the  instru- 
ment may  be  resorted  to  for  the  pur- 
pose of  ascertaining  the  terms  of  the 
agreement.  This  doctrine  is  fully  sus- 
taiaed  in  Brigga  v.  Partridge,  C4  N.  Y. 


357,  302,  364,  21  Am.  Rep.  617,  where 
the  .authorities  bearing  on  the  subject 
are  cited  and  considered.  See  also 
Story  on  Agency,  sec.  100.  A  differ- 
ent rule  prevails  as  to  .scaled  instru- 
ments; but  where  the  contract  is  in 
writing  or  by  parol,  not  under  seal,  in 
the  name  of  the  agent,  and  within  his 
authority,  the  principal  can  enforce 
the  same,  and  is  liable  thereon.  The 
contract  for  the  letting  of  the  prem- 
ises in  question  from  year  to  year  wag 
nob  required  to  bo  in  writing.  The 
defendant  understood  that  the  agents 
■were  acting  for  others,  and  were  lia- 
ble to  the  principals.  The  particular 
phraseology  used  in  the  lease,  describ- 
ing the  agents  "  as  landlords,"  does  not 
change  the  rule,  or  prevent  its  applica- 
tion to  contracts  not  under  seal.  In 
fact,  the  counterpart  of  the  lease  not 
being  produced,  and  it  being  no  doubt 
in  the  defendant's  possession,  and  it  not 
appearing  in  what  manner  it  was  exe- 
cuted by  the  lessors,  and  the  proof  show- 
ing that  the  plaintiffs  were  the  land- 
lords and  entitled  to  the  rents,  it  was 
reasonable  to  assume  that  it  was  exe- 
cuted by  their  agents  for  their  benefit 
and  on  their  account.  The  cases  cited 
by  the  learned  counsel  for  the  defend- 
ant to  establish  the  doctrine  that  the 
lease,  as  it  was,  could  only  be  enforced 
by  the  agents,  do  not  sustain  the  prin- 
ciple contended  for.  Most  of  them  re- 
late to  instruments  under  seal,  and 
none  of  them  hold  that  the  principal 
cannot  recover  where  the  contract  is 
made  by  the  agent  within  his  author- 
ity, cither  written  or  parol,  when  not 
under  seal." 

*  Evans  on  Agency,  396;  Story  on 
Agency,  sec.  420;  Leverick  v.  Meigs,  1 
Cow.  645. 


196 


197       DUTIES   AND   LIABILITIES   OF   THIRD   PERSONS.      §  117 


Illustrations. — Lumber  is  purchased  and  paid  for  by  an 
agent  in  his  own  name  l)y  drafts  on  his  principal,  without  dis- 
closing his  agency,  and  it  falls  short  in  quality.  The  principal 
may  maintain  an  action  in  liis  own  name  for  the  over-payment 
made  therefor:  Ciishing  v.  Rice,  4G  iSIe.  303;  71  Am.  Dec.  579. 
An  agent  i)urchased  property  on  credit  in  the  name  and  for  the 
uge  of  his  principal,  but  the  vendor,  declitiing  to  give  credit  to 
the  i)rincipal,  took  the  agent's  individual  note  for  the  property, 
which  note  was  afterwards  paid  with  the  money  of  the  princi- 
pal. Held,  that  the  principal  might  maintain  an  action  in  his 
own  name  against  the  vendor  for  a  breach  of  warranty  in  the 
sale  of  the  property:  White  v.  Oivcn,  12  Vt.  3G1.  An  agent  de- 
posited money  in  bank  as  an  ordinary  deposit,  stating  at  the 
time  that  it  was  the  money  of  his  principal,  but  desired  the  offi- 
cer to  place  the  money  to  his  credit  on  the  books  of  the  bank, 
alleging  that  ho  might  have  occasion  to  use  it  for  the  benefit  of 
his  principal,  and  the  agent  died  shortly  afterwards  insolvent. 
Held,  that  the  principal  was  entitled  to  the  fund,  and  might  fol- 
low the  same  in  a  court  of  equity:  Whitley  v.  Foy,  6  Jones  Eq. 
34;  78  Am.  Dec.  236. 

§  117.    Subject  to  Frauds  and  Misrepresentations. — 

But  this  right  is  subject  to  the  qualifications, — first,  that 
it  may  be  affected  or  modified  by  the  declarations,  mis- 
representations, concealments,  and  fraud  of  the  agent, 
whether   authorized   by  or   known  to   the  principal,  or 

not.' 


Itory  on 
Vleigs,  1 


'  Evans  on  Agency,  396;  Demer- 
ritt  V.  Meserve,  39  N.  H.  521;  Bar- 
ber V.  Britton,  26  Vt.  112;  Crump  v. 
U.  S.  Mining  Co.,  7  Gratt.  352;  56 
Am.  Dec.  116;  Morton  v.  Scull,  23 
Ark.  289;  Madison  etc.  R.  R.  Co.  v. 
Norwich  Sav.  Soc,  24  Ind.  457;  Mu- 
tual Benetit  Co.  v.  Cannon,  48  Ind. 
204;  ElwcU  V.  Cliamberlin,  31  N.  Y. 
01 1 ;  Sandford  v.  Handy,  23  Wend.  260; 
North  River  Bank  v.  Ayinar,  3  Hill, 
20J;  Bennett  v.  Judson,  21  N.  Y.  238; 
Barry  v.  Page,  10  Gray,  398;  Traub  v. 
Millilien,  57  Me.  63;  2  Am.  Rep.  14; 
Southern  Ex.  Co.  v.  Palmer,  48  Ga. 
8").  But  see  Lamm  v.  Port  Deposit 
Homo  Ass'n,  49  Md.  233;  33  Am.  Rep. 
240;  Kennedy  v.  McKay,  43  N.  J.  L. 
288;  39  Am.  Rep.  581;  Tiiompson  v. 
Phucnix  Ins.  Co.,  75  Me.  55;  46  Am. 
Rep.  357;  JEtna,  Ins.  Co.  v.  Reed,  33 


Ohio  St.  283.  In  Vcazio  v.  Williams, 
8  How.  134,  it  was  said:  "If  a  ijrinci- 
pal  ratify  a  sale  by  hi.-i  agent  and  take 
the  benefit  of  it,  and  it  afterwards 
turn  out  that  fraud  or  mi-itako  ex- 
isted in  tlie  sale,  the  latter  may  bo 
aunulled,and  the  parties  placed  in  atatu 
quo;  or  they  may,  where  tlie  case  and 
money  are  divisible,  be  at  times  re- 
lieved to  the  extent  of  the  injury. 
The  principal  in  such  case  is  profiting 
by  the  acts  of  tlio  agent,  and  is  henco 
answerable  dviidcr  for  the  acts  of  tho 
agent,    however   innocent   himself   of 

any  intent  to  defraud The  test 

is,  Was  the  purchaser  deceived?  and 
has  the  vendor  adopted  tho  sale  mado 
by  deception  and  received  tho  benefits 
of  it?  For  if  so,  ho  takes  tho  sale  with 
all  its  burdens. " 


mm 


§118 


PRINCIPAL  AND  AGENT. 


198 


Illustrations. — An  agent  makes  a  compromise  with  credi- 
tors for  his  principal.  The  principal  cannot  take  its  benefits 
unless  he  adopts  also  all  the  representations  made  by  the  agent 
to  the  creditors  in  obtaining  it:  Crans  v.  Hunter,  28  N.  Y.  389. 
A  husband,  as  agent  for  his  wife,  by  fraud  procures  an  insur- 
ance on  her  life.  The  policy  was  paid  to  her  representatives 
before  discovery  of  the  fraud.  Held,  that  it  could  be  recovered 
from  them  notwithstanding  the  wife  was  innocent  of  the  fraud: 
Mutual  Life  Ins.  Co.  y.  Minch,  5  Thomp.  &  C.  545;  Brown  v. 
Hartford  Ins.  Co.,  117  Mass.  479. 

§  118.  And  Equities.  —  Second,  that  where  the  prin- 
cipal was  undisclosed,  if  he  takes  advantage  of  the  agent's 
contracts,  he  does  so  subject  to  all  the  equities  and  rights 
of  which  the  other  contracting  party  might  avail  himself 
as  against  the  agent, — i.  e.,  had  he  been  the  principal.* 
"As  the  contract  of  the  agent  is  in  law  the  contract  of  the 
principal,  the  latter  may  come  forward  and  sue  thereon, 
although  at  the  time  the  contract  was  made  the  agent 
acted  as  and  appeared  to  be  the  principal.  There  is  a 
qualification  of  the  rule,  by  which  it  is  held  that  when  a 
contract  has  been  made  for  an  undisclosed  principal  who 
permits  his  agent  to  act  as  apparent  principal  in  the 
transaction,  the  right  of  the  former  to  intervene  and 
bring  suit  in  his  own  name  is  not  allowed  in  any  way  to 
affect  or  impair  the  right  of  the  other  contracting  party, 
but  he  will  in  such  cases  be  let  in  to  all  the  equities,  set- 
offs, and  other  defenses  to  which  he  would  have  been  en- 
titled if  the  action  had  been  brought  in  the  name  of  the 
ageut."^  Where  the  other  contracting  party  knows  he 
is  dealing  with  the  agent,  the  rule  in  the  last  paragraph 
does  not  apply,  although  ho  does  not  know  who  the  par- 
ticular principal  is.^ 

*  Evans  on  Agency,  .396;  George 
V.  Clagctt,  7  Term  Rep.  359;  Peel  v. 
Shepherd,  58  Ga.  .305;  Koch  v.  Willi, 
63  111.  144;  Culver  v.  Bigelow,  43  Vt. 
249;  Miller  v.  Lea,  .35  Md.  396;  6  Am. 
Rep.  417;  Traub  v.  Milliken,  57  Me. 


565;  Pitts  v.  M  wer,  18  Me.  361;  36 
Am.  Dec.  727. 

*  Bigelow,  J.  in  Barry  v.  Page,  10 
Gray,  398. 

3  Ladd  V.  Arkell,  40  N.  Y.  Sup.  Ct. 

150;  Wilson  v.   Codman,    3   Cranch, 

63;'  2  Am.  Rep.  14;  Eclipse  Windmill    204;  Graham  v.  Duckwall,  8  Bush,  12; 


Co.  V.  Thorson,  46  Iowa,  181 ;  Merrick's 
Estate,  5  Watts  &  S.  9;  2  Ashm.  485; 
Leeds  v.  Marine  lua.  Co.,  6  Wheat 


Miller  v.  Lea,  35  Md.  396;  6  Am. 
Rep.  417;  Saladia  v.  Mitchell.  45  111. 
79. 


198 


199      DUTIES   AND   LIABILITIES   OF   THIRD   PERSONS.       §  121 


Illustrations,  —  A  lent  a  sum  of  money  to  B.  The  money 
belonged  to  C,  for  whom  it  had  been  collected  by  A,  but  13  did 
not  know  of  C's  interest.  Afterwards  C  notified  B  to  pay  him 
the  money,  but  B  replied  that  A  was  indebted  to  him  in  a  larger 
sum  than  the  amount.  Held,  that  B  was  entitled  to  retain  the 
money  as  against  C:  Lime  Rock  Bank  v.  Plimpton,  17  Pick.  159; 
28  Am.  Dec.  286. 

§  119.  Contracts  under  Seal. — Third,  that  a  contract 
under  seal  in  the  name  of  an  agent  cannot  be  enforced 
by  another  on  proof  that  the  party  named  had  oral  au- 
thority to  enter  into  the  contract  and  acted  as  his  agent.* 

§  120.  Exclusive  Credit  Given  to  >  Agent.  —  Fourth, 
that  where  an  exclusive  credit  is  given  to  and  by  the  agent 
the  principal  cannot  take  advantage  of  it.'^ 

§  121.  Principal  may  Recover  Money  Wrongfully  Paid 
by  Agent. — Where  a  man  pays  money  by  his  agent  which 
ought  not  to  have  been  paid,  either  he  or  the  agent  may 
bring  an  action  to  recover  it  back."*  The  right  of  a  prin- 
cipal to  follow  property  wrongfully  converted  or  its  pro- 
ceeds rests  on  the  principle  that  where  a  person's  property 
has  been  wrongfully  misapplied,  or  a  trust  fund  has  been 
wrongfully  converted  into  another  species  of  property,  if 
its  identity  can  be  traced  it  will  be  held  in  its  new  form 
liable  to  the  rights  of  its  original  owner."*  But  where  an 
agent  to  collect  money  lends  it  to  his  own  creditor  with- 


*  Briggs  V.  Partridge,  64  N.  Y.  357; 
21  Am.  Kep.  017;  Bearsdley  v.  Duntley, 
C'JN.Y.  677;  Story  on  Agency,  sec.  422. 

''  Evans  on  Agency,  404;  Roose- 
velt V.  Doherty,  1?9  Mass.  .301 ;  37  Am. 
Rep,  350;  Story  on  Agency,  sec.  423. 

^Sadler  v.  Evans,  4  Burr.  1984; 
Stevenson  i».  Mortimer,  Cowp.  805; 
Fanners'  Bank  v.  King,  57  Pa.  St.  202; 
9S  Am.  Dec.  215;  Sheffer  v.  Mont- 
gomery, 65  Pa.  h:t.  329;  Anchor  v.  Bank, 
2  Doug.  637;  Story  on  Agency,  sec. 
435;  United  States  v.  Bartlctt,  Daveis, 
9;  Bank  of  Kansas  City  v.  Mills,  24 
Kan.  604.  See  Bergenthal  v.  Fiebrantz, 
4S  Wis.  435. 


*  Evans  on  Agency,  400;  United 
States  V.  State  Bank,  90  U.  S.,  30;  Le 
Breton  v.  Peirce,  2  Allen,  8;  Chester- 
tield  Mfg.  Co.  V.  Dchon,  5  Pick.  7;  10 
Am.  Dec.  367;  Norris  v.  Tayloe.  49 
111.  17;  Bertholf  r.  Quinlan,  08  111.  297; 
Frazier  v.  Erie  Bank,  8  Watts  &  S.  18; 
Gary  v.  Hotailing,  1  Hill,  312;  37  Am. 
Dec.  323;  Proudtoot  v.  Wightman,  78 
111.  5.33;  Roach  v.  Turk,  9  Hciak.  708; 
Thompson  v.  Barnum,  49  Iowa,  392; 
Mackintosh  v.  Eliot  Nat.  Bank,  123 
Mass.  393;  Farmers'  Bank  v.  King,  57 
Pa.  St.  202;  98  Am.  Dec.  215;  Koch 
V.  Willi,  63  111.  114. 


: 


§§  122, 123 


PRINCIPAL   AND   AGENT. 


200 


out  informing  him  it  was  his  principal's  money,  the 
principal  cannot  recover  it  of  the  crcdito",  even  after 
notice  that  it  helongs  to  him.^  Where  an  agent  lends  his 
principal's  money,  taking  a  promissory  note  to  himself, 
the  note  helongs  to  the  principal,  and  the  borrower  may 
not  pay  the  agent  after  ho  has  been  informed  of  the  prin- 
cipal's superior  right,  and  has  received  notice  not  to  pay 
the  agent.'' 

Illustrations. — A  carrier  of  bank  notes  from  A  to  B  paid 
them  out  for  a  loss  of  his  own  at  unlawful  gaming.  Held,  that 
A  might  recover  the  amount  of  the  person  receiving  them,  with 
interest,  in  an  action  for  money  had  and  received:  Mason  v. 
Waite,  17  Mass.  500.  The  maker  of  a  note  not  yet  due  per- 
suaded a  donositary  of  it  to  accept  a  payment,  and  to  give  it  up, 
conti  ary  '  instructions  from  the  holder.     Ilehl,  that  the 

holder  ^('  "t.  atain  trover  for  it  against  the  maker,  even  if 
ho  liad  reason  to  think  that  the  depositary  had  authority  to 
deliver  it;  Kingman  v.  Pierce,  17  Mass.  247.  An  agent  paid 
his  principal ',"'  raon-^  "n  discharge  of  A's  debt.  Held,  that  the 
principal  had  no  cfiv.'i'ij  of  a^.tion  against  A,  there  being  no  priv- 
ity between  them  from  which  an  implied  contract  could  arise: 
Young  v.  Dibrell,  7  Humph.  270. 

§  122.  May  Sue  for  Torts  to  his  Property  in  Agent's 
Hands. — A  principal  may  maintain  an  action  against  any 
one  who  wrongfully  converts  or  injures  his  personal  prop- 
erty while  in  his  agent's  hands.* 

§  123.    Agent  Ordinarily  cannot  Sue  on  his  Contracts. 

— The  general  rule  is,  that  an  agent  cannot  maintain  an 
action  upon  a  contract  made  by  him  for  his  principal.* 


^  Limo  Rock  Bank  v.  Plimpton,  17 
Pick.  159;  28  Am.  Dec.  28G. 

2  Farmers'  Bank  v.  King,  57  Pa.  St. 
202;  9S  Am.  Dec.  215. 

3  Aikin  v.  Buck,  1  Wend.  467;  Thorp 
V.  Burling,  11  Johns.  285;  Cary  v. 
Hotailing,  1  H-ll,  312;  37  Am.  Dec. 
323;  Cutter  v.  Copcland,  18  Me.  127; 
Soper  V.  Sumner,  5  Vt.  274;  Edwards 
V.  Edwards,  11  Vt.  587;  34  Am.  Dec. 
711;  Story  on  Agency,  sees.  436-440; 
Southern  Ex.  Co.  v.  Palmer,  48  Ga. 


85;  White  v.  DoUiver,  113  Mass.  400; 
18  Am.  Rep.  502. 

*  Taintor  v.  Prendergast,  3  Hill, 
72;  38  Am.  Dec.  018;  Kert  v.  Born- 
stein,  12  Allen,  342;  Gunn  v.  Cantino, 
10  Johns.  387;  Oakey  v.  Bend,  3 
Edw.  Ch.  482;  Whitehead  v.  Potter, 
4  Ired.  257;  Jones  v.  Hart,  1  Hen. 
&  M.  470;  Jackson  Ins.  Co.  v.  Par- 
tee,  9  Heisk.  296;  Sargent  v.  Mor- 
ris, 3  Barn.  &  Aid.  277;  Fairlie  v. 
Fentou,  L.  R.  5  Ex.  169;  Pigott  v. 


200 


201      DUTIES  AND  LIABILITIES   OP  THIRD  PERSONS.      §  124 


"Ordinarily  an  agent  contracting  in  the  name  of  his  prin- 
cipal, and  not  in  his  own  name,  is  not  entitled  to  sue,  nor 
can  he  bo  sued  on  such  contracts.  Thus  an  agent  selling 
the  goods  of  his  principal  in  his  name  and  as  his  agent 
cannot  ordinarily  sue  on  the  contract  as  for  goods  sold  and 
delivered.  This  is  clearly  illustrated  in  the  common  case 
of  a  sale  made  by  a  clerk  or  shopman  in  a  shop  who  has 
no  right  whatsoever  to  sue  on  the  contract;  but  the  right 
belongs  exclusively  to  his  superior  or  employer.'"  Nor 
when  he  has  assumed  the  character  of  agent,  when  he  is 
really  the  principal,  without  first  notifying  the  other  party 
of  his  real  character.'^ 


§  124.    Exceptions — When  Agent  may  Sue.  — But  the 

agent  may  sue  in  his  own  name  in  the  following  cases, 
viz.:  Where  the  agent  has  made  the  contract  in  his  own 
name  for  an  undisclosed  principal;'  where  he  has  a 
beneficial  interest  in  the  contract;*  as,  for  example,  a  fac- 
tor'' or  an  auctioneer.'    An  agent  may  sue  in  his  own 


Thompson,  3  Bos.  &  P.  147;  White  v. 
Chouteau,  10  Barb.  202;  Grayt*.  Pear- 
son, L.  li.  5  Com.  P.  5G8;  Thompson 
V.  Fargo,  C3  N.  Y.  479;  Bayley  v.  Oiion- 
darra  Ins.  Co.,  6  Hill,  476;  41  Am. 
Doc.  759. 

'  Story  on  Agency,  sec.  391. 

2  Fo.ster  v.  Smith,  2  Cold.  474;  88 
Am.  Doc.  004;  Boulton  v.  Jones,  2 
Hurl.  &  N.  504;  Winchester  v.  How- 
ard, 97  Mass.  303;  93  Am.  Dec.  93; 
Bl(  kerton  v.  Burrell,  5  Maule  &  S.  383. 

s  Chandler  v.  Coe,  54  N.  H.  501; 
Culver  V.  Bigelow,  43  Vt.  249;  Taintor 
V.  Preude^,^'ast,  3  Hill,  72;  38  Am. 
Doc.  018;  Groover  r.  Warfield,  50  Ga. 
()44;  Suladin  v.  Mitchell,  45  111.  79; 
Merrick's  Estate,  2  Ashm.  485;  Hunt- 
ington V.  Knox,  7  Cush.  371;  Sims  v. 
Bond,  5  Barn.  &  Adol.  389;  Cooke  v. 
Wilson,  1  Com.  B.,  N.  S.,  153,  where 
Crowdor,  J.,  said:  "I  have  always 
understood  the  law  to  be  that  if  a  man 
signs  a  written  contract  he  is  to  be 
considered  as  the  contracting  party, 
unless  it  clearly  appears  that  he  exe- 
cutes it  as  agent  only";  Bayaer  v. 


Grote,  15  Mees.  &  W.  359;  Fairfield  v. 
Adams,  16  Pick.  381;  Beebei*.  Robert, 
12  Wend.  413;  27  Am.  Dec.  132;  Tyler 
V.  Freeman,  3  Cush.  201;  Sharp  v. 
Jones,  18  Ind.  314;  81  Am.  Dec.  359; 
Ludwig  V.  Gillespie,  51  N.  Y.  Sup. 
Ct.  310.  Where  a  contract  not  under 
seal  is  made  with  an  agent  in  his  own 
name,  for  an  undisclosed  principal, 
whether  he  has  descril)ed  himself  as 
agent  or  not,  either  the  agent  or  the 
principal  may  sue  upon  it:  Ludwig  v. 
Gillespie,  105  N.  Y.  053.  One  who 
sells  his  principal's  goods,  not  as  agent, 
but  as  principal,  may  sue  the  buyer  for 
the  price:  Keown  v.  Vogel,  25  ^lo. 
App.  35. 

*  Toland  v.  Murray,  18  Johns.  24; 
Atkyns  v.  Amber,  2  Esp.  493;  Leeds 
V.  Marine  Ins.  Co.,  0  Wheat.  505; 
Evrit  V.  Bancroft,  22  Ohio  St.  172; 
Whitehead  v.  Potter,  4  Ired.  257; 
Bryan  v.  Wilson,  27  Ala.  215;  South- 
ern Exp.  Co.  V.  Craft,  49  Miss.  480; 
19  Am.  Rep.  4. 

*  See  Part  IV.,  Factors. 

*  See  Part  III.,  Auctioneers. 


§124 


PRINCIPAL   AND   AGENT. 


202 


luiiuo  on  contracts  made  in  his  name  in  which  ho  is 
interested,  as  for  commissions,  or  by  reason  of  a  special 
property  in  the  subject-matter.  Among  such  agents  are 
factors,  brokers,  carriers,  auctioneers,  a  policy  broker 
whose  name  is  on  the  policy,  and  an  agent  who  in  his 
own  name  carries  on  a  business  for  his  principal,  and  ap- 
pears to  be  proprietor,  and  sells  goods  in  the  trade  as  such 
apparent  owner.^  Thus  an  agent  who  is  answerable  to  his 
principal  generally,  or  who  has  made  a  contract  beyond 
his  authority  on  which  he  will  bo  liable  to  his  employer, 
has  such  a  beneficial  interest  in  the  contract  as  to  give 
him  a  right  to  sue  on  it  in  his  own  name.^    An  agent 


*  United  S;,^fce8  Telegraph  Co.  r. 
Gilderslcve,  29  Md.  232;  96  Am.  Dec. 
519. 

"  Story  on  Agency,  sec.  398.  An 
agent  who  was  employed  to  sell  goods 
received  cash  for  them,  which  ho  ex- 
changed with  B  for  a  bill  of  larger  de- 
nomination, which  turned  out  to  be 
counterfeit.  Held,  that  he  could  re- 
cover back  the  money  from  B  in  his 
own  name:  Kent  v.  Bomstein,  12  Al- 
len, 342.  *"ihe  facts  of  this  case," 
said  Bigelow,  C.  J.,  "do  not  bring  it 
within  the  familiar  principle  relied  on 
by  the  defendant,  that  a  mere  agent  or 
servant,  with  whom  a  contract,  either 
express  or  implied,  is  entered  into  in 
behalf  of  anotlier,  and  who  has  no 
beneficial  interest  in  the  transaction, 
cannot  support  an  action  thereon.    The 

fdaintiflf  had  possession  of  money  be- 
onging  to  another,  for  a  special  pur- 
f»ose  only.  His  authority  was  strictly 
imited.  It  was  confined  to  the  mak- 
ing of  sales  of  goods  in  the  store,  and 
tlie  payment  of  the  money  received 
therefor  to  a  tliird  person.  He  had  no 
authority  to  deal  with  the  money  as 
his  own,  or  to  appropriate  it  for  any 
purpose  whatever.  His  duty  was 
merely  to  receive  it  for  goods  which 
he  might  sell  in  the  course  of  the  day, 
and  to  hold  it  in  his  possession  till  the 
hour  for  the  daily  payment  of  it  over 
to  the  sheriff's  keeper  arrived,  when 
Lo  was  bound  to  pay  it  over  to  him. 
Any  act  or  dealing  w^ith  the  money  be- 
yond this  was  outside  of  the  scope  of 
his  employmeat.    He  had  no  authority 


to  enter  into  any  contract  concerning 
the  money  in  hia  hands,  or  to  exchange 
it  for  other  money  with  third  persons. 
An  authority  to  raceivo  the  proceeds 
of  sales  in  a  shop  did  not  empower  the 
plaintiff  to  exchange  the  mouey  re- 
ceived in  small  sums  for  bills  of  larger 
denominations  with  persons  who  made 
no  purchases  of  goods.  No  evidence 
was  offered  to  show  any  usage  of  busi- 
ness, either  general  or  special,  which 
would  authorize  the  inference  that  the 
plaintiff's  authority  was  extended  be- 
yond the  precise  terms  of  his  employ- 
ment, so  as  to  embrace  a  transaction 
similar  to  that  which  he  entered  into 
with  the  defendant's  agent.  In  this 
state  of  the  evidence,  it  is  clear  that 
the  plaintiff  exceeded  his  authority  in 
exchanging  the  smaller  bills  in  his  pos- 
session for  one  of  the  denomination  of 
fifty  dollars,  and  he  is  liable  to  his  em- 
ployer for  the  loss  occasioned  by  his 
unauthorized  act.  It)  does  not  appear 
that  the  transaction  has  been  ratified 
by  the  principal.  For  aught  that  we 
can  know,  the  plaintiff  is  still  liable 
for  the  amount  of  the  genuine  bills 
which  he  exchanged  for  the  counterfeit 
one.  It  cannot  tlierefore  be  said  that 
the  plaintiff  has  no  beneficial  interest 
in  the  cause  of  action  on  which  this 
suit  is  brought.  On  the  contrary,  it 
plainly  appears  that  his  right  to  re- 
cover in  this  action  is  the  only  mode 
in  which  he  can  indemnify  himself 
against  the  rightful  claim  of  his  em- 
ployer for  the  loss  caused  by  his  abuse 
of  the  authority  intrusted  to  him." 


202 


203      DUTIES   AND   LIABILITIES   OF   THIRD   TERSONS.      §  124 


holding  negotiable  paper  payable  to  him  as  agent,  or  to 
bearer,  or  indorsed  in  blank,  may  sue  on  it  in  his  own 
name.*  So,  where  money  is  paid  by  the  agent  by  mistake, 
or  under  an  illegal  contract.  "  Where  a  man  pays  money 
by  his  agent  which  ought  not  to  have  been  paid,  either 
the  agent  or  principal  may  bring  an  action  to  recover  it 
back:  the  agent  may  from  the  authority  of  the  principal, 
and  the  principal  may  as  proving  it  to  have  been  paid  by 
his  agent. "^  Where  the  agent  sues  in  his  own  name,  the 
defendant  may  avail  himself  of  all  the  defenses  that 
would  have  been  open  to  him  had  the  suit  been  brought 
by  the  principal.^  An  agent  having  a  special  or  tempo- 
rary property  in  goods,  with  a  right  to  their  possession, 
may  maintain  trespass,  or  trover,  or  conversion  against  a 
third  person.* 

Illustrations.  —  A  contract  of  sale  read,  that  "I,  A,  agent 
for  B,  agree  to  Bcll,"  etc.,  and  "  I,  C,  agree  to  buy,"  etc.  No 
other  mention  of  B's  name  was  make,  and  it  was  signed  by  A 
in  his  own  name,  and  by  C.  Held,  A  could  sue  in  his  own 
name  for  a  broach:  Albany  and  Eenssclaer  Iron  etc.  Co.  v.  Lund- 
berg,  121  U.  S.  451.    A  delivered  B'e  coat  in  a  bundle  to  a  ear- 


ns cin- 
3  abuae 


*  Mauran  v.  Lamb,  7  Cow.  174; 
Buffum  V.  Chadwick,  8  Mass.  103;  Fair- 
tield  V.  Adams,  16  Pick.  351;  Sargeat 
V.  Morris,  3  Barn.  &  Aid.  277;  Con- 
siderant  v.  Brisbane,  22  N.  Y.  303; 
Van  Staphorst  v.  Pearce,  4  Mass.  2J8; 
Fish  V.  Jacobsohn,  1  Keyes,  539;  John- 
son V.  Catlin,  27  Vt.  89;  62  Am.  Doc. 
6'J2;  Jackson  v.  Heath,  1  Bail.  35o; 
Moore  v.  Penn,  5  Ala.  135;  Blanchard 
V.  Page,  8  Gray,  281;  Griffiths.  Ingle- 
dew,  6  Serg.  &  R.  429;  9  Am.  Dec. 
4t4;  Hamilton  v,  Voiight,  34  N.  J.  L. 
187;  Dugan  V.  United  iStates,  3  Wheat. 
176;  Guernsey  v.  Burns,  25  Wend. 
412:  Brigham  v.  Marean,  7  Pick.  40; 
Commercial  Bank  v.  French,  21  Pick. 
486;  32  Am.  Dec.  280;  Fisher  v.  Ellis, 
3  Pick.  322;  Binney  v.  Plumley,  5  Vt. 
500;  26  Am.  Dec.  313;  Mcllenry  v. 
Ridgely,  2  Scam.  309;  35  Am.  Dec. 
110;  Doe  V.  Thompson,  22  N.  H.  217; 
Wheelock  v.  Wheelock,  5  Vt.  433; 
Clap  V.  Day,  2  Mo.  305;  11  Am.  Dec. 
99;  Goodman  v.  Walker,  30  Ala.  482; 


68  Am.  Dec.  134;  Pierce  ?■.  Robie,  39 
Me.  205;  03  Am.  Dec.  6J.4;  Rutland 
etc.  R.  R.  Co.  V.  Cole.  24  Vt.  37;  Pot- 
ter V.  Yale  College,  8  Conn.  52;  I'ortor 
V.  Nckervis,  4  Rand.  359;  Poor  v. 
Guilford,  10  N.  Y.  273;  61  Am.  Dec. 
749. 

^  Lord  Mansfield,  C.  J.,  in  Drink- 
water  V.  Goodwin,  C'owp.  251;  Kent 
V.  Bornstcin,  12  Allen,  312;  Oom  v. 
Bruce,  12  East,  225;  Lime  Rock  Bank 
V.  Plimpton,  17  Pick.  159;  28  Am. 
Dec.  236.  Sec  Huugerford  v.  Scott,  37 
Wis.  341. 

"  Gib-ion  V.  Winter,  5  Barn.  &  Aid. 
96;  Leeds  v.  Marine  Ins.  Co.,  6  Wheat. 
565;  Taintor  v.  Piendergast,  3  Hill, 
72;  33  Am.  Dec.  618;  Ilogan  v.  Shorb, 
24  Wend.  458. 

*  Evans  on  Agency,  389;  Robinson 
V.  Webb,  11  Bush,  464;  Heard  v. 
Brewer,  4  Daly,  136;  Bass  v.  Pierce, 
16  Barb.  595;  Faulkner  v.  Brown,  13 
Wend.  63;  Beyer  v.  Bush,  50  Ala.  19; 
Story  on  Agency,  sees.  414  et  seq. 


§125 


PRINCIPAL   AND   AOKNT. 


204 


ricr.     The  bundle  was  lost.     Held,  that  A  might 
against  tlie  carrier:  Elkins  v.  Boston  etc.  It 
51  Am.  Dec.  184.' 


V 


1  iiig  ail  iu.iiiui 


{.  Co.,  ID  N.  II. 


§  125.    Agfent's  Right  to  Sue  Oontrollable  by  Principal. 

— The  right  of  the  agent  to  sue  is  subordinate  to  and  con- 
trollable by  the  principal.  Where  the  principal  as  well  as 
the  agent  has  a  right  to  sue  upon  a  contract  made  by  the 
latter,  he  may  generally  supersede  the  right  of  the  agent 
to  sue  by  suing  in  his  own  name.'' 


^  "Tlio  principle,"  aaiil  the  court, 
"  api>eard  to  bo  settled  that  if  it  is  not 
expressed  tiiat  an  agent  contracts  in 
behalf  of  another,  and  the  name  of  the 
principal  is  not  disclosed  by  him,  a 
suit  may  be  maintained  in  the  name 
of  the  principal.  In  the  present  case 
Jonathan  Elkius  was  clearly  the  aj;ent 
of  the  plaintill",  and  the  name  of  the 
plaintiff  was  not  disclosed  by  him. 
Tliis  principle  is  recognized  in  the 
case  of  8ims  v.  Bond,  5  Barn.  &  Adol. 
3S'J,  where  Lord  Denman  says:  'It  is 
a  well-established  rule  of  law  that 
where  a  contract,  not  under  seal,  is 
made  with  an  aj^ont  in  his  own  name 
for  an  undisclosed  principal,  either 
the  agent  or  the  principal  may  sue 
upon  ft;  the  defendant  in  the  latter 
case  l)eing  entitled  to  be  placed  in  the 
same  situation  at  the  time  of  the  dis- 
closure of  the  real  principal  as  if  the 
agent  had  been  the  contracting  party.' 
In  the  case  of  Higgins  v.  Senior,  8 
Moes.  &  W.  834,  it  was  held  tliat  the 
suit  might  be  maintained  on  the  con- 
tract cither  in  the  name  of  the  prin- 
cipal or  of  the  agent,  and  that,  too, 
although  required  to  be  in  writing  by 
the  statute  of  frauds:  Bcebe  v.  Robert, 
12  Wend.  413;  27  Am.  Dec.  132;  Tain- 
tor  V.  Treudergast,  3  Hill,  72;  38  Am. 
Dec.  CI8.  The  same  principal  was 
adopted  by  tiio  suijreme  court  of  the 
United  States  in  the  memorable  case 
of  the  loss  of  the  steamer  Lexington 
in  Long  Island  Sound.  In  the  case 
of  New  Jersey  Steam  Navigation 
Company  v.  Merchants'  Bank,  6  How. 
344,  the  bank  had  delivered  to 
Haruden,  an  express  agent,  a  large 


amount  of  specie  for  transportation, 
by  whom  it  was  delivered  to  the  Steam 
Navigation  Company,  who  were  tlicn 
running  the  Lexington  between  New 
York  and  Stonington.  It  was  lield 
tliat,  notwithstanding  the  contract  of 
atTreightment  was  made  by  Harudou 
with  the  company  personally  for  the 
transportation  of  the  specie,  it  was, 
in  contemplation  of  law,  a  contract 
between  the  bank  and  the  company, 
and  althougli  Harnden  made  the  con- 
tract in  Ilia  name,  and  without  dis- 
closing the  name  of  his  employers  at 
the  time,  the  bank  miglit  maintain  a 
suit  upon  the  contract  directly  against 
the  company.  So  where  the  plaintifT 
agreed  with  B,  a  common  carrier,  for 
the  carriage  of  goods,  and  B,  without 
the  plaintiff's  directions,  agreed  for 
the  carriage  with  C,  who,  without  the 
plaintiff's  knowledge,  agreed  with  D, 
a  third  carrier,  it  was  lield  that  the 
plaintiff  might  maintain  au  action 
against  D  for  not  delivering  the  goods, 
and  that  by  bringing  the  action,  the 
plaintiff  affirmed  the  contract  made 
with  D  by  C,  and  could  not  afterwards 
recover  from  B:  Sanderson  v.  Lamber- 
ton,  CBinn.  129." 

^  Story  on  Agency,  sec.  403:  Sadler 
V.  Leigh,  4  Camp.  194;  Taintor  v. 
Prendergast,  3  Hill,  72;  38  Am.  Dec. 
618;  Girard  v.  Taggart,  G  Serg.  &  R. 
27;  9  Am.  Dec.  327;  Sargent  r.  Mor- 
ris, 3  Barn.  &  Aid.  277;  Morris  v. 
Cleasby,  I  Maulc  &  S.  57G;  Coppin  v. 
Walker,  7  Taunt.  237;  Walter  v. 
Ross,  2  Wash.  C.  C.  283;  Hubbert  v. 
Borden,  6  Whart.  79. 


205 


ADMISSION    AND   REMOVAL  OF   ATTORNEYS. 


§120 


Part  II.— ATTORNEY  AND  CLIENT. 


CHAPTER  XIII. 

THE  ADMISSION  AND  REMOVAL  OF  ATTORNEYS. 

§120.  Attorneys  defined. 

§  127.  Admisaion  to  the  bar  —  License  essential  to  practioe. 

§  128.  Office  of  attorney  —  Nature  of  tho  oflSce. 

§  129.  Power  of  court  to  disb  n  attorneys. 

§  130.  Causes  good  prounds  Un  d'sbarmont. 

§131.  Causes  not  ground  for  disbarment. 

§  1 32.  Suspension  for  a  time. 

§133.  Previous  conviction  not  necessary. 

§134.  Practice  on  disbarment  proceeding  —  Proof — Appeal. 

§  135.  Mandamus  to  restore  attorney. 

§  136.  Readmission  after  disbarment. 

§  126.  Attorneys  Delined. — In  England  there  are  dif- 
ferent divisions  of  lawyers, — sergeants,  queen's  counsel, 
barristers,  attorneys, proctors,  solicitors, etc.  The  members 
of  these  different  divisions  have  certain  privileges  and  dis- 
tinctions peculiar  to  their  order.  A  barrister  cannot  draw 
papers  or  do  the  work  of  an  attorney;  an  attorney  cannot 
appear  in  court  and  plead  tho  cause  of  his  client.  No 
such  class  distinction  prevails  in  the  American  states. 
With  us,  the  same  person  may  fulfill  the  duties  of  both 
the  English  barrister  and  attorney.  The  term  "attorney 
at  law"  is  therefore  a  general  title,  embracing  all  persons 
who  are  skilled  in  the  law,  and  duly  authorized  to  repre- 
sent others  in  litigation  and  in  legal  matters.'  The  word 
"attorney  "  will  be  construed  to  mean  attorney  at  law  when 
not  coupled  with  any  word  of  qualification.'^  The  office  ol 
attorney,  in  its  professional  signification,  is  not  known  in 
justices'  courts'  nor  in  a  surrogate  court  in  New  York.* 

'  Wharton  on  Agency,  sec.  555.  'Bailey  v,  Delaplaine,  1  Sand.  11; 

^  Ingram  v.  Richardson,  2  La.  Ann.  Fox  v.  Jackson,  8  Barb.  355. 

839;  Dwight  V.  Weir,  6  La.  Ann.  706;  ♦  CuUea  v.  Miller,  9  N.  Y.  Leg.  Obs- 

contra,  Hall  v.  Sawyer,  47  Barb.  116.  62. 


§127 


PRINCIPAL   AND  AOBNT. 


206 


§  127.  Admission  to  the  Bar— License  Essential  to 
Practice.  —  A  person  cannot  hold  himself  out  as  a  practi- 
tioner of  law  without  a  license  to  do  so  issued  by  sonic  com- 
petent authority, — generally  a  court  of  justice,  appellate  or 
of  original  jurisdiction.'  A  liceuso  granted  by  the  high- 
est court  of  a  state  gives  authority  to  practice  in  all  the 
courts  of  that  state,  while  a  license  given  by  an  inferior 
court  extends  only  to  practice  in  that  particular  court.'' 
This  license  is  usually  granted  after  an  examination  as  to 
the  applicant's  knowledge  of  the  law,  or  as  to  his  possess- 
ing the  qualifications  required  by  statute.  The  statutes 
of  the  different  states  prescribe  these  qualifications.'  One 
who  is  not  licensed  to  practice  as  an  attorney,  but  repre- 
sents himself  to  be  one,  and  is  employed  and  acts  as  such, 
cannot  recover  for  his  services  by  declaring  on  them  as 
those  of  an  agent  only.*  A  statute  making  the  diploma 
of  a  law  school  conclusive  evidence  of  the  learning  and 
ability  of  the  possessor  is  valid  ;*  but  a  statute  is  not  which 
admits  to  the  practice  of  law  any  person  of  good  moral 
character.*  An  unlicensed  attorney  cannot  sue  for  fees, 
nor  can  the  firm  of  which  he  is  a  member,  though  the 
other  partners  are  licensed.'  The  term  of  the  office  is  for 
life,  during  good  behavior.®    The  order  of  a  court  admit- 


1  Robb  V.  Smith,  4  111.  46;  McKoan 
V.  Dcvries,  3  Barb.  196;  Thorn  r.  Law- 
son,  6  lex.  240;  In  re  Pratt,  13  How. 
Pr.  1. 

*  Weeks  on  Attorneys,  aec.  23; 
Withers  V.  State,  36  Ala.  252;  Osborn 
V.  United  States  Bank,  9  Wheat.  738. 

*  See  Weeks  on  Attorneys,  sees.  66- 
76;  In  re  Pratt,  13  How.  Pr.  1;  In  re 
A.  B.,  5  N.  Y.  Leg.  Obs.  136;  In  re 
Graduates,  11  Abb.  Pr.  301;  20  How. 
Pr.  1 ;  10  Abb.  Pr.  357;  19  How.  Pr. 
136;  People  v.  Hallett,  1  Col.  352. 

*  Tedrick  v.  Hiner,  61  111.  190. 
6  In  re  Cooper,  22  N.  Y.  67. 

«  McKoan  v.  Devries,  3  Barb.  196; 
Devries  ads.  McKoan,  6  N.  Y.  Leg. 
Obs.  203;  BuUard  v.  Van  Tassell,  3 
How.  Pr.  402;  see  Roy  r.  Harley,  1 
Duer,  637. 


^  Hittson  V.  Browne,  3  Col.  304. 

^  "And  his  oflBce  is  an  oflBce  for  life. 
....  The  grant  of  an  office  without 
express  limitation  at  common  law,  be- 
ing taken  most  strongly  against  the 
grantor,  endures  for  the  life  of  the 
grantee;  and  though  this  principle  hii3 
not  been  applied  to  ofiBces  within  the 
grant  of  the  executive,  it  must  neces- 
sarily be  applied  to  the  office  of  attor- 
ney, for  to  subject  the  members  of  the 
profession  to  removal  at  the  pleasure 
of  the  court  would  leave  them  too 
small  a  share  of  the  independence  ne- 
cessary to  the  duties  tliey  are  called  to 
to  perform  to  their  clients  and  to  tlie 
public":  Case  of  Austin,  5  Rawlu, 
191;  28  Am.  Dec.  657;  Richardson  v. 
Brooklyn  City  R.  R.  Co.,  22  How.  Pr. 
368. 


206 


207 


ADMISSION   AND   REMOVAL   OP   ATTOHNKYS. 


§127 


ence  ne- 
called  to 
d  to  the 
Rawle, 
rdson  v. 
low.  Pr. 


ting  an  attorney  to  practice  is  an  adjudioation  that  ho  was 
of  "good  moral  character"  at  tliat  time.*  If  the  court 
finds  the  applicant  not  to  possess  the  "character  or  learn- 
ing" required  by  statute,  its  decision  is  not  reviewable  on 
appeal."  Nor  is  the  decision  of  the  court  that  his  quali- 
fications are  sufficient  appealable  from.*  The  decision  of 
the  court  that  ho  is  not  entitled  to  admission  is  review- 
able on  appeal,  but  is  not  the  suttject  of  mandamus.*  An 
attorney  cannot  have  his  name  enrolled  nunc  pro  tunc  as 
of  the  day  of  his  license.'  lie  >  i  inot  bo  admitted  with- 
out personally  appearing  before  the  court.*  He  may  be 
examined  as  to  his  professional  qualifications,  even  though 
he  is  a  member  of  the  bar  of  another  state  or  of  the  supreme 
federal  court.'  The  statutory  provision  that  an  attorney 
of  another  state  may  be  admitted  on  the  production  of  his 
license  does  not  take  away  the  power  of  the  court  to  in- 
quire as  to  his  still  being  a  member  of  the  V»ar,  and  as  to 
his  standing  and  moral  character.®  A  rule  requiring  a 
candidate  for  admission  to  the  bar  to  serve  a  clerkship  of 
four  years  with  n  practicing  attorney  is  not  complied  with 
by  studying  law  with  an  attorney  for  that  time;  he  must 
actually  assist  him  in  the  office  practice."    But  a  service 

'  la  re  Lowenthal,  61  Cal.  122.  which    he   must  undergo;  and  alto- 

» In  re  Bcggs,  67  N.  Y.  120.  gether  aside  from  that  question  is  the 

*  State  I?.  Johnston,  2  Har.  &  M.  160.'-  inquiry  whether  he  has  served  the 
♦Commonwealth  v.  Judges,  1  Serg.  necessary  clerkship.  The  substance  of 
"    '"■'    "^^    "  *'■  ■   '  "        this  prerequisite  it  is  not  difficult  to 

perceive.  A  clerkship  to  an  attorney 
imports  the  office  of  assistant  to  an 
attorney,  an  actual  occupation  in  and 
about  the  attorney's  business  and  un- 
der his  control.  The  service  is  to  be 
rendered,  not  solely  or  mainly  by  the 
study  of  law-books,  but  chiefly  by  at- 
tending to  the  work  of  the  attorney 
under  his  direction.  The  purpose  of 
the  rule  is,  that  the  clerk  shall  be  actu- 


&  R.  187;  Strother  v.  Missouri,  1  Mo, 
605;  Ex  parte  Garland,  4  Wall.  378; 
In  re  Cooper,  22  N.  Y.  67;  Ex  parte 
Secombe,  19  How.  9;  Bradwell  v.  State, 
1(5  Wall.  133, 

^  Ex  parte  Fellows,  3  111.  369. 

«  Ex  parte  Snelling,  44  Cal.  553. 

'  Ex  parte  Snelling,  44  Cal.  553.  A 
lawyer  from  another  state  may  become, 
by  practicing  without  being  admitted, 

a  de  facto  attorney,  so  that  his  acts     , 

will  be  valid:  Garrison  v.  MoOowan,    ally  engaged  in  the  practice  of  law 
48  Cal.  598.  under  the  guidance  of  his  master  for 

« In  re  Lowenthal,  61  Cal.  122.  the  stated  period,  so  tliat  by  direct 

» In  re  Dunn,  43  N.  J.  L.  359;  39  contact  with  an  attorney's  duties  he 
Am.  Rep.  600;  the  court  saying:  may  acquire  the  skill  and  facility  in 
"Whether  an  applicant  has  studied  the  profession  which  are  necessary  for 
sufficiently  is  left  by  our  rules  to  be  enabling  him  to  protect  and  promote 
determined    upon    the    examination    independently  the  interests  that  clients 


§128 


PRINCIPAL  AND   AGENT. 


208 


m?'4 


with  a  judge  of  a  court  is  a  service  with  a  "practicing 
attorney  or  gentleman  of  the  law."  *  The  right  to  prac- 
tice  law  does  not  depend  on  United  States  citizenship.^ 
Women  are  not  eligible  to  hold  the  office  of  attorney  at 
law,'  nor  non-residents  of  the  state,*  nor  unnaturalized 
foreigners,^  nor  a  circuit  judge,*  nor  a  master  in  chan- 
cery,' nor  the  clerk  of  the  court.^ 

§  128.    OflBce  of  Attorney— Nature  of  the  Office. — An 

attorney  at  law  does  not  hold  an  "office  of  trust,  civil  or 
military,"  within  those  words  in  a  statute,"  nor  is  he  an 
"officer"  or  "public  officer."^"  He  cannot  be  excluded 
from  his  profession  for  past  misconduct, — as,  for  example, 
bearing  arms  against  the  United  States,"  or  having  fongl* 
a  duel,^^ — unless  it  seems  that  the  past  conduct  shows  him 
to  be  a  person  not  of  "good  moral  character."^'  The  fact, 
however,  that  the  attorney  is  not  qualified  does  no^  render 
void  —  as  against  the  client — the  proceedings  taken  by 
him.^*  A  license  granted  by  a  court  to  an  attorney  to 
practice  law  is  not  a  contract  between  him  and  the  state 


may  afterwards  commit  to  him.  This 
is  the  solo  object  of  requiring  the  clerk- 
ship to  bo  served  with  a  practicing  at- 
torney. For  the  mere  study  of  legal 
Jirinciples,  a  retired  counselor  or  a  pro- 
essor  wouIJI  be  an  apter  guide." 

^  Commonwealth  v.  Judges,  1  Serg. 
&  R.  187. 

a  Bradwcll  v.  State,  16  Wall.  130. 

*  In  re  Bradwell,  55  111.  5.35;  Brad- 
well  V.  State,  10  Wall.  130;  In  re 
Lockwood,  9  Nott  &  H.  340;  In  re 
Goodell,  30  Wis.  232;  20  Am.  Rep. 
42;  Robinson's  Case,  131  Mass.  376; 
41  Am.  Rep.  239;  contra,  In  re  H;.ll, 
50  Conn.  131;  47  Am.  Rep.  625;  In  re 
Leonard,  12  Or.  93;  53  Am.  Rep.  323. 
By  statute  in  several  states  this  privi- 
lege is  now  granted  to  women. 

*  In  re  Mosness,  39  Wis.  520;  20 
Am.  Rep.  65;  In  re  Henry  ads.  8nyder, 
40  N.  Y.  560;  Richardson  v.  Brooklyn 
R.  R.  Co.,  22  How.  Pr.  308. 

*  Ex  parte  Thompson,  3  Hawks,  355; 
1  Johns.  528;  In  re  O'Neill,  90  N.  Y. 
6S4;  contra,  In  re  Emmet.  2  Gaines,  387. 


8  Hobby  V.  Smith,  1  Cow.  588;  Sey- 
mour V.  Ellison,  2  Cow,  13. 
'  Anonymous,  Tayl.  G. 

8  CoUins's  Case,  2  Va.  Cas.  222. 

9  Ex  parte  Faulkner,  1  W.  Va.  2G9; 
Cohen  v.  Wright,  22  Cal.  204;  Ex 
parte  Yale,  24  Cal.  241;  85  Am.  Dec. 
62. 

'**  IngersoU  v.  Howard,  1  ileisk.  2t7; 
Champion  v.  State,  3  Cold,  lit;  Ex 
parte  Garland,  4  Wall.  333;  Dyriie  v. 
Stewart,  3  Desaus.  Eq.  466;  Leigh's 
Case,  1  Munf.  ''OS.  See  Waters  v. 
Whittemore,  22  Barb.  595. 

"  Ex  parte  Garland,  4  Wall.  333; 
Ex  parte  Law,  35  Ga.  285;  Ex  parte 
Tenney,  2  Duvall,  351. 

'^  In  re  Dorsey,  7  Port.  293.  See  In 
re  Wood,  1  Hopk.  Ch.  6;  Leigh's  Case, 
1  Munf.  468. 

'^  As,  for  instance,  where  he  has  been 
convicted  of  larceny:  Attorneys'  Li- 
cense, 21  N.  J.  L.  345. 

"  Peterson  v.  Parriott,  4  W.  Va.  42; 
Weeks  on  Attorneys,  sec.  43;  Garrison 
V.  McGowau,  48  Cal.  698. 


208 


209 


ADMISSION    AND   REMOVAL   OF   ATTOKNEYS. 


§129 


222. 

Va.'  2G9; 
204;  Ex 
Lin.  Doc. 

[eisk.  2i7; 
Hi;   Ex 

r.ynio  r. 

;   Loigli'a 

'iiters   V. 


Seo  la 
th'd  Case, 

I  has  been 
loya'  Li- 


which  the  legislature  cannot  interfere  with.*  It  may  be 
revoked,  or  additional  conditions  may  be  placed  upon  its 
exercise."  So  the  exercise  of  its  profession  may  be  taxed, 
and  a  penalty  enforced  upon  its  exercise  without  such 
payment.^  The  requirement  of  a  license  tax  for  carrying 
on  the  profession  of  attorney  at  law  does  not  conflict  with 
a  constitutional  provision  that  taxation  upon  property 
shall  be  in  exact  proportion  to  its  value.^ 

§  129.    Power  of  Court   to  Disbar  Attorneys.— The 

summary  jurisdiction  of  the  court  over  an  attorney  may 
be  exercised  to  the  extent  of  taking  away  his  oliicc, — dis- 
barring him,  striking  his  name  from  the  rolls.  Such  a 
power  is  necessary  to  protect  the  court  itself,  the  ad- 
mii-1-U.ation  of  justice,  and  the  public  from  imposition 
and  fraud.  It  is  exercised,  not  by  way  of  punishment, — 
the  attorney  may  also  be  punished  in  the  proper  tribunals 
if  his  acts  amount  to  a  crime, — but  to  remove  from  the 
exercise  of  professional  privileges  those  who  are  unworthy 
of  them.  "The  proceeding  is  not  for  the  purpose  of  pun- 
ishment, but  for  the  purpose  of  preserving  the  courts  of 
justice  from  the  official  ministration  of  persons  unfit  to 
practice  in  them.""  The  license  of  an  attorney,  obtained 
without  authority  of  law,  may  bo  revoked  in  a  summary 
proceeding.''     "It  is  difficult,"  says  Taney,  C.  J.,  "if  not 


1  Simmona  v.  State,  12  Mo.  2G8;  49 
Am.  Dec.  ]">l;  State  f.  Lackland,  12 
llo.  271);  State  v.  Garesche,  33  Mo. 
2G1. 

■*  Id.  Ill  Pcoplo  V.  Walbridge,  G  Cow. 
512,  tho  constitutionality  of  a  statute 
prolul)iting  attorueya  from  buying  ne- 
gotiable paper  was  attacked.  But  the 
court  hcl  1  it  constitutional. 

^  Siinmous  v.  State,  12  Mo.  2G8;  49 
Am.  Dec.  131;  Cousins  v.  State,  CO 
Ala.  113;  23  Am.  Rep.  290;  St.  Louis 
V.  Sternberg,  8  Cent.  L.  J.  8;  Gold- 
tliwaite  V.  City  Council,  50  Ala.  48G; 


109;  Ould  V.  City  of  Richmond,  23 
Gratt.  4G4;  14  Am.  Rep.  139;  coii/.ra, 
Lawyer'a  Tax  Casos,  8  Hoi,  k.  5G5. 
E.'.ch  member  of  a  firm  must  pay  the 
liceuae  fee:  Jones  v.  Paige,  44  Ala. 
657. 

*  McCaskoU  r.  State,  53  Ala.  510. 

*Ex  parte  Wall,  po.it;  Pcopb  v. 
Turner,   1  Cal.  143;  52  Am.  l)oi.  295. 

«  111  re  BurcharJ,  27  Hun,  4'J9.  In 
Ex  parte  Wall,  107  U.  S.  2G5,  it  is 
said:  "  It  is  laid  down  in  all  the  books 
in  which  the  subject  is  treated,  that  a 
court  has  power  to  exercise  a  sum- 


Stewart  V.  Potts,  49  Miss.  479;  State  mary  jurisdiction  over  its  attorneys, 

r.  King,   21    La.  Ann.  201;  State  v.  to  compel  them  to  act  honcotly  towards 

Waplcs,    12  La.  Ann.    343;   Egan  v.  their  clients,  and  to  punish  them  by 

St.  Charles  Court,  3  liar,    k  McH.  fine  and  iuprisoumcnt  for  misconduct . 
Vol.  I. -14 


§129 


PRINCIPAL   AND   AGENT. 


210 


impossible,  to  enumerate  t>nd  define  with  legal  precision 
every  offense  for  which  an  attorney  or  counselor  ought  to 
be  removed;  and  the  legislature  for  the  most  part  can 
only  prescribe  general  rules  and  principles  to  be  carried 
into  execution  by  the  court  with  judicial  discretion  jind 
justice,  as  cases  may  arise."*  The  power  to  disbar  is 
inherent  in  the  court,  and  need  not  bo  given  (t'-ougli  it 
may  be  regulated)  by  statute.'^     Where  grounds  of  disbar- 


and  contempts,  and,  in  gross  cases  of 
miscoa^luct,  to  strike  their  names  from 
the  roll.  It  reguhr.ly  convicted  of  a 
felony,  au  attoruei;  will  be  struck  oflf 
the  roll  as  of  coifse,  whatever  the 
felony  may  be,  because  he  ia  rendered 
infamous.  If  convicted  of  a  misde- 
meanor which  imports  fraud  or  dis- 
honesty, the  same  course  will  bo  taken. 
He  will  also  he  struck  ofif  the  roll  for 
gross  malpractice  or  dishonesty  in  his 
profession,  or  for  conduct  gravely 
affecting  his  professional  character. 
In  Archbold's  Practice,  edition  by 
Chitty,  p.  148,  it  is  said:  'The  court 
wdl,  in  general,  interfere  in  this  sum- 
mary way,  to  strike  an  attorney  oflf 
tiiO  I'oU  or  otherwise  punish  him  for 
gross  misconduct,  not  only  in  cases 
where  the  misconduct  has  arisen  in 
the  course  of  a  suit,  or  other  regular 
and  ordinary  business  of  an  attorney, 
but  where  it  has  arisen  in  any  other 
matter  so  connected  with  his  profes- 
sional character  as  to  afford  a  fair 
presumption  that  he  was  employed  in 
or  intrusted  with  it  in  consequence  of 
that  character.'  And  it  is  laid  down 
by  Tidd,  that  '  where  an  attorney  has 
been  fraudulently  admitted,  or  con- 
victed (after  admission)  of  felony,  or 
other  offense  which  renders  him  unfit 
to  be  continued  an  attorney,  or  has 
knowingly  suffered  his  name  to  be 
made  use  of  by  an  unqualified  person, 
or  acted  as  agent  for  such  person,  or 
has  signed  a  fictitious  name  to  a  An- 
murrcr,  as  and  for  the  signature  of  a 
barrister,  or  otherwise  grossly  mis- 
behaved himself,  the  court  will  order 
him  to  be  struck  off  the  roll ':  1  Tidd's 
Prac.,  9th  ed.,  89.  Where  an  attorney 
was  convicted  of  theft,  and  the  crime 
was  condoned  by  burning  in  the  hand, 
he  was,  nevertheless,  struck  from  the 
roll.     'The  question    is,'  said   Lord 


Mansfield,  '  whether,  after  the  con- 
duct of  this  man,  it  is  proper  thnt  he 
should  continue  a  member  of  a  piofes- 
sion  which  should  stand  free  fra-i  all 

suspicion It  is  not  by  ^ray  of 

punishment;  but  the  court  in  such 
cases  exercise  their  discretion,  whether 
a  man  whom  they  have  formerly  ad- 
mitted is  a  proper  person  to  be  con- 
tinued on  the  roll,  or  not.' " 

-  Ex  parte  Secombe,  19  How.  9. 

•■»  State  r.  Winton,  1 1  Or.  45G;  50 
Am.  Rep.  48G;  Ex  parte  Wall,  107  U. 
S.  2G5;  People  v.  Palmer,  Gl  111.  2?5; 
State  V.  Burr,  19  Neb.  593;  United 
States  i).  Porter,  2  Cranch  C.  C.  GO; 
Cohen  v.  Wright,  22  Cal.  293;  In  re 
Davies,  93  Pa.  St.  116;  39  Am.  Rep. 
729;  In  re  Goodrich,  79  111.  148;  Pe- 
nobscot Bar  V.  Kimball,  G4  Me.  140;  In 
re  Woolley,  11  Bush,  95;  Merritt  v. 
Lambert,  10  Paige,  356;  Ex  parte 
Smit'.i,  28  Ind,  47;  Ex  parte  Brown,  2 
Miss.  303;  In  re  Bowman,  8  Cent.  L.  J. 
250;  State  V.  Kirke,  ]2Fla.  278;  95  Am. 
Dec.  314;  Bradley  r.  Fisher,  13  Wall. 
335;  Ex  parte  Cole,  1  McCrary,  405; 
Baker  v.  Commonwealth,  10  Bush,  592. 
The  St,  Louis  criminal  court  cannot 
disbar  an  attorney,  nor  suspend  him 
from  practice.  Under  the  statute,  this 
power  is  vested  only  in  the  supreme 
court,  the  St.  Louis  court  of  appeals, 
and  the  several  circuit  courts:  State 
V.  Laughlin,  73  Mo.  443.  Under  the 
Illinois  statute  giving  the  supreme 
court  exclusive  power  to  strike  from 
the  roll  the  name  of  an  attorney  for 
malpractice,  the  circuit  court  can  only 
suspend  him  from  practice  till  the 
next  term  of  the  supreme  court.  And 
the  order  of  suspension  must  be  re- 
scinded if  the  supreme  court  then 
make  no  movement  to  strikf^  him  from 
the  roll:  Winkelman  v.  People,  50 
lU.  449.     Oisbiurred  attonxeya  can  no 


210 


211 


ADMISSION   AND   REMOVAL  OF   ATTORNEYS. 


§129 


preme 
from 
ney  for 
in  only 
ill  the 
And 
be  re- 
then 
1  from 
le,  50 
can  no 


merit  are  specified  by  statute,  this  does  not  exclude  the 
power  of  the  court  to  disbar  for  good  grounds  not  men- 
tioned.' An  attorney  struck  from  the  roll  of  one  court 
will  not  be  admitted  in  any  other,*  or  be  allowed  to  act 
for  a  party  by  letter  of  attorney.'  In  New  York  it  is  held 
that  conviction  of  a  felony  forfeits  the  attorney's  office 
and  hio  right  to  practice,  without  an  order  of  court  re- 
moving him.*  The  disbarment  of  an  attorney  by  a  county 
court  in  Florida  does  not  affect  his  status  in  other  courts.' 
In  Illinois,  a  circuit  court  can  only  suspend,  the  supreme 
court  must  disbar."  The  United  States  supreme  court 
has  refused  to  consider  the  fact  that  a  member  of  the  bar 
of  the  supreme  court  of  a  state  has  been  struck  from  the 
rolls  of  a  federal  district  court  of  that  state,  as  a  reason 
for  not  admitting  him  to  the  bar  of  the  United  States 
supreme  court.'  An  attorney  may  be  removed  from  the 
rolls  at  his  own  request.®  It  is  no  bar  to  the  court's  pro- 
ceeding to  disbar  for  wrongfully  retaining  money  belong- 
ing to  a  client,  that  the  attorney,  after  the  proceedings 
were  commenced,  has  paid  over  the  money.*     Nor  can 

longer  appear  as  attorneys  in  any 
court  of  record  in  Michigan,  nor  repre- 
sent any  person  in  court  as  attorney, 
agent,  or  otherwise:  Cobb  v.  Grand 
Rapids  Superior  Judge,  43  Mich.  289. 
•  In  re  Mills,  1  Mich.  392;  Ohio  v. 
Chapman,  11  Ohio,  430;  Beener.  State, 
22  Ark.  157;  In  re  Bowman,  8  Cent. 
L.  J.  250;  contra,  Ex  parte  Smith, 
28  Ind.  47;  Redman  v.  State,  28  Ind. 
205;  Kane  v.  Haywood,  66  N.  C.  1. 
In  Ex  parte  Secombe,  19  How.  9, 
Taney,  C.  J.,  says:  "  It  is  true  that  in 
the  statutes  of  Minnesota  rules  are 
prescribed  for  the  admissior  of  attor- 
ney and  counselors,  and  al»ij  for  their 
removal.  But  i*^  "'ill  appear  upon  ex- 
amination thav<  in  describing  some  of 
the  ofTenses  for  which  they  may  be  re- 
moved the  statute  has  done  but  little, 
if  anything,  more  than  enact  the  gen- 
eral rules  upon  which  the  courts  of 
law  have  always  acted,  and  have  not 
in  any  material  degree  narrowed  the 
discretion  they  exercised.  Indeed,  it 
is  difficult,  if  not  inipoaaible,  to  enu- 


merate and  define  with  legal  precision 
every  oflFense  for  which  an  attorney  or 
counselor  ought  to  bo  removed.  And 
the  legislature  for  the  most  part  can 
only  prescribe  general  rules  and  prin- 
ciples to  be  carried  into  execution  by 
the  court  with  judicial  discretion  and 
justice,  as  cases  may  arise." 

"  In  re  Smith,  4  Moore,  319;  In  re 
Peterson,  3  Paige,  510. 

»  Paul  V.  Purcell,  1  Browne,  348. 

*  In  re  Niles,  5  Daly,  465. 

f"  State  V.  Kirke,  12  Fla.  278;  95  Am. 
Dec.  314. 

«  Winkelman  v.  People,  50  111.  449. 
T  In  re  Tillinghast,  4  Pet.  109. 

*  See  People  v.  Walbridge,  8  Cow. 
512;  Scott  V.  Van  Alstyne,  9  Johns. 
216. 

»  People  V.  Ryalls,  8  Col.  3.%;  21 
Cent.  L.  J.  71.  The  court  said: 
"After  service  of  the  rule  in  this 
case  as  required  by  law,  respond- 
ent paid  the  money  wrongfully  with- 
held; also  the  costs  of  this  proceeding. 
li   aeeoift   te   ^ave  been  understood 


130 


PRINCIPAL   AND   AGENT. 


212 


the  proceedings  be  dismissed  on  the  motion  of  the  ac- 


cuser. 


§  130.    Causes  Good  Grounds  for   Disbarment.  —  An 

attorney  has  been  disbarred  for  absence  of  good  moral 
character;'^  accusing  the  court  in  a  petition  for  rehear- 
ing of  neglecting  the  consideration  of  the  law,  and  not 
studying  the  facts  of  the  case;^  appropriating  or  wrong- 


that  the  proceeding  would  then  bo 
dismissed  by  relator,  as  respondent 
made  no  answer,  took  no  steps  to  de- 
fend against  the  charge,  and  departed 
from  the  state.  We  decline  to  dis- 
charge the  rule,  and  have  heard  the 
evidence  touching  the  matters  averred 
in  the  petition.  It  soems  to  havo  been 
assumed  in  the  present  and  several 
similar  cases  recently  brought  in  this 
court  that  the  statute  mentioned  was 
framed  to  aid  clients  in  collecting 
moneys  th"s  wrongfully  withheld  by 
their  attorneys.  Doubtless  the  pro- 
ceeding will  tend  to  accomplish  this 
purpose,  for  two  reasons:  first,  an  at- 
torney must  be  lost  to  all  sense  of 
honor  as  well  as  professional  pride, 
who  would  not  thereby  bo  stimulated 
to  relievo  himself  from  the  odium  at- 
attachiug  to  his  breach  of  trust;  and 
second,  payment  of  the  money,  even 
though  under  an  influence  akin  to  coer- 
cion, would  prol)ably  havo  some  bear- 
ing upon  the  decision  of  this  court  on 
the  question  of  disbarment.  But  we 
do  not  conceive  tliat  the  statute  re- 
ferred to  was  adopted  for  the  purpose 
of  affording  an  addition;d  private  rem- 
edy for  the  collection  of  the  moneys 
mentioned.  In  our  opinion,  the  prin- 
cipal object  of  the  legislature  was  to 
place  in  the  hands  of  this  court  an  ad- 
ditional means  whereby  the  profession 
may  be  purged  of  unworthy  members, 
and  litigants  generally  be  protected 
from  impositions  practiced  by  such 
persons.  As  supporting  this  view,  it 
may  be  suggested  that  witliout  the 
statute  at  common  law  the  client  pos- 
sessed quite  as  effective  a  remedy  for 
the  wrong  imder  consideration;  he 
might  obtain  from  the  court  a  rule  re- 
quiring the  attorney  to  pay  over  the 
moneys  kept  back,  and  upon  disobe- 
dience of  the  rule  tho  proper  practice 


was  not  to  move  for  disbarment,  but 
to  procure  an  attachment  for  tho  con- 
tempt: Weeks  on  Attorneys,  sec.  97." 

» In  re  Knott,  71  Cal,  584. 

••'  Percy's  Case,  30  N.  Y.  651.  where 
it  is  said:  "  It  has  been  seen  that  the 
right  of  admission  to  practice  ia  made, 
both  by  the  constitution  and  statute, 
to  depend  upon  the  possession  of  a 
good  moral  character,  joined  with  the 
requisite  learning  and  ability.  It  is 
equally  important  that  this  character 
should  be  preserved,  after  admission, 
while  in  the  i)ractice  of  tho  profession, 
as  that  it  should  exist  at  the  time.  It 
would  be  an  anomaly  in  tlie  law  to 
make  good  moral  character  a  prerequi- 
site to  admission  to  an  oflBco  of  life 
tenure,  while  no  provision  for  removal 
is  made  in  case  such  character  is  wholly 
lost."  People  V.  Palmer,  01  111.  'Zo5; 
Walker  r.  Commonwealth,  8  Bujli,  86; 
Dickinson  v.  Dustin,  '21  Mich.  561;  In 
re  Peterson,  3  Paige,  510;  Anonymous, 
22  Wend.  656.  , 

3  In  ro  Woolley,  11  Bush,  95,  the 
court  saying:  "An  attorney  may  unfit 
himself  for  the  practice  of  his  profes- 
sion by  the  manner  in  which  lie  con- 
ducts liimsclf  in  his  intercourse  with 
the  courts.  He  may  bo  honest  and 
capable,  and  yet  he  may  so  conduct 
himself  as  to  continually  interrupt  the 
business  of  tho  courts  in  which  he 
practices;  or  he  may,  by  a  sy;jtcmatic 
and  continuoua  course  of  conduct,  ren- 
der it  impossible  for  the  courts  to  pre- 
serve their  self-respect  and  the  respect 
of  the  public,  and  at  the  same  time 
permit  him  to  act  as  an  officer  and 
attorney.  An  attorney  who  thus  stu- 
diously and  systematically  attempts 
to  bring  the  tribunals  of  justice  into 
contempt  is  an  unfit  person  to  hold 
the  position  and  exercise  the  privileges 
of  an  officer  of  those  tribunals.     Aq 


212 


213 


ADMISSION   AND   REMOVAL   OP   ATTORNEYS. 


§130 


fully  retaining  his  client's  money  ;^  altering  a  letter  written 
by  the  judge  to  the  clerk,^  or  a  receipt;'  advising  and 
encouraging  a  lynching;*  abusing  a  judge  in  the  street 
concerning  his  judicial  action  in  a  case  pending  before 
him;"  bad  faith  towards  the  court;*  deceiving  and  im- 
posing upon  the  court;^  conviction  of  such  crimes  as  the 
law  regards  as  infamous;*  disloyal  or  treasonable  acts;' 
colluding  with  the  wife  in  a  divorce  case  to  manufacture 
evidence;'"  or  to  obtain  a  divorce  without  authority;"  or 
forging  a  pretended  divorce;*^  or  advertising  to  procure 
divorces  without  publicity;^'  embezzling  his  client's 
money;"  fighting  a  duel;''  forging  an  affidavit  for  a  change 
of  .  juue;**  fraudulent  conduct  not  criminal;"  getting  the 
opposite  attorney  drunk;**  making  a  false  professional 
statement;*'  or  a  false  statement  in  writing  not  sworn  to;^ 


COil- 

with 
ami 
nduct 
pt  the 
h  he 
matic 
ren- 
0  pre- 
spect 
time 
and 
s  stu- 
mp ta 
into 
hold 
ilcgea 
Ad 


open,  notorious,  and  public  insult  to 
the  highest  judicial  tribunal  of  the 
state,  for  which  an  attorney  refuses  in 
any  way  to  atone,  may  justify  the 
refusal  of  that  tribunal  to  recognize 
him  in  the  future  as  one  of  its  officers; 
and  in  a  proceeding  against  him  for 
contempt,  if  the  contumacy  be  therein 
manifested,  there  is  no  reason  why  the 
order  revoking  his  authority  until  he 
dous  comply  with  the  reasonable  re- 
quirements of  the  court  may  not  be 
made. " 

'  Jeffries  v.  Laurie,  27  Fed.  Rep.  195; 
Li  re  Treadwell,  07  Cal.  353;  People 
V.  Ryalls,  8  Col.  332;  Ex  parte  Brown, 
2  Col.  553;  Dawson  v.  Compton,  7 
Biackf.  421;  Ilynman  v.  Washington, 
2  McCord,  493;  People  v.  Smith,  3 
Caiiics,  221;  In  re  Bleaklcy,  5  Paige, 
311;  People  V.  Palmer,  61111. 255.  See 
Guilford  V.  Sims,  13  Com.  B.  370.  The 
United  States  circuit  court  will  disbar 
aud  commit  for  contempt  an  attorney 
who  disobeys  the  order  of  the  court  to 
pay  over  to  his  client  money  collected 
by  suit  in  that  court:  Jeffries  v.  Lau- 
rie, 27  Fed.  Rep.  195.  Such  imprison- 
niciit  is  not  the  "imprisonment  for 
debt "  which  the  Missouri  constitution 
prohibits.  Nor  is  it  material  that  the 
attorney  has  no  money:  Jeffries  v, 
Laurie,  27  Fed.  Rep.  198.    By  convert- 


ing money  collected  for  his  client,  aa 
attorney  violates  "  his  duties  as  such 
attorney, "  within  the  California  Code 
of  Civil  Procedure,  section  287,  speci- 
fying the  grounds  of  disbarment:  In  re 
Treadwell,  07  Cal.  353. 

^  Baker  v.  Commonwealth,  10  Bush, 
592. 

»  In  re  Serf  ass,  116  Pa.  St.  455. 

*  Ex  parte  Wall,  107  U.  S.  205. 

*  People  V.  Green,  7  Col.  237;  49 
Am.  Rep.  .351. 

*  Ex  parte  Deringer,  4  Week.  Not. 
Cas.  200 

'  In  re  Loew,  5  Hun,  402. 

8  In  re  McCarthy,  42  Mich.  71. 

»  Cohen  v.  Wright,  22  Cal.  293. 

10  In  re  Gale,  75  N.  Y.  527. 

"  Dillon  V.  State,  6  Tex.  55. 

•'^  In  re  Peterson,  3  Paige,  510. 

»  In  re  Goodrich,  79  111.  148. 

"In  re  Davies,  93  Pa.  St.  116;  39 
Am.  Rep.  729. 

i»  Smith  V.  State,  1  Yerg.  228. 

"  Ex  parte  Walls,  64  Ind.  461. 

"  United  States  v.  Porter,  2  Cranch 
C.  C.  60;  In  re  Peterson,  3  Paige,  510; 
In  re  Attorneys*  License,  21  N.  J.  L. 
345;  People  v.  Ford,  54  111.  520. 

"  Dickens's  Case,  67  Pa.  St.  109. 

w  Perry  v.  State,  3  G.  Greene, 
550. 

» In  re  Keegan,  31  Fed.  Rep.  129. 


§130 


PRINCIPAL  AND  AGENT. 


214 


obtaining  admission  to  the  bar  through  fraud;'  obtain- 
ing money  by  false  pretenses;-  obliterating  a  record  or 
antedating  a  writ  to  avoid  the  effect  of  the  statute  of  limi- 
tations;' preparing,  advising  a  client  to  verify,  and  filing 
in  court  a  complaint  alleging  things  as  true  which  he 
knew  to  be  false;*  proposing  to  a  client  to  influence  the 
judge's  action  in  his  case  by  visiting  him  at  his  homo  and 
getting  his  opinion  beforehand,  or  inducing  newspapers 
to  attack  him;^  procuring  deeds  of  property  from  persons 
in  distress;®  procuring,  by  false  pretenses,  a  debt  due  his 
client,  to  be  paid  to  himself,  and  attempting  to  retain  it 
for  his  services;'  committing  perjury;*  subornation  of 
perjury;'  substituting  the  name  of  his  client  for  his  own 
in  an  affidavit  for  a  change  of  venue;"*  retaining  and  fail- 
ing to  pay  over  money  collected;"  taking  fees  on  both 
sides  of  a  case;''*  threatening  a  judge  with  personal  vio- 
lence during  a  trial,  though  out  of  court;'*  tampering  with 
jurors."  "  Misdemeanor  in  his  professional  capacity " 
means  professional  misdemeanor,  and  not  a  misdemeanor 
punishable  by  fine  or  imprisonment."* 

Illustrations.  —  An  attorney  obtained  the  confidence  of  a 
weak-minded  man,  who  was  possessed  of  an  hallucination  that 
he  was  in  danger  of  apprehension  for  imaginary  crimes  coni- 


>Ex  parte  Hill,  11  L.  J.,  N.  S., 
329;  Anonymous,  2  Barn.  &  Add.  760; 
In  re  Lowenthal,  01  Cal.  122. 

2  Penobscot  v.  Kimball,  04  Me.  140; 
State  V.  Winton,  11  Or.  450;  50  Am. 
Rep.  480;  People  v.  Ford,  54  111.  520. 

*  Ex  parte  Brown,  2  Miss.  SOS. 

*  People  V.  Pearson,  55  Cal.  472. 

*  Ex  parte  Cole,  1  McCrarv,  405. 

8  Ex  parte  Burr,  2   Cranch  0.   C. 
379. 
'  People  V.  Murphy,  119  111.  159. 

*  In  re  Percy,  30  N.  Y.  051. 

»  State  V.  Holding,  1  McCord,  379; 
In  re  Eldridge,  82  N.  Y.  101;  37  Am. 
Rep.  558. 

1"  People  V.  Leary,  84  111.  190. 

''  Weeks  on  Attorney,  sec.  81; 
People  V.  Cold,  84  111.  .S27;  People  v. 
Palmer.  61  111.  255;  Kliugeusmlth  v. 


Kepler,  41  Ind.  341;  Slammer  v. 
Wright,  54  Iowa,  104;  In  re  Buchan- 
an, 28  Mo.  App.  230. 

1^  In  re  Bowman,  8  Cent.  L.  J.  250. 
See  Jackson  v.  State,  21  Tex.  CCS.  An 
accusation  that  respondent  urged  a 
prosecution  for  libel  and  promised  to 
secure  satisfactory  evidence  of  the 
guilt  of  the  defendant,  and  alleged 
that  the  statute  of  limitations  had  not 
run,  and  at  the  examination  appeared 
for  defendant  and  set  np  the  statute  of 
limitations  and  procured  a  writ  of  pro- 
hibition and  defendiint's  discharge 
thereon,  shows  good  ground  for  dis- 
barment.    In  re  Stephens,  Cal.  (1888). 

"  Bradley  v.  Fisher,  13  Wall.  335; 
Beene  v.  State,  22  Ark.  149. 

"  Turner  v.  St.  John,  3  Cold.  370. 

1^  In  re  Bowman,  8  Cent.  L.  J.  250. 


214 


215 


ADMISSION   AND   REMOVAL   OF   ATTORNEYS. 


§131 


mitted,  encouraged  his  hallucination,  and  procured  money  on 
the  strength  of  it.  Held,  that  the  attorney  should  he  disbarred: 
In  re  Snyder,  24  Fed.  Rep.  910.  Pending  a  writ  of  error  in  the 
United  States  supreme  court  in  a  capital  case,  the  prisoner's 
attorney  induced  a  United  States  commissioner  to  believe  that 
he  had  power  to  issue  a  writ  of  habeas  corpus,  and  admit  the 
prisoner  to  bail,  whereby  ho  got  away.  Held,  that  the  attorney 
should  be  dismissed  from  the  bar:  State  v.  Burr,  19  Neb.  593. 
An  attorney  in  whose  hands  a  note  had  been  placed  for  collec- 
tion agreed  with  the  maker,  without  autiiority,  that  if  she  would 
board  his  law  partner  he  would  indorse  the  amount  on  the  note. 
His  client  repudiated  this  agreement,  and  collected  the  full 
amount  of  the  note  from  the  maker.  The  attorney  never  ac- 
counted to  his  client  for  the  amount  indorsed,  and  never  repaid 
it  to  the  maker.  Held,  that  this  was  willful  professional  mis- 
conduct: In  re  Temple,  33  Minn.  343. 


§  131.  Causes  not  Grounds  for  Disbarment. — The  courts 
have  refused  to  disbar  an  attorney  for  the  following  alleged 
acts:  extorting  from  a  candidate  for  the  position  of  re- 
ceiver (as  the  price  of  consent  to  his  appointment)  that 
he  would  employ  a  certain  person  named  by  the  attor- 
ney;^ ignorance  of  the  law;'  disclosing  information  re- 
ceived;^ mere  moral  delinquencies;''  drawing  a  check  on 
a  bank  in  which  he  had  no  money;"  misconduct  of  a  part- 
ner;" neglecUng  to  obey  a  subpoena;^  the  publication 
over  the  signature  of  several  members  of  the  bar,  of  a 
letter  in  a  newspaper,  stating  that  the  judge  had  lost  the 
confidence  of  the  public,  and  had  better  resign;^  refusing 
in  an  insulting  manner  to  answer  questions  put  by  the 
judge  in  court;"  making  an  affidavit  and  representations 


'  Ex  parte  Cole,  1  McCrary,  40.'). 
» Bry tint's  Case,  '2i  N.  H.  149. 
!>  Pcoplo  V.  Barker,  5G  111.  ^99. 

*  Starr  v.  Vanderhcyden,  9  Johns. 
253;  C  Am.  Dec.  275;  In  re  Mills, 
1  Mich.  392;  State  v.  Chapmtin,  1 
Munf.  581;  Laker  v.  Commouwealth, 
10  Bush,  592. 

*  Bank  v.  Stryker,  1  Wheel.  C.  C. 
330. 

*  If  a  claim  is  sent  to  a  firm  of  attor- 
neys for  collection,  and  one  collects  and 
misappropriates  the  amount,  the  other, 


having  no  knowledge  thereof,  nor  even 
of  the  receipt  of  tlio  claim  for  collec- 
tion, while  liable  for  tlio  amount,  is 
not  liable  for  tlie  tstatutory  penalty, 
nor  to  be  dismissed  from  the  bar: 
Porter  v.  Vance,  14  Lea,  C'29. 

'  Commonwealth  v.  Newton,  1  Grant 
Cas.  453. 

«Caso  of  Austin,  5  Rawlc,  191;  28 
Am.  Dec.  C57.  And  see  Ex  parte 
Cole,  1  McCrary,  405. 

'  Ex  parte  Robinson,  19  Wall. 
505. 


§131 


TRINCIPAL  AND  AGENT. 


216 


for  tlio  purpose  of  deceiving  the  court,  where  it  is  not 
clear  that  ho  intended  to  state  a  falsehood;'  the  delinquen- 
cies of  a  partner;'*  taking  notes  instead  of  money  in  satis- 
faction of  a  fieri  facias;^  that  the  grounds  of  a  motion  made 
by  the  attorney  are  not  supported  by  the  facts;*  applying 
abusive  epithets  to  a  judge  in  vacation  is  not  a  "contempt 
involving  fraudulent  or  dishonorable  conduct  or  malprac- 
tice";® and  the  courts  have  refused  to  disbar  an  attorney 
for  discreditable  acts  not  connected  with  his  profession,* 
as  participating  in  an  exhibition  in  which  pretended 
gifts  wore  made  to  draw  full  houses;^  or  attacking  the 
court  in  a  newspaper,  not  as  an  officer  and  attorney,  but 
in  the  character  of  editor;*  or  being  guilty  of  fornica- 


'  In  ro  Houghton,  67  Cal.  511. 

'  KlingGiidmith  v.  Kepler,  41  Ind. 
341;  CO  lad.  434. 

^  Banks  v.  Cage,  1  How.  (Mias.) 
293. 

*  Fletcher  v.  Daingerfield,  20  Cal. 
430. 

*  Jackson  v.  State,  21  Tex.  CG8. 
«2Dowl.  Pr.  110. 

'  Dickcns'a  Case,  C7  Pa.  St.  1G9;  5 
Am.  Rep.  420,  the  court  saying:  "The 
doctinc  of  Austin's  Case,  5  llawle, 
191,  28  Am.  Dec.  657,  is  that  the 
power  of  the  court  may  be  exer- 
cised against  attorneys  at  law,  either 
for  a  contempt  which  is  au  offense 
against  the  court  itself,  or  for  un- 
fitness which  disqualifies  the  attor- 
ney from  filling  the  office  properly. 
In  the  i)resent  case,  no  contempt  was 
committed,  and  the  expulsion  rests 
upon  the  charge  of  unfitness  to  exer- 
cise the  office  of  an  attorney.  If  an 
attorney  should  by  a  series  of  unpro- 
fessional acts,  disgraceful  to  him  as  a 
man,  form  a  character  which  unfits 
him  for  association  with  the  fair  and 
honorable  men  of  the  profession,  and 
disqualifies  him  from  receiving  the 
confidence  of  men  of  integrity,  bring- 
ing reproach  upon  himself  and  upon 
the  profession  to  which  he  belongs, 
we  will  I'.ot  say  such  unfitness,  the 
result  of  habitual  practices,  cannot  be 
made  the  subject  of  inquiry  by  the 
court  and    expulsion  from  the   bar. 


But  certamly  an  act  merely  discredit- 
able, but  not  infamous,  such  as  a 
participation  in  making  pretended 
gifts  as  a  means  of  giving  notoriety 
to  an  exhibition,  innocent  iu  itscU, 
while  it  would  lose  a  member  of  the 
bar  the  favor  and  countenance  of  the 
high-minded  men  of  the  profession, 
cannot  of  itself  give  jurisdiction  to  the 
court  to  take  judicial  cognizance  of 
it,  and  expel  him  from  his  office.  To 
admit  such  a  power  would  expose  the 
members  of  the  bar  to  the  whims, 
caprice,  peculiar  views,  and  prejudices 
of  judges.  The  office  of  an  attorney 
is  too  important  to  him,  to  those  de- 
pendent on  his  eiforts,  and  to  the 
public,  to  be  thus  at  the  mercy  of 
any  one.  The  preparation  of  years  to 
enable  one  to  practice,  and  the  pros- 
pects of  a  lifetime,  ought  not  to  be  in 
the  power  of  men,  however  upright, 
to  blast,  who,  from  peculiarity  of  dis- 
position or  habits  of  thought,  may 
exercise  the  power  unjustly." 

8  Ex  parte  Biggs,  04  N.  C.  204;  con- 
tra, Ex  parte  Greevy,  4  Week.  Not. 
Cas.  308;  and  see  State  v.  Anderson, 
40  Iowa,  207;  Ex  parte  Steiuman,  95 
Pa.  St.  220;  40  Am.  Tiep.  637.  In 
Case  of  Austin,  supra,  it  was  said: 
"Even  a  battery  miglit  be  committed 
by  an  attorney  on  a  judge  consistently 
with  the  official  relati .  -i,  if  provoked 
in  matters  of  social  intercourse. "  In 
In  re  Wallace.  L.  R.  1  P.  C.  283,  an  at- 


til 

hi 
fc 
oti 
ell 

dil 

ai] 


217 


ADMISSION   AND   REMOVAL   OF   ATTORNEYS. 


§131 


tion;^  or  attempting  to  "fix  up"  a  prosecution  against 
himself  not  growing  out  of  his  professional  position;''  or 
for  unfaithful  conduct  as  an  ordinary  trustee.'  But  it  is 
otherwise  as  to  often ses  which  are  evidence  of  a  criminal 
character  in  the  offender.'*  Thus  an  attorney  has  been 
disbarred  for  appropriating  money  collected  by  him,  in 
another  capacity,  to  his  own  use.* 


torney  and  barrister  of  the  supreme 
court  of  Nova  Scotia  addressed  "a 
most  reprehensible  letter  "  to  the  chief 
jujlicj,  severely  rellucting  on  the  judges 
and  their  goiiural  administration  of  jus- 
tice-, Oil  account  of  their  disposition 
of  certain  causes  in  which  he  was  a 
suitor.  Ho  was  suspended  from  prac- 
tice by  the  court,  but  that  order  was 
roversad  by  the  privy  council.  Lord 
Wcjtbury   said:    "This  letter  was  a 

contempt  of  court It  was  an 

odjnij  [which]  had  no  connection 
whatever  with  his  professional  char- 
acter, or  anything  done  by  him  pro- 
fessionally  If  an  advocate,  for 

example,  were  found  guilty  of  crime, 
there  13  no  doubt  that  the  court  would 
Buspeud  him.  If  an  attorney  be  found 
guilty  of  moral  delinquency  in  his  pri- 
vate character,  there  is  no  doubt  that  he 

may  be  struck  off  the  roll When 

an  offense  was  committed,  which  might 
have  been  adequately  corrected  by  that 
panishmont,  and  the  offense  was  not 
0113  which  subjected  the  individual 
committing  it  to  anything  like  gen- 
eral infamy,  or  an  imputation  of  bad 
character,  so  as  to  render  his  remain- 
ia;j  in  the  court  as  a  practitioner  im- 
proper, wo  think  it  was  not  competent 
to  the  court  to  inflict  upon  him  a  pro- 
fessional punishment  for  an  act  which 
was  not  done  professionally,  and 
which  act,  per  ae,  did  not  render  him 
improper  to  remain  as  a  practitioner 
of  the  court." 

'  In  re  Trumbore,  42  Am.  Rep.  557 
(Pa.). 

-  Id. 

="  Pcopie  V.  Appleton,  105  111.  474; 
41  Am.  Rep.  812;  People  v.  Allison, 
CS  111.  151. 

*  In  State  v.  Winton,  11  Or.  456,  50 
A;n.  Rep.  486,  the  court  said:  "The 
question    which    has    presented    the 


most  difficulty,  and  out  of  which 
there  has  grown  some  difference  of 
opinion,  i.'i  where  the  facts  charged 
against  the  attorney  are  indictable, 
but  are  in  no  wise  connected  with  hij 
professional  employment,  —  acts  done 
in  his  private  but  not  in  his  profes- 
sional capacity.  In  such  cascj,  it  has 
been  held  by  some  courts  that  whero 
the  misconduct  alleged,  though  dono 
in  his  private  capacity  merely,  and 
not  in  his  official  capacity,  is  of  such 
gross  character  as  to  gravely  affect  his 
standing  as  an  attorney,  they  will  ex- 
ercise the  power  of  removal  or  disbar- 
ment. This  seams  to  be  an  exception 
to  the  general  rule  as  held  by  other 
courts,  which  confines  the  exercise  of 
such  summary  jurisdiction  over  an 
attorney  to  cases  whero  the  miscon- 
duct was  committed  in  hi?  professional 
character,  or  was  in  some  way,  or  in 
some  matter,  so  connected  with  hij 
professional  character  as  to  bo  the 
direct  result  of  it.  Courts,  adhering 
to  this  rule,  when  the  misconduct  al- 
leged constitutes  an  indictable  ofxense 
not  growing  out  of  or  in  any  way  con- 
nected with  his  professional  employ- 
ment or  duties,  refuse  to  proceed  in 
this  summary  manner,  but  leave  the 
party  injured  to  obtain  relief  by  a 
prosecution  in  the  proper  court,  or 
the  matter  to  bo  prosecuted  by  a 
public  officer,  upon  whom  the  law 
devolves  the  duty  of  prosecuting 
criminal  offenses.  But  there  is  no 
doubt  much  authority  for  extending 
the  rule  to  misconduct  for  acts  which 
are  indictable  and  committed  outside 
of  tho  proressioaal  relation,  when  the 
misconduct  alleged  against  the  attor- 
ney is  so  gross  as  to  seriously  impugn 
his  standin-j  and  integrity." 

^  Delano'a  Case,  58  N.  II.  5;  42  Am. 
Rep.  555. 


§131 


PRINCIPAL  AND  AORNT. 


218 


Illustrations. —  An  attorney  nccepteJ  p.  deed  of  trust,  not 
as  u  result  of  his  professional  advice,  but  simply  as  a  friendly 
office,  and  afterwards  appropriated  money  arising  from  his 
wrongful  mortgage  and  sale  of  the  property  to  his  own  vise. 
Held,  tliat  this  was  not  professional  misconduct  justifying  sum- 
mary disharment:  People  v.  Applcton,  105  111.  474;  44  Am.  Hep. 
812.  On  January  7,  1885,  the  supreme  court  n)ade  an  order, 
referring  the  settlement  of  a  bill  of  c.x(;eptions  to  a  certain 
judge.  Subsequently,  the  attorneys  for  the  parties  interested, 
of  whom  the  respondent  was  one,  entered  into  a  stipulation 
for  the  continuance  of  the  hearing  of  the  settlement  of  the  bill 
of  exceptions.  Thereafter  a  motion  was  made  in  the  supreme 
court  to  set  aside  the  order  of  reference  of  January  7,  1885. 
That  motion  was  contested  by  the  respondent,  who  filed  an  af- 
fidavit in  which  ho  stated  that  it  had  been  stipulated  that  the 
bill  of  exceptions  should  be  settled  by  the  judge.  On  the  argu- 
ment of  the  motion,  the  respondent,  in  reply  to  a  suggestion 
that  the  stipulation  was,  or  might  have  been,  a  stipulation 
merely  to  continue  the  hearing,  replied:  "  No;  the  stipulation 
is  as  stated  in  the  affidavit."  Held,  that  the  evidence  did  not 
show  that  the  respondent  intentionally  made  a  false  statement 
for  the  purpose  of  misleading  the  court,  and  that  consequently 
he  ouglit  not  to  be  disbarred:  In  re  Houghton,  G7  Cal.  511. 
Certain  attorneys  were  notified  that  the  deposition  of  a  witness 
for  whom  they  hud  sought  would  bo  taken  by  the  adverse 
party.  Being  desirous  of  knowing  to  what  he  would  testify, 
they  sent  an  agent  to  see  him,  with  instructions  to  try  to  incline 
him  as  favorably  towards  their  client  as  possible.  Their  agent 
induced  the  witness  to  keep  out  of  the  way,  making  him  drunk 
for  the  purpose,  and  got  him  to  come  to  the  city  where  one  of 
the  attorneys  was,  and  have  a  consultation  with  the  lajter  at 
his  oCicc.  There  was  no  evidence  that  the  attorneys  directed 
the  witness  to  be  made  drunk  or  to  be  kept  out  of  the  way,  nor 
that  he  should  be  bribed  or  intimidated.  Held,  not  a  suflicient 
ground  for  disbarment:  In  re  Thomas,  36  Fed.  Rep.  242.  A 
candidate  for  the  office  of  district  judge  refused  an  offer  of 
money  for  campaign  purposes  made  on  condition  that  he  ap- 
point the  party  making  it  clerk  of  the  court  in  case  of  his  elec- 
tion, but,  upon  consultation  with  friends,  Avho  advised  him  that 
Bueh  party  would  do  him  much  injury  if  ho  did  not  accept, 
executed  a  written  promise  to  make  such  appointment,  and 
gave  it  to  a  friend  to  deliver,  charging  him  not  to  accept  any 
money.  The  money  was,  however,  tendered,  and  still  acting 
upon  the  suggestion  that  the  party  had  it  in  his  power  to  injure 
him,  he  accepted  it,  but  returned  it  after  the  election.  Held, 
that  the  transaction  did  not  warrant  the  disbarment  of  the  can- 
didate after  his  election:  People  v.  Goddard,  Col.  (1888). 


218 


219 


ADMIS'!ION   AND   REMOVAL  OP  ATTORNEYS. 


§132 


ay,  nor 

.iflicient 

M2.     A 

offer  of 

ho  np- 

lis  elec- 

im  that 

aoccpt, 

nt,  nnd 

pt  any 

acting 

injuro 

IMd, 

he  can- 


§  132.  Sasponsion  for  a  Time.  — Disbarment  is  an  ex- 
treme remedy,  und  should  not  bo  decreed  when  nny  pun- 
ishment less  severe  —  such  as  a  reprimand,  temporary 
suspcnbion,  or  fine  —  would  accomplish  the  deaired  end.* 
Thus  in  some  cases  the  court  has  adjudged  it  a  sullicient 
punishment  that  the  attorney  should  be  susj)endcd  from 
practice  for  a  time  only;''  e.g.,  for  twelve  months  for  using 
indecorous  language  to  the  court  in  a  petition  for  rehear- 
ing, suggesting  that  the  court  was  disposed  to  punish  him 
for  publishing  certain  articles;'  until  ho  paid  the  costs  of 
an  action  ho  had  brought  without  authority;^  until  ho 
paid  aline  of  fifty  dollars  for  addressing  a  letter  to  a  judgj 
in  which  he  stated  that  an  injunction  issued  by  him  "was 
against  the  law  as  everybody  knows  it";°   a  fine  of  two 

all  matters  and  things  tiutler  review 
and  in  evidenoo.  But  with  this  privi- 
lege goes  the  corresponding;  obliga- 
tion of  constant  conrtcjy  and  respect 
toward  the  tribunal  in  vvliicli  the  pro- 
ceeilingd  arc  pending.  And  the  fact 
that  the  trihunul  is  an  interior  one, 
and  its  rulings  not  final  and  without 
appeal,  does  not  diminish  in  the  dight- 
cat  degree  this  obligation  of  courtcjy^ 
and  respect.  A  justice  of  the  peace, 
before  whom  the  most  trifling  matter 
is  being  litigated,  is  entitled  to  receive 
from  every  attorney  i:i  the  cauo  cour- 
teous and  respectful  treatment.  He 
is  pro  line  vice  the  reprersentativc  of  the 
law,  as  fully  as  the  chief  justice  of  the 
United  States  in  the  most  i:nportant 
case  pending  before  him.  A  failure 
to  extend  this  courteous  and  respect- 
ful treatment  is  a  failure  of  duty;  and 
it  may  be  so  gross  a  dereliction  as  to 
warrant  the  exercise  of  the  power  to 
punish  for  contempt.  Now,  as  we 
have  said,  tlio  hmguago  of  the  letter  is 
insulting.  It  would  bo  so  regarded 
outside  of  judicial  proceedings,  and  ia 
the  intercourse  of  gentlemen.  To 
charge  another  with  knowintjly  doing 
an  illegal  act  would  always  bo  re- 
garded as  an  imputation  to  be  resented. 
Change  the  circumstances  a  little: 
suppose  in  a  public  trial  i:i  the  court- 
house, after  a  ruling  had  bjcn  made, 
an  attorney  in  the  ca;;c  should  say  to 
the  court:   'That  ruling  is  not  the 


»  Bradley  v.  Fisher,  i:)  Wall.  335; 
Paul  V.  Purcell,  1  Browne,  318. 

'  Ex  parte  Burr,  9  Wheat.  529;  2 
Crancli  f.  C.  .'{79. 

3  De  Arnia's  Case,  10  Mart.  123. 

♦  Anonymous,  2  Cow.  590. 

■  In  re  Tryor,  18  Kan.  72;  26  Am. 
Rep.  747.      "An  attorney,"  said  the 
court,  "is  under  special  obligations  to 
ho  considerate  and  resi)cctful  in  liiscon- 
(hict  and  connnunications  to  a  judge. 
He  is  an  oincer  of  the  court,  and  it  is 
therefore  liis  duty  to  uphold  its  honor 
and  dignity.    Certain  privileges  attach 
to  liini  by  reason  of  such  official  posi- 
tion.    He  may  in  the  trial  of  cases  use 
hulguage    concerning   witnesses     and 
parties,  and  all  matters  and  things  in 
issue,    which    elsewhere     and    under 
otiicr  circumstances  would  bo  libelous. 
By  virtue  of  tliis  privilege,  wo  often 
hear  from  the  lips  of  counsel  in  argu- 
ment, or  read  in  the  briefs  filed  in  pro- 
ceedings in   error  in   this  court,  the 
most  severe  animadversion  and  criti- 
cism upon  the  conduct  and  rulings  of 
the  courts  from  which  the  proceedings 
are  brought.     Tiicy  have    the   same 
right  of  criticising  the  ruling  and  con- 
duct of  those  courts  in  proceedings 
ponding  here  that  they  have  in  those 
courts  of  criticising  the  actions  and 
conduct  under  review  there.    In  other 
words,  the  independence  of  the  pro- 
fession carries  with  it  the  right  freely 
to  challenge,  criticise,  and  condeuiu 


8  1.^2 


PRINCIPAL  AND  AGENT. 


220 


'■)'l'  i.'.L- 


luindrod  and  fifty  dollars  for  writing  n  letter  to  the  trial 
jii(l;;i',  i  11  ti mating  that  he  was  prejudiced  against  the  pris- 
oner,  and  had  better  not  sit;*  for  six  months,  for  knowingly 
antedating  the  j((ra<  to  an  otlicial  oath,  and  the  acknowl- 
edgnu'iit  of  an  olReial  bond,  taken  before  himself  as  a 
notary  public,  no  excuse,  explanation,  or  justification  of 
the  false  dating  being  oflered  or  attempted;'  for  six 
months  for  having  abstracted  from  the  files  a  receipt 
attached  to  a  fieri  facias;^  and  not  accounting  to  a  client 
or  paying  the  proceeds  of  a  note  collected;*  for  one  year 
for  concealing,  in  moving  for  the  admission  of  a  person  to 
the  bar,  that  ho  had  previously  been  rejected ;°  for  fivo 
years  for  receiving  money  for  a  client  to  apply  to  certain 
purposes,  and  not  doing  so;"  for  three  months  for  drawing 
an  indictment  as  district  attorney,  and  afterwards  appear- 
ing for  the  defendant;^  for  two  years,  and  until  the  pay- 
ment of  a  certain  judgment  obtained  against  him  by  a 
client;''  for  five  years  for  converting  money  received  in  a 
professional  capacity  to  his  own  use;"  or  the  imposition 
of  tt  fine,  as  for  instituting  a  groundless  motion  to  disbar 


law,  ami  your  honor  kuowa  it.'  Who 
wo'.:lil  (lonht  that  tlio  court  might 
rightly  treat  such  language  as  con- 
tempt, and  punidh  it  uccordmgly?  Yet 
practically  that  is  the  case.  The  fact 
that  iu  tho  ca:jO  supposed  others  are 
listening,  and  hear  tho  words,  and  in 
thia  tho  language  reaches  tho  judge 
alone,  doea  not  change  tho  quality  of 
t!;o  act.  It  will  be  borne  iu  mind  that 
the  remarks  wo  have  made  apply  only 
while  tho  matters  which  give  rise  to 
tho  words  or  acts  of  the  attorney  aro 
ponding  and  undetermined.  Other 
considerations  apply  after  the  matters 
havo  finally  bsen  determined,  the  or- 
ders signed,  or  the  judgment  entered. 
For  no  judge,  and  no  court,  high  or 
low,  is  beyond  tho  reach  of  public  and 
individual  criticism.  After  a  case  is 
disposed  of,  a  court  or  judge  has  no 
power  to  compel  the  public,  or  any 
individual  thereof,  attorney  or  other- 
wise, to  consider  his  rulings  correct, 
bis  conduct  proper,  or  even  his  integ- 


rity free  from  stain,  or  to  punish  for 
contempt  any  mere  criticism  or  an- 
imadversion thereon,  no  matter  liow 
severe  or  unjust.  Nor  do  wo  wish  to 
be  understood  as  expressing  any  opin- 
ion as  to  tho  power  to  punish  otJiers 
than  attorneys  and  otlicers  of  tiio 
court,  for  language  or  conduct  even 
while  tho  matter  is  pending  and  un- 
determined. Wliether  tlio  samo  rules 
and  considerations  apply  to  them  or 
not,  we  do  not  care  to  inquire.  Sueli 
is  not  the  case  before  us,  and  to  this 
case  alone  do  our  remarks  ai)ply. " 

'  People  V.  Tweed,  20  Am.  Rep.  Til^, 
note. 

^  In  re  Arctander,  2fi  ATi 

*  In  re  Gates,  1  Pa  i.  Dig. 
3. 

*  In  ro  Temple,  33  J»i         :U3. 

*  In  re  Deringer,  12  I'liu  .    217. 
« In  re  Mooro,  72  Cal.  So'J. 

'  People  V.  Spencer,  Gl  Cal.  128. 
8  In  ro  Tyler,  71  Cal.  3j3. 
>  In  re  Moore,  72  CaL  359. 


220 


221 


ADMISSION   AND   REMOVAL   CF   ATTORNRYS. 


8  i:]3 


another  attorney  with  an  improper  motive,  the  costs  woro 
iniposod  on  the  mover.'  VViioro  a  .statute  gives  the  court 
power  to  remove  or  suspcn<l,  the  hitter  will  be  tlio  jud;;;- 
iiit'iit  entered  only  where  mitigating  circumstances  aro 
shown.* 

iLUisTitATioNS.  —  An  attomoy  moved  tlmt  a  porpon  ho  ad- 
mitted to  the  bar,  against  whoso  applifiution  the  hoard  of  cxuin- 
iiKTS  li.^d  reported.  The  attorney  knew  this  fact,  but  concealed 
it.  Held,  that  he  was  prop(!rly  sut^pended:  In  re  Dcriiujcr,  12 
riiila.  217.  A,  in  1874,  as  district  attorney,  drew  an  indictment 
which  the  grand  jury  returned  as  a  true  bill.  In  18S1  A  ap- 
lH>ared  as  attorney  for  the  defendant  in  the  indictment.  lIcUl, 
that  he  was  thus  guilty  of  a  "  violation  of  his  duty  as  attorney," 
and  properly  jjunished  —  no  harm,  apparently  having  been 
intended  —  ])y  three  months'  suspension  from  practice:  People 
v.  Spencer,  Gl  Cal.  128. 


§  133.  Previous  Conviction  not  Necessary.  —  It  is  not 
necessary  that  the  attorney  should  havo  been  first  con- 
victed of  a  criminal  charge  by  indictment,  where  tho 
misconduct  took  place  in  his  oflicial  character.'  As  to 
criminal  acts  of  tho  attorney  not  done  in  his  official  char- 
acter, there  is  a  difference  of  opinion;  some  courts  hold- 
ing that  thoro  must  havo  been  a  regular  indictment  and 
conviction  before  tho  court  will  strike  his  name  from  tho 
roll;*  others  that  such  a  previous  conviction  is  not  neces- 


'  Ex  parte  Kelly,  G2  N.  Y.  198. 

■  la  ro  Buchauaii,  28  Mo.  App. 
230. 

» Ex  parte  Wall,  197  U.  S.  2G5;  la 
re  Peterson,  3  Pai^'o,  510;  Ex  parte 
Brown,  1  How.  (Mis?.)  303;  Dickens's 
(\iac,  07  Pii.  St.  lUl);  5  Am.  Rep.  420; 
Kx  parte  Milb,  1  Mich.  392;  In  re 
Hirit,  9  Pliila.  21G;  Baker  r.  Common- 
wealth, 10  Bush,  592;  Penobscot  Bar 
V.  Kiml)all,  61  Me.  140;  In  re  Wood, 
30  Mich.  299;  People  v.  Gooilrich,  79 
111.  148;  Ex  parte  Walls,  G4  Iml.  461; 
Dulano'a  Case,  58  N.  H.  5;  42  Am. 
Rep.  555;  In  re  Percy,  3G  N.  Y.  651; 
State  V.  Wintou,  11  Or.  45G;  50  Am. 
Kcp.  4SC  In  re  Treadwell,  66  Cal. 
400.    Contra,  in  North  Carolina,  Kane 


V.  Haywood,  CG  N.  C.  1;  Ex  parte 
Schcnck,  65  N.  C.  ?j:>.  An  attorney 
convicteil  of  cunc  forfeits  hi;)  rights 
as  such  without  an  or.ler  of  the  bu- 

Srerne    court    rem  wing    him:    In   ro 
'iles,    5    Paly,   405;    In    ro    E.,    G5 
How.  Pr.  171. 

*  State  V.  Chap:nan,  11  Ohio,  430; 
Ex  parte  Steininan,  95  Pa.  St.  229; 
Anonymous,  7  N.  J.  L.  102;  State 
V.  Foreman,  3  Mo.  412;  Fisher's  Caie, 
6  Leigh,  619;  Bjcne  v.  State,  22  Arlv. 
149;  Willson  v.  Will  ;on,  5  N.  .1.  L.  79G. 
Pending  an  appeal  from  tho  judgment 
of  a  justice's  court  convicting  a-i  at- 
torney of  embezzlement,  proceedings 
for  his  disbarment  arc  premature: 
People  V.  Treadwell,  CG  Cal.  400. 


§134 


PRINCIPAL   AND   AGENT. 


222 


sary.*  The  withdrawal  of  a  criminal  charge  by  a  client 
against  an  attorney  does  not  prevent  his  disbarment  for 
that  act.'' 

§  134.  Practice  in  Disbarment  Prcceediu^fs — Proof 
— Appeal.  —  The  proper  practice  in  cases  of  disbarment 
is  for  the  court,  on  the  charges  being  presented  supported 
by  affidavit,  to  issue  a  rule  on  the  attorney  to  show  cause 
why  ho  should  not  be  removed.'  If  the  offense  was  com- 
mitted in  the  presence  or  within  the  personal  knowledge 
of  the  court,  the  judge  may  proceed  on  his  own  motion.* 
The  state  need  not  commence  the  prosecution;  it  is  the 
right  and  duty  of  the  bar  or  the  court  to  do  so.**     It  is 


1  Ex  parte  Burr.l  Wheel.  C.  O.  503; 
2  Ciaach  0.  C.  379;  Smith  v.  State,  1 
Yerg.  2*28;  Perry  v.  Iowa,  3G.  Greeue, 
550;  la  ro  Percy,  36  N.  Y.  651;  Penob- 
scot V.  Kimball,  64  Me.  140;  Delano'a 
Case,  58  N.  H.  5;  42  Am.  Rep.  555;  la 
re  Wool,  36  Mich.  299;  People  v.  Ap- 
pletoii,  105  III.  474;  44  Am.  Rep.  812; 
Ex  parte  Wall,  107  U.  S.  265;  Ex  parte 
Walls,  64  Ind.  461 ;  Watson  v.  Citizens' 
Savings  Bank.  5  S.  C.  159.  In  Ex 
parte  Wall,  107  U.  S.  265,  the  court 
say:  "It  is  apparent  that  whilst  it 
may  be  the  general  rule  that  a  previ- 
ous conviction  should  be  had  before 
striking  an  attorney  off  the  roll,  for  an 
indictable  offense  committed  by  him 
when  not  acting  in  his  character  of  aa 
attorney,  yet,  that  the  rule  is  not  an 
inflexible  one.  Cases  may  occur  in 
which  such  a  requirement  would  resul*; 
in  allowing  persons  to  practice  as  aU 
torneys  who  ought,  on  every  ground 
of  propriety  and  respect  for  the  admin- 
istration of  the  law,  to  be  excluded 
from  such  practice.  A  criminal  pros- 
ecution may  fail,  by  the  absence  of  a 
witness,  or  by  reason  of  a  flaw  in  the 
indictment,  or  some  irregularity  in  the 
proceedings;  and  in  such  cases,  even 
m  England,  the  proceeding  to  strike 
from  the  roll  may  bo  had.  But  other 
causes  may  operate  to  shield  a  gross 
offender  from  a  conviction  of  crime, 
however  clear  and  notorious  his  guilt 
may  be;  a  prevailing  popular  excite- 
ment, powerful  influences  brought  to 
bear  on  the  public  mind  or  on  the 


mind  of  the  jury,  and  many  other 
causes  which  might  be  suggested;  and 
yet,  all  the  time  the  offends-  in:'.y  be 
so  covered  with  guilt,  perhaps  glory- 
ing in  it,  that  it  would  be  a  disgrace 
to  ;he  court  to  be  obliged  to  receive 
him  as  one  of  its  officers,  clothed  with 
all  the  prestige  of  its  confidence  and 
authority.  It  seems  to  us  that  the  cir- 
cumstances of  the  case,  and  not  any 
iron  rule  on  the  subject,  must  deter- 
mine whether  and  when  it  is  proper  to 
dispense  with  a  preliminary  convic- 
tion. If,  as  Lord  Chief  Justice  Cock- 
burn  said,  the  evidence  is  conflicting, 
and  any  doubt  of  the  party's  guilt  ex- 
ists, no  court  would  presume  to  Moceed 
summarily,  but  would  leave  the  cuse 
to  be  determined  by  a  jury.  But 
where  the  case  is  clear  and  the  denial 
..?  evasive,  there  is  no  fixed  rule  of  law 
to  prevent  the  court  from  exercising 
its  authority." 

'  In  ro  Uavies,  93  Pa.  St.  116;  39 
Am.  Rep.  729. 

"  In  re  Bowman,  8  Cent.  L.  J.  250; 
In  ro  Percy,  36  N.  Y.  651;  Perry  v. 
State,  3  Iowa,  550;  State  v.  Holding, 
I  McCord,  379;  Baker  v.  ('ommon- 
wealth,  10  Bush.  592;  Ohio  v.  Chap- 
man, 11  Ohio,  430;  Ex  parte  Burr,  9 
Wheat.  529;  State  v.  Kirke,  12  Fla. 
278;  95  Am.  Dec.  314. 

*  Weeks  on  Attorneys,  sec.  83. 

'  In  re  Bowman,  8  Cent.  L.  J.  250; 
In  ro  Percy,  36  N  Y.  051;  aliter  in 
Kentucky  by  statute:  Turner  v.  Com- 
monwealth. 2  Met.  (Ky.)  619. 


222 


223 


ADMISSION   AND   REMOVAL   OP  ATTORNEYS. 


134 


not  necessary  that  proceedings  against  attorneys  for  mal- 
practice or  any  unprofessional  conduct  should  bo  founded 
upon  formal  allegations  against  them.     Sucli  proceedings 
arc  often  instituted  upon  information  developed  in  the 
progress  of  a  cause,  or  from  what  the  court  learns  of  the 
con  Jact  of  the  attorney  from  his  own  observation.     Some- 
times they  are  moved  by  third  parties  upon  affidavit,  and 
sometimes  they  are  taken  by  the  court  upon  its  own  mo- 
tion.    All  that  is  requisite  to  their  validity  is,  that  when 
not  taken  for  matters  occurring  in  open  court  in  the  pres- 
ence of  the  judge,  notice  sliould  be  given  to  the  attorney 
of  the  charges  made,  and  opportunity  aflbrded  him  for  ex- 
planation and  defense.    The  manner  in  which  the  proceed- 
ing shall  bo  conducted  so  that  it  be  without  oppression  or 
unfairness  is  a  matter  of  judicial  regulation.'    The  charges 
should  be  presented  by  affidavit,  but  want  of  an  affidavit 
does  not  render  the  proceeding  void.''     Except  where  the 
matter  occurs  in  open  court,  the  summary  power  of  dis- 
barment should  not  be  exercised  without  notice  to  the 
offending  attorney  of  the  grounds  of  complaint,  and  an 
opportunity  for  explanation  or  defense.'     Tn  Kentucky, 
if  an  attorney  has  been  prosecuted  by  an  indictment  or 
information,  and  his  guilt  confessed  or  found  by  a  jury, 
the  courts  in  which  he  practiced  have  the  power,  upon 
his  guilt  thus  appearing,  to  strike  his  name  from  the 
roll  of  attorneys,  and  thereby  disable  him  from  practicing 
in  the  court  inflicting  the  punishment.     But  in  a  sum- 
mary proceeding  for  malpractice  the  fact  must  be  known 


» Ramlall  v.  Brigham,  7  Wall.  523. 

'  Ex  parte  Wall,  107  U.  S.  2G5.  In 
Florida,  a  proceeding  to  disbar  an  at- 
torney is  special,  of  a  summary  charac- 
ter. The  pleadings  are  not  controlled 
by  common-law  rules.  A  replication 
to  the  answer  is  unnecessary.  After 
the  filing  of  the  answer,  upon  counter- 
motions  to  make  the  rule  absolute  and 
to  discharge  it,  testimony  is  admissi- 
ble without  further  pleading:  State  v. 
MaxwcU,  lOFla.  31. 


«  Bradley  v.  Fisher,  13  Wall.  335; 
Saxton  V.  Stowull,  11  Paige,  5'JG;  Ex 
parte  Heyfron,  7  How.  (Miss.)  11:7; 
Beene  v.  State,  22  Ark.  149;  Ex  parte 
Robinson,  ID  Wall.  505;  Pcoplo  v. 
Turner,  1  Cal.  143;  52  Am.  Dec.  2&c; 
Fletcher  v.  Daingerfield,  20  Cal.  427; 
Jackson  v.  State,  21  lex.  GG8;  Fisher's 
Case,  6  Leigh,  G19;  Peyton's  Appet.l, 
12  Kan.  405;  In  re  Brewster,  12  Hun, 
109;  Dickinson  v.  Dustin,  21  Mich. 
561;  Randall  v.  Brigham,  7  Wall.  C£3. 


§134 


PRINCIPAL   AND   AGENT. 


224 


to  the  court  by  having  occurred  in  its  presence.^  "Where 
a  suit  in  equity  against  an  attorney  and  solicitor  charging 
him  witli  fraud  under  circumstances  implicating  him  in 
a  gross  abuse  of  confidence  has  been  before  the  court  on 
the  facts,  and  the  court  has  decreed  against  him,  an  order 
to  show  cause  why  he  should  not  be  struck  from  the  rolls 
may  properly  be  based  on  the  decree,  or  be  incorporated 
in  the  decree  itself.'^  The  charges  should  be  definite  and 
certain,  and  state  with  particularity  the  offenses  alleged 
against  the  attorney.'  As  such  a  proceeding  is  penal  in  its 
nature,  the  evidence  to  sustain  it  should  be  free  from  doubt.'* 
In  Kansas,  in  a  proceeding  to  disbar  an  attorney  at  law 
on  the  ground  that  he  fraudulently  procured  his  admis- 
sion to  the  bar,  the  defendant  is  entitled  to  a  change  of 
venue  or  to  a  trial  before  a  judge  pro  tern,  if  it  appears 
that  the  judge  then  sitting  is  prejudiced  against  him.^  In 
Iowa  a  proceeding  upon  charges  preferred  by  a  private 
prosecutor  to  disbar  an  attorney  is  a  special  proceeding, 
wherein  a  change  of  venue  on  account  of  prejudice  of  the 
judge  may  bo  granted  upon  the  same  conditions  and  upon 
compliance  with  the  same  rules  as  in  ordinary  civil 
actions.®  The  power  to  disbar  is  exercised  with  caution 
and  discretion/  and  the  court  should  bo  satisfied  of  the 
guilt  of  the  attorney  before  disbarring  or  even  suspending 
him.®  He  is  not  entitled  to  a  jury  trial,"  except  in  some 
states  where  it  is  given  by  statute,***  nor,  except  where  re- 
quired by  statute,  need  the  prosecution  be  in  the  name  of 


86. 


•  Walker  v.  Commonwealth,  8  Bush, 
5. 

^  111  ro  Wool,  30  Mioh.  299. 

»rooplo  V.  Allison,  G8  111.  151; 
Fletcher  v.  Daiugerhekl,  20  Cal.  427; 
Ex  parte  Smith,  28  Iiul.  47;  Walker 
V.  Commonwealth,  8  Bush,  S';;  Florida 
V.  Kirke,  12  Fla.  278;  95  Ai:i.  Dec. 
314;  Rcilly  v.  Cavanaugh,  32  Ii  il.  214; 
In  re  Mills,  1  Mich.  392;  People  v. 
Tryon,  4  Mich.  GGo. 

*  In  re  Attorney,  1  Hun,  321 ; 
Fletcher  v.  Daingerfield.  20  Cal.  427; 


People  ?'.  Barker,  56  111.  299;  In  re 
Baluas,  28  Mich.  507. 

^  Matter  of  Peyton,  12  Kan.  398. 

*  State  V.  Clark,  46  Iowa,  155. 

'  Rico?'.  Commonwealth,  13B.  Mon. 
472;  Ex  parte  Robinson,  19  Wiill.  505. 

Bin  re  Houghton,  07  Cal.  511;  la 
ro  Lowenthal,  00  Cal.  122;  People  v. 

Barker,    5P  111.    299;    In  re   ,    1 

Hun,  321. 

9  Smith  V.  State,  1  Yerg.  228. 

"  Reilly  v.  Cavanaugh,  32  Ind.  214; 
In  ro  Bowman,  8  Cent.  L.  J.  250. 


224 


225 


ADMISSION   AND   REMOVAL   OP   ATTORNEYS.        §  136 


jnding 
some 


the  stato.^  The  judgment  should  specify  the  particular 
charge  or  charges  on  which  he  is  found  guilty.'^  It  can- 
not adjudge  the  attorrey  "infamous."^  The  court  has  a 
discretion  in  the  matter  which  will  not,  except  for  great 
injustice,  be  reversed  on  appeal/  In  most  states,  how- 
ever, an  appeal  lies.*  An  appeal  in  such  a  case  does  not 
restore  the  attorney  to  the  right  to  practice  pending  its 
determination."  The  law  does  not  favor  informations 
against  attorneys  at  law  after  a  lapse  of  a  great  length  of 
time  from  the  commission  of  the  acts  complained  of.  In 
analogy  to  the  limitation  of  prosecutions  for  misdemean- 
ors, there  ought  to  be  a  limit  to  the  time  for  tiling  such 
informations.^ 

§  135.    Mandamus  to  Restore  Attorney. — Where  the 

court  has  exceeded  its  jurisdiction  in  disbarring  an  attor- 
ney, mandamus  is  the  proper  remody  to  restore  him.* 

§  136.    Readmission  after  Disbarment.  —  An   attorney 
may  be  readmitted  after  being  disbarred,"  but  a  pardon 


'  111  re  Bowman,  8  Cent.  L.  J.  250. 

"-  Perry  v.  State,  3  G.  Greene,  550; 
State  V.  Watkins,  3  Mo.  388. 

=»  Fletcher  v.  DaingerfieKl,  20  Cal. 
430. 

*  Ex  parte  Sccombe,  19  How.  9;  Ex 
parte  Burr,  9  Wheat.  529;  InreDavies, 
<j;{  Pa.  St.  IKi;  .39  Am.  Rep.  729;  Rice 
r.  Commonwealth,  18  B.  M^n.  472; 
Cominouwcalth  z\  Judges,  5  Watts  & 
S.  272;  State  v.  Tunstall,  51  Tex.  81. 

''  Winkelman  r.  People,  50  111.  440; 
Turner  v.  Commonwealth,  2  Met. 
(Ry.)  CIO;  In  re  Bowman,  8  Cent.  L. 
J.  2M;  Commonwealth  r.  McLaughlin, 
r>  Watts  &  S.  272;  State  v.  Start,  7 
Iowa,  499;  74  Am.  Dec.  278;  Rice  v. 
Commonwealth,  18  B.  Mon.  472;  Dil- 
lon r.  State,  0  Tex.  55;  Jackson  v. 
f^tato,  21  Tex.  608;  Ex  parte  Smith, 
2S  lud.  47;  Ex  parte  Trippe,  06  Ind. 
531.  In  Michigan  the  appellate  court 
vill  not  lefuse  to  review  a  decision  of 
the  court  below  disbarring  an  attor- 
ney, upon  the  facts  and  merits,  as  well 
as  upon  questions  of  power,  regularity, 
etc.,  though  they  will  not  reverao  on 
the  evidence  unless  a  plain  case  is 
Vol.  I. -16 


shown:  Mutter  of  Wool,  30  Mich.  299. 
Where  the  attorney  is  disbarred  by 
the  supreme  court,  a  motion  for  a  new 
trial  is  not  a  proner  proceeding  for  » 
rehearing:  In  ro  Tyler,  71  Cal.  353. 

«  Wall}  V.  Pahner,  64  Ind.  493. 

^  People  r.  Allison,  68  111.  151. 

*  Ex  parte  Robinson,  19  Wall.  505; 
People  r.  lurner,  1  Cal.  143;  52  Am. 
Dec.  295;  Ex  parte  Garla:ul,  4  WalL 
;"8;  Fletcher  v.  Daingerficld,  20  Cal. 
•i;'.";  Withers  ?■.  State,  36  Ala.  252; 
Ex  parte  Bradley,  7  Wall.  3o4;  Ex 
parte  Burr,  9  Wheat.  5.10;  Ex  parte 
Hcyfron,  7  How.  (Miss.)  l'J7;  Rico  v. 
Commonwealth,  18  B.  Mon.  472;  State 
r-.  Start,  7  Iowa,  499;  74  Am.  Dee.  278; 
People  V.  .lustices,  1  Johns.  Cas.  182; 
State  r.Kirke,  12  Fla.  278;  95  Am.  Dec. 
314.  As  to  when  ttinm/dmux  will  not 
lie  though  proceedings  were  irregular, 
see  Ex  parte  Randall,  11  Allen,  473. 
It  is  held  in  some  states  that  viaiida- 
mtts  will  not  lie  to  compel  the  admis- 
sions of  an  attorney:  ConimonM'ealth 
V.  Judges,  1  Serg.  &  R.  187. 

•Rex  V.  Greenwood,  1  W.  Black. 
222j  Ex  parte  Frost,  1  Chit.  558,  note. 


§136 


PRINCIPAL  AND  AGENT. 


226 


granted  for  the  crime  for  which  he  was  disbarred  does 
not  restore  his  office  of  attorney.*  Under  the  Indiana 
statute,  when  an  attorney  who  has  been  disbarred  applies 
for  readmission,  it  is  within  the  power  of  the  court  to 
secure  a  petition  against  his  readmission,  and  to  appoint 
certain  of  the  petitioners  to  resist  his  application.^ 
Where  an  attorney  is  disbarred  for  misappropriating  his 
client's  money,  if  he  seeks  to  be  readmitted  it  will  be  a 
condition  precedent  that  he  make  all  the  restitution  in 
his  power.* 


»In  re  Attorney,  86  N.   Y.   563; 
Penobscot  Bar  v.  Kimball,  64  Me.  140. 


«  Ex  parte  Walls,  73  Ind.  95. 

>  In  re  Poole,  L.  R.  4  Com.  P.  350. 


227      PRIVILEGES   AND  LIABILITIES  OF  ATTORNEYS.      §  13S 


CHAPTER  XIV. 

PRIVI~iEGES,  DISABILITIES,  AND  LIABILITIES   OP   ATTORNEYS 

TO  THIRD  PEliSONS. 

§  137.  Privileges  and  exemptions  of  attorneys. 

§  138.  Exemption  from  arrest. 

§  139.  Privilege  of  suing. 

§  140.  Exemption  from  civil  duties. 

§  141.  Exemption  from  responsibility  for  words  spoken. 

§  142.  Disabilities  of  attorneys. 

§  143.  To  act  in  diverse  capacities. 

§  144.  To  act  for  both  parties,  or  on  both  sides. 

§  145.  To  purchase  demands  for  suit. 

§  146.  Communications  between  attorney  and  client. 

§  147.  Privileged  communications  —  Exceptions  to  the  role. 

§  148.  To  become  surety  for  client. 

§  149.  To  be  witness  in  cause. 

§  150.  Liability  to  third  persons. 

§  151.  Liability  for  acting  without  authority. 

§  152.  Liability  to  third  persons  on  implied  contracts. 

§  153.  Liability  for  costs  and  fees. 

§  154.  Liability  for  trespass. 

§  155.  Liability  for  malicious  prosecution. 

§  137.  Privileges  and  Exemptions  of  Attorneys. — From 
an  early  day  the  office  of  attorney  has  had  attached  to 
it  certain  privileges  and  exemptions  which  have  been 
granted,  "  not  for  the  sake  of  the  individual,  but  of  the 
suitors,  and  of  the  administration  of  justice."*  They  are: 
1.  A  privilege  from  arrest;  2.  A  privilege  in  suing  and 
being  sued;  3.  An  exemption  from  civil  duties;  4.  An 
exemption  from  liability  for  words  spoken  in  argument.^ 

§  138.  Exemption  from  Arrest.  —  He  is  privileged 
from  arrest  in  civil  suits,'  but  only  while  in  necessary 


^  In  re  Bliss,  9  Johns.  347.  There- 
fore he  cannot  waive  them:  Scott  v. 
Van  Alstyne,  9  Johns.  216. 

^  An  attorney  has  likewise  a  right 
at  all  times  to  visit  his  client  in  per- 
son: Ex  parte  McClellan,  1  WheeL 
C.  C.  303. 

'  Emmet's  Case,  2  Caines,  387;  Og- 


don  V.  Hughes,  5  N.  J.  L.  718;  Gibbs 
V.  Loomis,  10  Johns.  463;  Secor  v. 
Bell,  18  Johns.  55;  Corey  v.  Russell,  4 
Wend.  204;  Commonwealth  ?•.  Ron- 
ald, 4  Call,  97;  Sperry  v.  Willard,  1 
Wend.  32;  Humphrey  v.  Camming, 
5  Wend.  90;  Bohanan  v.  Peterson,  9 
Wend.  503. 


§§  139-141 


PRINCIPAL  AND  AGENT. 


228 


attendance  on  the  court,^  and  while  he  is  practicing  his 
profession,'^  and  not  when  sued  jointly  with  others.* 

§  139.  Privilege  of  Suing.  —  There  was  an  ancient 
privilege  of  attorneys  in  England  of  suing  or  being  sued 
in  the  court  in  which  they  wero  enrolled.  This  privilege 
never  had  much  footing  in  our  courts,  and  is  certainly 
now  obsolete  * 

t 

§  140.  Exemption  from  Civil  Duties. — An  attorney  is 
exempt  from  serving  as  a  juror,^  or  as  overseer  of  the  poor, 
or  supervisor  of  public  roads  ;^  but  he  is  not  exempt  from 
military  duty,  which  is  a  great  national  servi'^e  to  which 
all  men  are  equally  liable.' 

§  141.  Exemption  from  Responsibility  for  Words 
Spoken.  —  Words  spoken  by  an  advocate  in  the  course  of 
judicial  proceedings,  though  they  are  such  as  impute 
crime  to  another,  and  therefore,  if  spoken  elsewhere, 
would  import  malice  and  be  actionable  in  themselves, 
are  not  actionable  if  they  are  applicable  and  pertinent  to 
the  subject  of  inquiry.®     The  reasons  for  this  exception 


t( 

C( 


*  Gibba  v.  Loomis,  10  Johns.  463; 
Corey  v.  Russell,  4  Wend.  204;  Cole 
V.  MeLellan,  4  Hill,  5D;  Foster  v. 
Garnsey,  13  Johns.  4G5. 

■■*  Brooku  V.  Patterson,  2  Johns.  Cas. 
102;  Colt  r.  Grcj^ory,  3  Cow.  22. 
3  Tiffany  v.  Driggs,   13  Johns.  252. 

*  See  All  are  i\  Ouland,  2  Johns. 
Cas.  52;  Beimington  Iron  Co.  v. 
Rutherford,  18  N.  J.  L.  105,  158;  35 
Am.  Dec.  528;  King?;.  Burr,  20  Johns. 
274. 

»  In  re  Swett,  20  Pick.  I.  Even 
though  he  may  not  bo  in  active  prac- 
tice, or  may  have  retired.  The  test 
is,  Has  he  a  right  to  practice  if  he  de- 
eires  to? 

0  R.  V.  Fisher,  1  Yeates,  350. 

'  R.  V.  Fisher,  1  Yeates,  350;  In  re 
Bliss,  9  Johns.  347. 

6  Hoar  V.  Wood,  3  Met.  193;  Brad- 
ley V.  Heath,  12  Pick.  163;  ?*>  Am. 
Dec.  418;  Stackpole  v.  Hennen,  6 
Mart.,  N.  S.,  481;  17  Am.  Dec.  187; 


Commonwealth  v.  Culver,  1  Pa.  L.  J. 
361.  -'^sea'-lyas  the  reign  of  James 
I.,  it  was  laid  down  in  England  "  that 
a  counselor  hath  a  privilege  to  enforce 
anything  which  is  informed  unto  him 
for  his  client,  and  to  give  it  in  evi- 
dence, it  being  pertinent  to  the  mat- 
ter in  question,  and  not  to  examine 
whether  it  be  true  or  false  " :  Brook 
V.  Montague,  Cro.  Jac.  90.  Later,  in 
Wood  V.  Guuston,  Style?,  462,  decided 
in  1055,  it  is  said  that  "if  a  counsel 
speak  scandalous  words  against  one  in 
defending  his  client's  cause,  an  action 
lies  not  against  him  for  so  doing;  for 
it  is  his  duty  to  speak  for  his  client, 
and  it  shall  be  intended  to  be  spoken 
according  to  his  client's  instructions." 
Buller,  J.,  in  Weatherston  v.  Hawkins, 
1  Term  Rep.  110,  says:  "In  actions 
of  this  kind,  unless  he  can  prove  the 
words  to  be  malicious,  as  well  as  false, 
they  arc  not  actionable " ;  and  Lord 
Maustleld,  in  Edmoasoa  v.  Stephenson, 


W 

S 


I.  L.  J. 

James 
I  "that 
enforce 
ito  him 


Olio  111 

action 
ig;  for 
client, 
spoken 
tions." 
wkins, 
ictions 
ve  the 
false, 
Lord 
cuson, 


229      PRIVILEGES   AND   LIABILITIES   OF   ATTORNEYS.      §  141 

to  the  general  rules  of  the  law  of  slander  are  these:  the 
counsel  for  a  person  is  the  legal  substitute  for  the  party 
himself;  so  far  as  respects  the  subject  before  the  court,  he 
iri  presumed  to  be  invested  with  the  whole  person  and 
case  of  his  client.  Whatever,  therefore,  law  or  reason 
would  allow  to  a  man  pleading  his  own  cause,  whether  in 
statement  or  in  the  expression  of  natural  feelings,  bo- 
longs,  to  the  same  extent,  to  the  counsel  who  represents 
him.*  A  defamatory  statement  contained  in  the  declara- 
tion in  an  action  signed  by  counsel,  if  not  pertinent  or 
material  to  the  issue,  is  not  privileged;  and  in  an  action 
of  libel  against  the  counsel,  he  cannot  justify  by  showing 


Bull.  N.  P.  8:  "The  gist  of  it  must  be 
malice,  which  is  not  implied  from  the 
occasion  of  speaking,  but  should  bo  di- 
rectly proved.  But  if  without  ground, 
and  purely  to  defame,  an  action  would 
lie  "  :  llargrave  v.  Lo  Breton,  4  Burr. 
2422;  Rogers  v.  Clifton,  3  Bos.  &  P. 
587.  The  c^se  of  Hodgson  v.  Scarlett, 
1  Barn.  &  Aid.  233,  is  the  leading  Eng- 
lio'a  case  on  this  subject.  The  de- 
fendant, one  of  the  leaders  of  the  bar, 
and  afterwards  known  as  chief  baron 
of  the  court  of  exchequer,  under  the 
name  of  Lord  Abiuger,  was  sued  for 
having  used  the  following  words  while 
acting  as  counsel  in  the  trial  of  a  cause: 
"Some  actions  are  founded  in  folly, 
some  ill  knavery,  some  in  both,  some 
iu  folly  of  the  attorney,  some  in  the 
knavery  of  the  attorney,  some  in  the 
folly  and  knavery  of  the  parties  them- 
salves.  Hodgson  was  the  attorney  of 
the  parties,  drew  the  promissory  note, 
fraudulently  got  Bowman  to  pay  into 
hij  hands  153  pounds  for  the  benefit  of 
the  plaintiff.  This  was  one  of  the  most 
profligate  things  I  ever  knew  done  by 
a  professional  man.  Mr.  Hodgson  is 
a  fraudulent  and  wicked  attorney." 
The  court  unanimously  agreed  that  the 
action  would  not  lie.  Ellenborough, 
C.  J. :  "A  counsel  intrusted  with  the 
interests  of  others,  and  speaking  from 
their  information,  for  the  sake  of  pub- 
lic convenience,  is  privileged  in  com- 
menting fairly  and  hoiia  fide  on  the 
circumstances  of  the  case,  and  in  mak- 
ing observations  on  the  parties  con- 
cerned,   and    their    instrumeDta    or 


agents  in  bringing  the  case  into  court. 
Tlie  defendant  says  that  ho  is  a  fraud- 
ulent and  wicked  attorney.  Tliese 
were  words  not  used  at  random  and 
unnecessary,  but  were  a  comment 
upon  the  plaintiff  'a  conduct  as  attor- 
ney. Perhaps  they  wero  too  strong; 
it  may  have  been  too  iiuicli  to  say  that 
he  was  guilty  of  fraud  as  between  man 
and  man,  and  of  witkcdness  in  foro 
divino.  The  expression  in  the  exercise 
of  a  candor  fit  to  be  adopted  might 
have  been  spared.  But  still  a  counsel 
might  bona  fide  think  such  an  expres- 
sion justifiable  under  the  circum- 
stances. It  appears  to  me  that  the 
words  spoken  were  uttered  in  the 
original  cause,  and  were  relevant  and 
pertinent  to  it,  and  consequently  that 
this  action  is  not  maintainable." 
Abbott,  J.:  "They  were  spoken  in  a 
course  of  judicial  inquiry,  and  were 
relevant  to  the  matter  in  issue.  I  am 
therefore  of  opinion  that  no  action 
can  bo  maintained,  unless  it  can  bo 
shown  that  the  counsel  availed  himself 
of  his  situation  maliciously  to  utter 
words  wholly  unjustifiable.  It  v.ould 
be  impossible  that  justice  could  be 
well  administered  if  counsel  were  to 
be  questioned  for  the  too  great  strength 
of  their  expressions;  hero  the  words 
were  pertinent,  and  there  is  no  pre- 
tense for  saying  that  the  defendant 
maliciously  availed  himself  of  his  situ- 
ation to  utter  them. "  And  see  Lewis 
V.  Higgins,  62  L.  T.  98. 

'  See  article,   "The  privilege  of  an 
advocate,"  4  Cent.  L.  J.  76. 


§141 


PRINCIPAL  AND  AGENT. 


230 


his  belief  that  it  was  true,  the  sources  of  his  information, 
or  his  instructions.*  This  privilege  extends  not  merely 
to  regular  courts  of  justice,  but  to  all  inquiries  before 
magistrates,  referees,  municipal,  and  ecclesiastical  bodies,^ 
subject,  however,  to  the  restriction  that  they  shall  bo 
made  in  good  faith  to  courts  or  tribunals  having  juris- 
diction of  the  subject,  and  power  to  hear  and  decide  the 
matter  of  complaint  or  accusation.'  It  is  immaterial  if 
the  words  are  uttered  in  the  course  of  a  trial,  whether  in 
form  they  are  addressed  to  the  witness  or  to  the  court  or 
jury.  The  remarks  addressed  to  a  witness  in  the  form  of 
putting  a  question  reminding  him  of  his  duty  or  recur- 
ring to  what  he  had  before  stated,  indicating  a  contra- 
diction in  different  parts  of  his  testimony  or  calling  upon 
him  to  show  how  he  can  reconcile  them,  though  in  form 
directed  to  the  witness,  a«re  made  in  the  hearing  of  the 
court  or  magistrate,  and  may  constitute  a  part  of  that 
comment  upon  the  evidence  which  has  a  bearing  on  the 
result.'*  The  privilege,  however,  is  subject  to  the  limit 
that  a  counsel  shall  not  avail  himself  of  his  situation  to 
gratify  private  malice  by  uttering  slanderous  expressions, 
either  against  a  party,  witness,  or  third  person,  which 
have  no  relation  to  the  cause  or  subject-matter  of  the  in- 
quiry. Words  charging  a  witness  with  perjury  uttered 
by  a  party  or  his  counsel  in  the  course  of  a  trial  may  or 
may  not  be  actionable,  according  as  they  were  or  were 
not  spoken  maliciously,  were  or  were  not  pertinent  to 
the  issue,  as  there  was  or  was  not  color  for  making  the 
imputation,  or  as  they  were  or  were  not  spoken  with  a 
design  to  slander  the  witness.*    And  a  defamatory  state- 


^  McLaughlin  v.  Cowley,  131  Mass. 
70. 

»  Hoar  V.  Wood,  3  Met.  193;  York 
V.  Pease,  2  Gray,  282;  Farnsworth  r. 
Storrs,  5  Cush.  417;  Holt  v.  Parsons, 
23  Tex.  9;  70  Am.  Dec.  49. 

^  Hosmer  v.  Loveland,  19  Barb.  Ill; 
Howard  v.  Thompson,  21  Wend.  319; 
34    Am.    Dec.    238;    O'Donaghue    v. 


McGovem,  23  Wend.  26;  Hastings  v. 
Lusk,  22  Wend.  410;  34  Am.  Dec. 
330;  Fawcett  v.  Charles,  13  Wend. 
473;  Milam  v.  Bumsides,  1  Brov.  295. 

*  Shaw,  C.  J.,  in  Hoar  v.  Wood,  3 
Met.  193. 

'  Ring  V.  Wheeler,  7  Cow.  725;  Bur- 
lingame  v.  Burlingame,  8  Cow.  141; 
Hastings  v.  Lusk,  22  Wend.  410;  34 


230 


231       PRIVILEGES  AND   LIABILITIES   OP  ATTORNEYS.      §  143 


ment  contained  in  a  pleading  filed  in  a  cause  to  be  priv- 
ileged must  be  pertinent  and  material  to  the  issue.'  The 
privilege  is  a  personal  one,  the  subsequent  publication  of 
a  speech  made  by  counsel  in  a  cause,  containing  libelous 
matter,  being  unlawful  because  it  extends  beyond  what  is 
required  for  the  administration  of  justice.'' 

§  142.  Disabilities  of  Attorneys.  —  But  there  are  dis- 
abilities as  well  as  privileges  attaching  to  the  office  of 
attorney,  as  will  be  seen  from  the  succeeding  sections. 
Thus  an  attorney  is  oound,  if  ordered  by  the  court,  to  de- 
fend a  destitute  person  without  charge,*  and  can  make  no 
claim  for  his  compensation  on  the  public* 


jtings  V. 
m.  Dec. 
Wend, 
•ov.  295. 
Vood,  3 

25;  Bur- 
,w.  141; 
410;  34 


§  143.  To  Act  in  Diverse  Capacities. — A  solicitor  in  a 
cause  has  been  held  disabled  from  acting  as  a  special  mas- 
ter to  execute  the  decree;*  an  attorney  from  acting  as 
administrator  of  an  estate,  and  at  the  same  time  as  attor- 
ney to  collect  a  debt  of  the  intestate;"  a  constable  de  facto 
from  acting  as  attorney  in  the  case  whose  summons  he 
served;'  an  attorney  for  the  plaintiff  from  issuing  a  writ 
as  justice.®  Counsel  who  represent  private  interests  can- 
not be  retained  to  assist  in  criminal  prosecutions  growing 


Am.  Dec.  330;  Mower  v.  Watson,  11 
Vt.  536;  34  Am.  Dec.  704;  McMillan 
i:  Birch,  1  Binn.  178;  2  Am.  Dec.  42G; 
Gilbert  v.  People,  1  Dcnio,  41;  43  Am. 
Dec.  64G;  Coffin  r.  Coffin,  4  Mass.  1 ;  3 
Am.  Dec.  189;  Wyatt  v.  Bucll,  47  Cal. 
G24;  Gray  V.  Pentland,  2Serg.  &R.  23. 

'  McLaughlin  v.  Cowley,  127  Mass. 
316;  131  Mass.  70. 

''  Rex  V.  Abingdon,  1  Eop.  226;  Rex 
V.  Creevey,  1  Maule  &  S.  273;  Flint  v. 
Pike,  6  Dowl.  &  R.  528;  Edsall  v. 
Brooks,  17  Abb.  Pr.  221;  R.  v.  Os- 
wald, 1  Dall.  319;  Coiumonwealth  v. 
Blanding,  3  Pick.  304;  15  Am.  Dec 
214;  King  v.  Root,  4  Wend.  113;  21 
Am.  Dec.  102;  Sanford  v.  Bennett,  24 
N.  Y.  20.  And  see  post,  Division  2, 
Slander  and  Libel. 

'  People  V.   Supervisors  of  Erie,  1 
Sheld.   517;    Vise  v.    Hamilton   Co., 


19  111.  78;  Bacon  v.  Wayne  Co.,  1 
Mich.  461;  House  v.  Whitis,  5  Baxt. 
690.  But  see  Carpenter  v.  Dane  Co., 
9  Wis.  277;  Webb  v.  Baird,  G  Ind.  13; 
Hall  V.  Washington  Co.,  2  G.  Greene, 
473. 

*  Dismukes  v.  Supervisors,  58  Miss. 
612;  38  Am.  Rep.  330;  Wayne  Co.  v. 
Waller,  90  Pa.  St.  99;  35  Am.  Rep. 
636;  Lament  v.  Solano  Co.,  49  Cal. 
158;  Rowe  v.  Yuba  Co.,  17  Cal.  61; 
Elam  V.  Johnson,  48  Ga.  .348;  Arkan- 
sas Co.  V.  Freeman,  31  Ark.  266;  Peo- 
ple V.  Supervisors,  78  N.  Y.  622;  Case 
V.  Commissioners,  4  Kan.  441;  96  Am. 
Dec.  190.     And  see  chap.  17. 

"  White  V.  Hufifmaker,  27  111.  349. 

6  Spinks  V.  Davis,  32  Miss.  152. 

^  Wilkinson  v.  Vorce,  41  Bar)).  370; 
Knight  V.  Odell,  18  How.  Pr.  279. 

a  Ingraham  v.  Leland,  19  Vt.  301. 


§143 


PRINCIPAL   AND   AGENT. 


232 


out  of  such  interests.*  Wlioro  an  attorney  receives  a  large 
sum  of  money  from  his  client  as  payment  for  services  to 
bo  rendered  to  her  in  and  about  the  settlement  of  the 
estate  of  her  deceased  husband,  ho  is  bound  at  all  times 
to  hold  himself  in  readiness  to  render  them,  disembar- 
rassed from  all  complication  with  others,  and  to  take  no 
position  against  her,  and  not  to  appear  as  attorney  and 
counsel  for  parties  litigating  with  her,  in  relation  to  her 
rights  or  claims  under  the  will,  upon  the  estate  of  her 
husband.*  The  fact  that  an  attorney  for  clients  having 
different  interests  is  enjoined  for  one  does  not  restrain 
his  professional  action  for  others.'  An  attorney  may  act 
as  commissioner  to  take  a  deposition  in  the  cause.*  The 
attorney  for  the  mortgagee  in  a  foreclosure  suit  may  prop- 
erly appear  also  as  attorney  for  a  purchaser  of  the  equity 
of  redemption.*  One  who  acts  as  counsel  for  a  corpora- 
tion does  not  commit  a  breach  of  trust  if  he  afterwards 
acts  as  counsel  in  a  proceeding  against  a  director  to  re- 
cover money  which  the  corporation  has  lost  through  a 
breach  of  the  director's  official  trust.®  A  commissioner 
to  examine  and  allow  claims  against  an  insolvent  savings 
bank  is  not  disqualified  from  acting  as  attorney  for  the 
assignee.'  The  fact  that  an  attorney  is  employed  as  an 
agent  to  negotiate  loans  does  not  preclude  him  from  ren- 
dering professional  services  to  his  principal.® 


1  Peonle  v.  Hurst,  41  Mich.  328. 
»  Quinn  v.  Van  Pelt,  30  N.  Y.  Sup. 
Ct.  279. 
»  Slater  v.  Merritt,  75  N.  Y.  268. 

*  Taylor  v.  Branch  Bank,  14  Ala. 
633. 

»  Wallace  v.  Furber,  62  Ind.  103. 
«  Bent  V.  Priest,  10  Mo.  App.  543. 
^  Hall  V.  Brackett,  60  N.  H.  215. 

*  Union  Mut.  Life  Ins.  Co.  v.  Bu- 
chanan, 100  Ind.  63.  In  a  note  to 
Flaacko  v.  Jersey  City,  33  N.  J.  Eq. 
60,  Mr.  Stewart  in  his  excellent  way 
has  collected  the  following  decisions: 
the  mayor  of  a  city  has  been  held 
competent  to  act  as  its  attorney: 
NUes  V.  Muzzy,  33  Mich.  61;  20  Am. 


Dec.  670.  See  Gibson  v.  Zanesrille, 
31  Ohio  St.  184;  Powers  v.  Deca- 
tur, 54  Ala.  214.  But  in  Vin.  Abr., 
Attorney,  K,  it  is  said  that,  in  an  ac- 
tion by  the  commonalty  of  a  town,  one 
of  the  commonalty  cannot  appear  as 
attorney  for  the  commonalty,  for  ho 
is  party  to  the  action.  A  statute  pro- 
hibiting a  director  of  a  bank  to  appear 
as  its  attorney  was  deemed  constitu- 
tional: West  Feliciana  R.  R.  Co.  v. 
Johnson,  5  How.  (Miss. )  273.  So  brok- 
ers who  were  also  attorneys  were  held 
not  entitled  to  charge  counsel  fees  for 
services  about  the  business  of  their 
employer  in  relation  to  lands  in  their 
bauds   as  such   brokers:    Walker  v. 


232 


233      PRIVILEGES   AND  LIABILITIES  OP  ATTORNEYS.      §  144 


lesville, 
Dcca- 
Abr., 
an  ac- 


Illustrations. — A  lawyer  was  employed  to  and  did  per- 
form certain  services  for  a  railroad  company  in  which  ho  was 
IX  stockholder,  in  procuring  the  release  of  a  mortgage  upon  its 
property,  the  surrender  of  certain  of  its  bonds,  the  release  of 
its  liability  on  a  contract,  and  the  extension  of  a  land  grant, 
and  in  taking  care  of  the  surrendered  bonds,  etc.  Held,  that 
the  fact  that  he  was  a  stockholder  did  not  preclude  him  from 
sustaining  tiio  relation  of  attorney  to  the  railroad  company, 
being  retained  and  recovering  for  the  services  in  question: 
Barker  v.  Cairo  etc.  R.  li.  Co.,  3  Thomp.  &  C.  329. 

§  144.    To  Act  for  Both  Parties,  or  on  Both  Sides. — 

An  attorney  cannot  servo  professioually  both  parties  to  a 
suit.^  An  attorney  will  not  bo  permitted  to  represent 
both  parties  to  a  controversy,  a  county,  for  instance,  and 
the  commissioners  against  whom,  at  the  county's  in- 
stance, a  writ  of  mandate  is  asked.^  But  the  fact  that  a 
contract  is  drawn  up  by  and  under  the  advice  of  one  who 
is  the  counsel  for  both  parties  does  not  invalidate  it  in 
the  absence  of  fraud,  and  where  the  relation  of  the  attor- 


Amcrican  Nat.  Bank,  49  N.  Y.  659; 
Dyor  V.  Sutherland,  75  111.  583;  nor 
can  a  receiver  act  as  hia  own  coun- 
sel so  aa  to  charge  the  estate  for 
his  services:   Bank  of  Niagara  Case, 

6  Pai;,'e,  213;  McGourkey  v.  Downs, 
MS.,  N.  J.  Eq.,  May  term,  1880;  see 
Adams  v.  Woods,  8  Cal.  321 ;  68  Am. 
Dee.  313;  nor  can  one  member  of  a 
partnership  who  is  an  attorney  charge 
the  others  for  professional  services 
about  the  firm's  affairs,  either  before 
or  iifter  dissolution:  Milburn  v.  Codd, 

7  Barn.  &  C.  419;  Van  Duzer  v.  Mc- 
Millan, 37  Ga.  299;  McCrary  v.  Rud- 
dick,  S3  Iowa,  621 ;  nor  can  an  attor- 
ney who  is  a  mortgagee  recover  his 
CO  its  on  his  own  foreclosure:  Sclater  v. 
Cottam,  3  Jur.,  N.  S.,  630;  Patterson 
r.  Ponncr,  48  Cal.  369;  nor  can  a  so- 
licitor who  has  an  interest  in  attend- 
ing to  a  cause  charge  for  his  services 
without  an  express  agreement:  Martin 
V.  Campbell,  11  Rich.  Eq.  205;  see 
Dcire  i\  Robinson,  7  Hare,  283;  but  he 
would  bo  liable  for  costs:  Voorhees  v. 
McCartney,  51  N.  Y.  387;  Common- 
wealth V.  Donaldson,  47  Pa.  St.  303;  a 
director  of  a  corporation  who  brought 
suit  as  an  attorney  against  such  cor- 


poration was  held  entitled  to  costs: 
Christie  v.  Sawyer,  44  N.  H.  298;  lu 
to  a  stockholder  sustaining  such  rela- 
tion, see  Spence  v.  Whitaker,  3  Port. 
297. 

'  Sherwood  v.  Saratoga  R.  R.  Co., 
15  Barb.  650;  Herrick  v.  Catley,  30 
How.  Pr.  208;  1  Daly,  512;  Price  v. 
Grand  Rapids  R.  R.  Co.,  18  Ind.  137; 
Branch  v.  Harrington,  49  How.  Pr. 
196;  V^arreu  v.  Sprague,  4  Edw.  Ch. 
416;  Valentine  w.  Stewart,  15  Cal.  387; 
De  Cells  v.  Brunson,  53  Cal.  372.  An 
attorney  representing  one  party  in  a 
negotiation  will  not  be  allowed  to  re- 
ceive compensation  from  the  other 
party:  De  Cells  v.  Brunson,  53  Cal. 
372;  Orr  v.  Tanner,  12  R.  I.  94.  The 
rule  precluding  an  attorney  from  re- 
covering for  legal  services  rendered  by 
him,  both  to  the  plaintiff  and  defend- 
ant in  a  suit,  was  applied  in  one's  ac- 
tion on  a  note  given  him  by  a  husband 
for  services  to  both  parties  to  a  di- 
vorce suit;  the  payee,  while  attorney 
for  the  wife,  having  at  his  request 

Sersuaded  her  to  dismiss  the  action: 
lacdonald  v.  Wagner,  5  Mo.  App.  50. 
*  Clarke  County  v.  Clarke  County 
Commissioners,  1  Wash.  Ter.  250. 


§144 


PRINCIPAL   AND  AGENT. 


234 


ney  was  known  to  both.'  And  whcro  tho  attorney  to  col- 
lect a  note  was  appointed  by  the  defendant  his  attorney 
to  confess  judgment  on  it,  ho  having  full  knowledge  of  tho 
attorney's  position,  it  was  held  not  illegal.'  So  an  attor- 
ney after  onco  acting  as  such  in  a  suit  cannot  abandon 
his  client's  case  and  go  over  to  tho  other  side.'  lie  can- 
not make  uso  of  tho  information  ho  has  gained  as  such, 
for  the  benefit  of  the  opposite  party,  but  if  in  the  course 
of  other  business  ho  has  become  acquainted  with  tho 
secrets  of  another,  ho  will  not  thereby  bo  prevented  from 
acting  against  him.*  The  solicitor  who  files  a  bill  for 
tho  appointment  of  a  receiver  ought  not  to  act  as  solici- 
tor for  the  receiver;  but  if  the  defendant  appears  by  tho 
same  solicitor  in  the  suit  by  tho  receiver,  as  he  did  in 


»  Joslin  V.  Coweo,  60  N.  Y.  626. 

■•*  WiiHsell  V.  Rcanlon,  1 1  Ark.  703; 
54  Am.  Dec.  245.  Tho  court  said: 
"As  a  general  rule,  it  is  true  that 
agents  cannot  act  bo  as  to  bind  tlieir 
principals,  where  they  have  or  repre- 
sent interests  adverse  to  tho  princi- 
pals'. This  rule  is  founded  upon  the 
consideration  that  the  principal  bar- 
gains for  the  skill  and  vigilant  atten- 
tion of  tho  agent  to  tho  subject-matter 
intrusted  to  him;  and  tho  policy  of 
tJ)c  law  will  not  tolerate  tlie  existence 
of  an  adverse  interest  iu  the  agent  to 
that  of  his  principal,  for  fear  it  may 
influence  his  conduct  to  tho  prejudice 
of  interests  of  tho  principal.  This 
well-recognized  rule  is  particularly 
applicable  to  buying  and  selling  agents, 
■where  the  principal  contracts  for  the 
services  of  an  agent  at  a  time  when 
he  has  uo  interest  in  tho  subject  in- 
trusted to  him,  but  subsequently,  by 
his  own  act,  acquires  interest  in  it  ad- 
verse to  that  of  the  principal.  In  the 
case  before  us,  the  attorney  had  no 
interest  in  the  matter  of  his  agency 
unless  it  should  arise  from  his  claim 
to  compensation  as  a  collector,  which 
may  or  may  not  have  been  otherwise 
settled;  nor  had  the  plaintiff  any  in- 
terest whatever  in  the  act  to  bo  done 
of  which  the  principal,  at  the  time  ho 
instituted  him  agent,  was  not  fully 
advised;  and  if  such  disqualification 
existed,  he,  by  his  own  act,  expressly 


waived  it  by  conferring  upon  tho  agent 
such  power,  with  a  knowloilge  of  the 
facts.  When  it  is  remembered  that 
the  whole  ground  upon  which  this 
rule  is  based  rusts  upon  the  fraudulent 
advantage  which  such  an  interest  may 
stimulate  tho  agent  to  take  to  the 
prejudice  of  his  principal's  rights,  it 
will  scarcely  be  contended  that  the 
circumstances  of  this  case  bring  it 
within  the  reason  and  spirit  of  the 
rule.  Tlie  principal  was  informed  of 
the  nature  and  extent  of  tho  interest 
which  tho  payee  in  the  note  had  in 
tho  act  to  be  performed  by  the  agent. 
Tho  facts  disclosed  in  the  instrument 
itself  prove  this;  and  that  it  was  in- 
tended that  the  act  to  bo  performed 
should  inure  to  tho  mutual  benefit  of 
both  the  payor  and  payee:  to  the  first, 
by  saving  him  the  expense  incident  to 
a  suit  in  the  usual  form;  to  tho  other, 
by  facilitating  and  making  certain  a 
recovery."  How  far  an  attorney  au- 
thorized by  a  defendant's  warrant  to 
confess  judgment  may  act  for  the 
plaintiff,  see  Sipesr.  Whitney,  30  Ohio 
St.  69. 

>  Valentine  v.  Stewart,  15  Cal.  387; 
Commonwealth  v.  Gibbs,  4  Gray,  146; 
Gauldenu.  State,  11  Ga.  47;  Hatch  r. 
Fogerty,  10  Abb.  Pr.,  N.  S.,  147;  40 
How.  Fr.  492. 

*  Price  V.  Grand  Eapida  R.  R.  Co., 
18  Ind.  137. 


234 


235       PRIVILEGES   AND    LIADILITIES   OP   ATTORNEYS.      §  145 


387; 
146; 

itch  V. 
t7;  40 

,.  Co., 


the  original  suit,  such  appearance  amounts  to  a  waiver 
of  all  objections.'  An  attorney  employed  to  attend  to 
certain  specified  litigation,  "and  to  all  other  litigations," 
concerning  certain  lands,  under  a  contract,  who  accepts 
and  prosecutes  an  action  for  another  party  whoso  inter- 
ests are  adverse  to  those  of  his  employer,  concerning  the 
same  land,  if  discharged  by  the  latter,  is  noi  entitled  to  a 
specific  performance  of  his  contract  with  him.*  But  the 
fact  that  plaintilf's  attorney  officially,  as  an  oIRcor  of  the 
government,  at  a  former  time  held  a  different  view  of 
the  law  of  the  case  from  that  afterwards  advocated  by 
him  as  such  attorney,  need  not  of  itself  disqualify  him 
from  accepting  plaintiff's  retainer,  or  affect  his  right  to 
compensation  for  services  rendered  to  plaintiff.''  The 
trial  court  has  power,  and  it  is  its  duty,  when  satisfied 
that  on  a  former  trial  the  attorney  has  acted  for  one 
party,  to  prohibit  him  from  acting  on  the  second  trial  for 
an  opposite  party.* 

Illustrations.  —  Defendant  in  a  prosecution  filed  an  affidavit 
that  he  had  engaged  one  F.,  a  lawyer,  to  defend  him,  that  ho 
had  disclosed  to  him  the  facts  of  his  case,  and  his  evidence, 
etc.  F.  filed  an  affidavit  admitting  the  retainer,  but  denying 
that  he  had  learned  anything  from  defendant  as  to  his  grounds 
or  means  of  defense.  Held,  that  F.  should  not  be  allowed  to 
assist  in  the  prosecution,  as  it  would  be  a  defeating  of  the  ends 
of  justice:   Wilson  v.  State,  16  Ind.  392. 

§  145.  To  Purchase  Demands  for  Suit.  —  An  attorney 
is  not  at  liberty  to  buy  the  matters  in  suit  or  chosos  in 
action,*^  and  this  in  New  York  has  been  declared  a  crime;* 
and  while  the  relation  of  attorney  and  client  continues,  or 
even  after  it  has  been  dissolved,  purchases  made  by  the 
attorney  will  be  regarded  by  the  court  with  suspicion,  and 

'  Warren  ?;.,  prague,4  Etlw.  Ch.  416.  *  Weeks    on    Attorneys,    sec.    121; 

■•*  McArthur  v.  Fry,  10  Kan.  2.33.  Cunningham  v.  Jones,  37  Kan.  177. 

^  Smith  V.  Chicago  and  Northwest-  ''  See  Van  Rensselaer  ?'.   Sheriff,   1 

ern-R'y  Co.,  60  Iowa,  515.  Cow.  443;  Baldwin  v.  Lat.son,  2  Uarb. 

♦  Weidekind  v.  Water  Co.,  74  Cal.  Ch.  306;  Mann  v.  Faircuild,  14  Barb. 

380;  State  v.  Halatead,  63  Iowa,  376.  548. 


§146 


PRINCIPAL  AND   AGENT. 


236 


the  attorney,  if  there  be  any  circumstances  of  fraud  or 
inadequacy  of  price,  will  be  held  a  trustee  for  the  client  of 
the  property  so  purchased/ 

Illustrations.  —  An  attorney  bought  a  right  of  action  from 
a  receiver,  for  the  benefit  of  his  client;  but  the  iatter  objected 
to  accept  the  purchase,  and  the  attorney  retained  tlie  chose  in 
action  himself,  and  paid  for  it  with  his  own  money,  with  intent 
to  sue  upon  it.  Held,  that  this  purchase,  although  at  a  re- 
ceiver's sale,  and  originally  in  the  name  of  another  person,  was 
a  violation  of  2  N.  Y.  Rev.  Stats.  288,  sec.  71,  which  forbids  at- 
torneys to  buy  things  in  action  for  the  purpose  of  suing  thereon: 
Mann  v.  Fairchild,  3  Abb.  App.  152. 

§  146.    Communications  between  Attorney  and  Client. 

—  An  attorney,  counsel,  or  solicitor  will  not  be  permitted, 
and  cannot  be  compelled,  to  disclose  communications, 
either  oral  or  written,  made  to  him  in  his  professional 
capacity.^  This  privilege  extends  to  oral  communications 
or  letters,  or  knowledge  gained  from  books  or  papers, 
shown  to  him  or  placed  in  his  hands  by  the  client.^  "An 
attorney  or  counselor  cannot,  without  the  consent  of  his 
client,  be  compelled  to  disclose  any  fact  which  may  have 
been  communicated  to  him  by  his  client,  solely  for  the 
purpose  of  obtaining  his  professional  assistance  and  ad- 
vice. In  the  complicated  affairs  and  relations  of  life,  the 
counsel  and  assistance  of  those  learned  in  the  law  often 


'  Sec  post,  Divisioii  3,  Trustees. 

"  Lan(labcr£!tir.  Gorham,  5  Cal.  455; 
Mitchell  V.  Bromberger,  2  Nov.  345; 
90  Am.  Dec.  550;  Gallagher  v.  Wil- 
liamson, 23  fal.  331;  83  Am..  Dec.  114; 
Riiigj  r.  Deimiston,  3  Johrs.  Cas.  198; 
2  Am.  Dec.  145;  Covene/  v.  Taniia- 
hill,  1  Hill,  33;  37  Am.  Dec.  287; 
Crosby  v.  Bcrgor,  11  Paige,  377;  42 
Am.  Dec.  117;  McLellanv.  Longfellow, 
32  Uc.  494;  54  Am.  Dec.  599;  Hunter 
r.  Watson,  12  Cal  303;  73  Am.  Dec. 
543;  Rochester  etc.  Bank  v.  Suydam, 
5  How.  Pr.  254:  Rho.'xlea  i'.  Selin,  4 
Wash.  718;  Heisterw.  Lavis,  3  Yeates, 
4;  Yordan  v.  Hess,  13  Johns.  492; 
Chirac  v.  Reinicker,  11  Wheat.  280; 
Parker  r.  Carter,  4  Munf.  273;  G  Am. 
Dec.    513;  Rt)gers  v.    Dare,    Wright, 


13G;  Crawford  ?'.  McKissack,  1  Port. 
4?'i;  Riley  v.  Johnston,  13  Ga.  2C0; 
Jenkinson  r.  State,  5  Blackf.  405; 
Holmes  f.  Barbin,  15  Lu.  Ann.  553; 
King  V.  Barrett,  11  Ohio  St.  201; 
Chew  V.  Farmers'  Bank,  2  Md.  Ch. 
231;  ISIarch  v.  Ludlnm,  3  Sanil.  Ch. 
i'lb;  Childs  v.  Delaney,  1  Thomp.  & 
C  500;  Pearsall  v.  Elmer,  5  Redf. 
181. 

^  Crosby  i\  Berger,  1 1  Paige,  377 ;  42 
Am.  Dee.  117;  People  i-.  Benjamin,  9 
How.  Pr.  419;  Anonymous,  8  ^lass. 
370;  Lyn.le  v.  Judd,  3  Day,  499;  Kil- 
logg  r.  Kellogg,  G  Barb.  110;  Jackson 
V.  Burtis,  14  Johns.  391;  Wilson  r. 
Troup,  7  Johns.  Cli.  25:  Ncal  r.  Patten, 
47  Ga.  73;  Dover  t'.  Harrell,  58  Ga.  572; 
Fire  Ass'n  v.  Fleming,  78  Ga.  738. 


b( 

fol 

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H 

lal 

ml 

CO 

frJ 
mi 
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236 


237       PRIVILEGES   AND   LIABILITIES    OP   ATTORNEYS. 


14G 


1  Port. 

200; 

4G5; 

in.   553; 

it.    261; 

Ch. 

Ch. 

iinp.  & 

Kcdf. 

577;  42 

|iiiiin,  9 

Mass. 

ih  Kil- 

auksou 

son   r. 

'atten, 

572; 

38. 


becomes  necessary,  and  to  obtain  it  men  are  frequently 
forced  to  make  disclosures  which  their  welfare  and  yoi;!"- 
times  their  lives  make  it  necessary  to  be  kept  secret. 
Hence,  for  the  benefit  and  i^rotection  of  the  client,  the 
law  places  the  seal  of  secrecy  upon  all  communications 
made  to  the  attorney  in  the  course  of  his  profcsr?ional 
employment,  arid  the  courts  are  expressly  prohibited 
from  examining  him  as  a  witness  upon  any  facts  which 
may  have  come  to  his  knowledge  through  the  medium  of 
such  employment."*     To  entitle  the  communication  to 


'  Mitchell  V.   Bromberger,   2  Nev, 
345;    90    Am.    Doc.    550.     Where    a 
client    has    placed   in   his    attorney's 
hands  a  lease,   the   latter   cannot   be 
compelled  to  produce  it  in  evidence 
afaiiist  the  client  in  a  criminal  prose- 
cution:   Commonwealth  v.  Moyer,   15 
Pliila.    397.     But    the    production    of 
documents  in  the  hands  of  counsel  can 
1)C  resisted  only  when  a  coiitrover.sy 
exists,  or  is  anticipated  between  par- 
ties,   in   relation   to    tiie    subject    on 
viiieli  communications  were  made  to 
counsel,   on  the  documents  intrusted 
to  him.     It  is  not  enough  that  they 
were  made  or  delivered  in  the  gen<'  d 
courjo  of  profcisional  business:  1       ; 
r.   William.s,    13   Abb.    Br.    G8.      ....• 
privilogo  does  not   extend  to  a  com- 
bination betweoii  them  to  prevent  tlie 
court  from  compelling  the  production 
of  important  p:iper3  at  the  trial:  Peo- 
]>lc  r.  Sherifif  of  New  York,  29  Barb. 
GJ2;  7  Abb.  Pr.  90.     A  bill  in  chan- 
cery, .sworn  to  by  a  party,  but  never 
tiled,   and  which   is   prepared  by  his 
attorney  on  tho  client's  statement  of 
tlK  facis,  Iz  to  be  regarded  as  a  privi- 
le;^ed  communication  in  the  haadi  of 
the  attorney:  Burnham  /•.  Roberts,  70 
III.  19      The  correspondence  between 
a  district  attornej',   represr'nting  tlie 
U:iice(l  Staie  •,  and  tlie  attorney -gcn- 
er;d,  i,j  confidential  in  its  nature  and 
cauniit    be    cited    by   thiiil    persons: 
United  Sta:es  v.  Six  Lota  of  (Jrround, 
1  Woods,  231:.     In  n;i  action  for  falsely 
and  maliciously  representing  to  the 
trca:  ury   department   of    the   United 
States  tliat  the  plaintiff  was  intending 
to  defraud  the  revenue,   the  plaintiff 
liled  interrogatories  requiring  the  de- 


fendant to  answer  whether  he  did  not 
inform  the  department  that  ho  knew 
or  believed  that  the  jjlaintiff  was  in- 
tending to  commit  a  fraud  upon  the 
revenue.  It  was  h'dd  tliat  any  com- 
munications of  t'lio  l.iad  to  the  depart- 
ment were  privileged  m  the  sense  tliat 
tlieir  disclosure  wdl  not  lie  co'.r.p-jllcd 
or  permitted  without  the  assent  of  the 
government,  and  tliat  defeiidar.t  v.-ov.l  I 
not  bj  compelled  to  answer  tlio  inter- 
rogatories: Worthington  v.  SerilincT, 
109  Mass.  487;  12  Am.  Rep.  7:;!  By 
statute  in  some  wtates,  a  phy.sician  is 
forbidden  to  disclose  auj'  inl'oria.ation 
received  from  a  patient  in  his  pro- 
fessional capacity:  Sec  Edinjtou  ?•. 
Mntual  Life  Ins.  Co.,  07  N.  Y.  185; 
Edingtn:i  v.  .cEtna  Life  Ins.  Co.,  77 
N.  Y.  504;  Dillebor  ?'.  Homo  Insi.  Co., 
09  N.  Y.  250;  25  Am.  Rep.  182; 
(Irattan  ?•.  Metropolitau  Ins.  Co.,  92 
N.  Y.  274;  44  Am.  Rep.  372;  Sculis 
V.  Foster,  41  Min.  742;  Fraser  v. 
.lennisoii,  42  \.ioh.  225;  r.oto  to 
Canipiu  (".  North,  39  Midi.  1)00,  in 
33  Am.  Rep.  433,  435.  Tiio  inhi- 
bition is  not  conKned  to  communi- 
cations made  by  the  patient  to  the 
physician,  but  protects  with  the  veil 
of  privilege  whatever,  in  order  to  en- 
able the  physician  to  prcicribe,  v/as 
disclosed  to  any  of  liis  Bcnses,  and 
which  in  any  way  was  brought  to 
his  knowledge  for  that  purpose: 
Briggs  V.  Briggs,  20  Mieli.  34.  '-Tlie 
statute  covers  information  acquired 
by  observation  while  in  attendance 
upon  his  patient,  as  well  as  eo:;iinuui- 
cations  made  by  the  patient  to  him; 
but  the  rule  it  establishes  is  one  of 
privilege  for  the  protection  of  the  pa- 


§146 


PRINCIPAL  AND   AGENT. 


238 


the  privilege,  it  is  not  necessary  that  it  should  have  been 
made  undor  any  special  injunction  of  secrecy,  or  that  the 
client  sliould  have  understood  the  extent  of  the  privilege.^ 
The  couiniunication  cannot  bo  revealed,  even  after  the 
termination  of  the  suit  or  proceeding  in  which  it  was 
made,-  or  after  the  relation  of  attorney  and  client  has  ter- 
minated* with  the  leave  of  the  court,^  or  after  the  death 
of  the  client.^  Where  an  attorney  acts  for  two  clients, 
his  communications  with  them  are  not  privileged  in  a 
subsequent  suit  between  their  representatives,*  and  con- 
versations between  a  prosecuting  witness  and  an  attorney 
voluntarily  assisting  the  state's  atcorney  are  not  privileged 
in  a  subsequent  action  against  such  witness  for  malicious 
proseculionJ  An  attorney  who  drew  a  will  may  testify, 
on  its  probate,  to  what  transpired  between  the  testator 
and  himself  in  the  process  of  its  preparation  and  publica- 
tion.** And  where  ho  accepts  a  retainer  to  oppose  its  pro- 
bate, he  cannot  claim  exemption  from  testifying  as  to  the 
preparation  of  the  will,  on  the  ground  of  his  attorney's 
privilege."  He  may  testify  to  communications  received 
in  the  course  of  his  professional  employment,  when  he  is 
called  to  testify  by  the  executor,  who  alone  could  object; 
that  parties  contesting  the  will  object  to  his  testifying  is 
irrelevant.'" 


tient;  and  he  may  waive  it  if  he  seea 
fit,  and  what  he  may  do  iu  his  life- 
time those  who  represent  him  after 
his  death  may  also  do  for  the  protec- 
tic:  of  the  interests  they  claim  under 
him  ":  Fraser  v.  Jenniaon,  42  Mich. 
225.  The  burden  is  on  the  party  seek- 
ing to  exclude  the  testimony  to  show 
not  only  that  it  was  acquired  by  the 
physician  in  attending  the  patient  in  a 
professional  capacity,  but  that  it  was 
necessary  to  enable  him  to  act  in  that 
capacity:  People r.  Schuyler,  100 N.  Y. 
298. 

'  McLellan  v.  Longfellow,  32  Me. 
494;  54  Am.  Dec.  599. 

»  Chase's  Case,  1  Bland  Oh.  206;  17 
Am.  Dec.  277. 


'  Hatton  V.  Robinson,  14  Pick.  41G; 
25  Am.  Dec.  415. 

*  Andrews  v.  Thompson,  1  Houst. 
522. 

*  Bennett's  Estate,  13  Phila.  331. 
The  privilege  ceases  with  the  client's 
death  when  the  solicitor  is  made  his 
executor  and  residuary  legatee:  Crosby 
V.  Berger,  4  Edw.  Ch.  254. 

«  Sherman  v.  Scott,  27  Hun,  331. 
'  Meysenberg   v.   Engelke,    18  Mo. 
App.  346. 
"  In  re  Austin,  42  Hun,  516. 

*  Sheridan  v.  Houghton,  6  Abb.  N. 
C.  234;  16  Hun,  628. 

19  Whelpley  v.  Loder,  1  Demarest, 
368. 


238 


239      PRIVILEGES  AND  LIABILITIES   OP  ATTORNEYS.      §  146 


The  rule  of  privilege  is  not  confined  to  communications 
made  in  contemplatic  i  of  or  in  tho  progress  of  an  action 
or  judicial  proceeding,  but  extends  to  those  made  in  refer- 
ence to  any  matter  which  is  the  proper  subject  of  profes- 
sional employment.^  It  is  not  limited  to  advice  given  or 
opinions  stated;  it  extends  to  facts  communicated  by  the 
client,  to  all  that  passes  between  client  and  attorney,  in 
the  course  and  for  the  purpose  of  the  business.''  But  tlio 
privilege  is  confined  to  such  communications  as  are  made 
in  strictly  professional  intercourse.'  An  attorney  may 
b^  required  to  disclose  any  information,  pertinent  to 
the  cause,  which  has  no  necessary  connection  with  his 
professional  character,  and  which  he  did  not  acquire 
1y  reason  of  the  confidence  reposed  in  him,  on  account 
.hat  character,  or  to  matters  which  did  not  relate 
to  the  subject-matter  of  the  communication.'*  Nor  can 
the  client  be  compelled  to  testify  as  to  communica- 
tions made  by  him  to  his  attorney.^  But  if  he  makes 
himsci'^a  witness,  h-^  may  be  cross-examined,  and  cannot 
refuse  to  answer  on  the  ground  of  the  matter  being  a 
communication  which  he  had  made  to  his  attorney." 

1  Root  V.  Wright,  84  N.  Y.  72;  38    Caa.  198;  2  Am.  Dec.  145.     A  sheriflfig 
Am.  Rep.  495;  Britton  v.  Lorenz,  45    entitled  to  the  same  privilege,  in  his 

cc  nmunicationa  with  liis  attorney,  as 
other  persona:  Paxton  v.  Steckel,  2 
Pa.  St.  93. 

*  Lengstield  v.  Richardson,  52  Miss. 
443;  K-uit  V.  Kessler,  114  Pa.  St.  CO.-?. 

^  G '■anger  v.  Warrington,  8  111.  "99; 
Picracn  v.  Steo -tz,  1  Morris,  186; 
Milan  v.  State,  r.4  Ark.  34G;  Rijgs  v. 
Denniston,  3  Jrhns.  Cas.  198;  2  Am. 
Dec.  145;  Rojhester  City  Banii  v. 
Suydam,  5  Hotv.  Pr.  2C4;  llomherg  v. 
Hughes,  18N'1).  579. 

*  Chew  V  Jj'armers'  Bank  of  Mary- 
land, 2  Mil.  «-'h.  231 ;  Beeson  v.  Beeson, 
9  Pa.  St.  279;  Carroll  v.  Sprague,  59 


^bb.  N. 
marest, 


N.  Y.  57;  Parker  v.  Career,  4  Mu  if. 
273;  6  Am.  Dec.  513;  Foster  v.  IIjA, 
12  Pick.  89;  22  Am.  Dec.  400;  Beltz- 
hoover  v.  Blackstock,  3  Watts,  20;  27 
Am.  Dec.  330;  Moore  v.  Bray,  10  Pa. 
St.  524v  Clark  v.  Richards,  3  E.  D. 
Smith,  95;  Graham  v.  People,  63  Barb. 
482;  March  v.  Ludlum,  3  Sand.  Ch. 
40;  Bank  of  Utica  v.  Mersereau,  3  Barb. 
Ch.  528;  49  Am.  Dec.  189;  McLcUan 
V.  Longfellow,  32  Me.  494;  64  Am. 
Dec.  599;  Bobo  v.  Bryaon,  21  Ark.  387; 
7G  Am.  Dec.  407;  Parker  v.  Carter,  4 

Munf.  273;  G  Am.  Dec.  513;  Bigler  v. 

Reyber,  43  Ind.  112;  Cainea  v.  Piatt, 

loAbb.  Pr.,N.  S.,  337.  Some  cases  hold    Cal.  655;  Oliver  v.  Cameron,  4  McAr. 

that  the  communication,  to  be  privi-    237;  State  v.  Mewhcrter,  46  iowa,  88. 

leged,  must  have  relation  to  some  suit        *  Bobo  v.   BryaoD^  21  Ark.  387;  76 

or  other    judicial   proceeding,    either     Am.   Dec.   406;    State  v.   White,    19 

existing  or  contemplated:   Whiting  v.     Kan.  445;  27  Am.  Rep.  137. 

Barney,  30  N.  Y.  330;    86  Am.  Dec.         « Inhabitouts  of  Woburn   v.    Hen- 

3So;  In  re  O'Donohue,  3  Nat.  Bank,     shaw,   101    Mass,    193;    3  Am.   Rep. 

Keg.  245;  Rigga  v.  Demustou,  3  Johns.    333. 


§146 


PRINCIPAL  AND   AGENT. 


240 


The  communication  is  privileged,  though  the  attorney 
did  not  consider  himself  as  acting  for  the  party,  if  the  lat- 
ter was  under  the  impression  that  he  was.*  The  privilege 
extends  only  to  the  attorney  or  counsel  himself,  and  to 
those  whoso  intervention  is  strictly  necessary  to  enable 
the  client  to  communicate  with  him.'*  The  following  are 
therefore  within  the  rule:  a  clerk  of  the  attorney,^  or  an 
interpreter.*  The  privilege  does  not  extend  to  a  student 
at  law  in  a  lawyer's  office;^  nor  to  one  not  licensed  as 
attorney;''  nor  to  a  mere  conveyancer  not  a  lawyer;^  nor  to 
one  whom  the  j^arty  sui^posed  to  be  an  attorney,  and  whom 
ho  employed  as  such,  but  who,  although  doing  business 
as  a  member  of  the  bar,  was  not  in  fact  admitted  at  that 
time;*  nor  to  a  witness  who  had  been  employed  to  assist 
him  in  a  trial,  but  who  was  not  an  attorney,  counselor, 
or  solicitor;"  nor  to  third  persons  present  when  the  com- 
munication is  made.*" 

It  has  been  held  that  the  attorney  cannot  bo  compelled 
to  testify  whether  or  not  a  note  placed  in  his  hands 
by  a  client  was  indorsed,  or  had  writing  on  its  back,  or 
not;"  or  as  to  the  condition  and  appearance  of  a  deed  of 
trust  and  notes,  at  the  time  they  were  placed  in  his  hands 
for  foreclosure;*^  or  as  to  a  communication  made  in  rcfer- 


^  Alderman  v.  People,  4  Mich.  414; 
G9  Am.  Dec.  :^'2l. 

'^  Hatton  V.  Robinson,  14  Pick.  41G; 
2o  Ain.  Dec.  415. 

■*  Laniltibergcr  v.  Gorhani,  5  Cal.  455; 
Jackson  v.  Fruncli,  3  Wcid.  .^"7;  20 
Am.  Dec.  C99,  Sibley  v.  Waffle,  16 
K.  Y.  1S.3. 

*  Jaclvson  V.  French,  3  Wend.  337; 
£0  Am.  Dec.  009. 

'■  Andi  n\v.s  v.  Solomon,  Pet.  C.  C. 
S5G;  Barnes  v.  Harris,  7  Cush.  570;  54 
Am.  Dec.  734. 

"  McLaughlin  v.  Gilmore,  1  111.  App. 
503;  aUter,  as  to  one  licensed  to  prac- 
tice before  a  justice  of  the  peace  or  in 
the  county  court:  Scales  r.  Kelly,  2 
Lea,  70G.  And  in  Oliio,  communica- 
tions made  to  one  not  an  attorney  of 
the  courts  of  record,  but  vhoso  regu- 
lar buainesa  had  long  been  that  ot' 


practicing  before  justices  of  the  ])eace, 
was  held  privileged:  Benedict  v.  fetate, 
44  Ohio  St.  079. 

'  Matthcws's  Estate,  1  Phila.  'J92. 

"  Sample  v.  Frost,  10  Iowa,  2GG. 

^  Brayton  v.  Cliase,  3  Wis.  150. 

'0  Jackson  r.  French,  3  Wend.  337; 
20  Am.  Dec.  G99;  Wcinstein  v.  Reid, 
25  Mo.  App.  41.  But  in  a  Texas  case 
an  attorney's  mother-in-law,  being 
present  at  a  time  when  profespi(mai 
conununications  were  made  to  the  at- 
torney, overheard  them;  it  vas  held 
that  she  could  be  required  to  testify 
concerning  them:  Walker  r.  S^ate,  19 
Tex.  App.  170.     Sec  next  section. 

>'  Dietrich  v.  Mitchell,  43  III.  40;  92 
Am.  Doc.  99. 

'-  Gray  v.  Fox,  43  Mo.  570;  97  Am, 
Dec.  410. 


240 


241       PRIVILEGES   AND   LIABILITIES   OF   ATTORNEYS.      §  14G 


ence  to  personal  estate,  on  retaining  liim  to  draw  an 
affidavit  for  the  reduction  of  the  assessment  on  the  estate;' 
nor  that  while  attorney  of  plaintiff  he  furnished  the  de- 
fendant's agent  with  a  specification  of  plaintiff's  claim, 
which  was  different  from  that  now  presented;'^  nor  as 
to  what  claim  or  title  he  was  employed  to  maintain;^ 
nor  (in  a  prosecution  for  stealing  silver  coin)  that  his 
retaining  fee  was  paid  in  silver;"*  nor  statements  made 
to  him  in  regard  to  the  preparation  of  a  will;^  or  made 
at  the  time  that  he  drafted  for  the  client  an  affidavit  on 
which  perjury  was  assigned;**  nor  as  to  what  his  client, 
the  assignor,  said  at  the  time  of  his  drawing  it,  with  refer- 
ence to  his  intent  or  purpose  in  making  the  assignment;" 
or  as  to  communications  made  to  him  in  his  professional 
capacity,  by  an  owner  of  property,  respecting  a  transfer 
of  it;*  or  as  to  any  facts  which  came  to  his  knowledge,  as 
such,  when  objecting  or  consenting  to  the  examination  of 
his  client  as  a  witness;®  or  to  communications  made  to  a 
prosecuting  attorney  relative  to  criminals  or  suspected 
persons;^'*  or  us  to  communications  made  to  an  attorney 
employed  simply  to  draw  up  a  contract  or  conveyance." 
An  attorney  retained  by  the  husband  to  aid  in  having 
land,  bought  by  the  husband  at  chancery  sale,  conveyed 
to  the  wife,  cannot  disclose  any  communication  made 
pending  the  relation  touching  the  purposes  of  the  con- 


l7  Am. 


>■  Williams  v.  Fitch,  18  N.  Y.  346. 

'^  Hicks  V.  Blanclii  rd,  GO  Vt.  (iTS. 

^  Chir.iO  V.  Reiuioker,  II  Wh(3at. 
280;  Stephens  v.  Mattox,  37  Oa. 
289. 

<  State  V.  Dawson,  90  Mo.  149. 

'  BiMuiett's  Estate,  13  Pliila.  331. 

*  Hcniaiulcz  v.  State,  18  Tux.  App. 
134. 

'  Hollenback  v.  Todd,  119  111.  543. 

«  Foster  V.  Hall,  12  Pick.  89;  22 
Am.  Doc.  400;  Bultzhoover  v.  Black- 
stock,  3  Watts,  20;  27  Am.  Dec. 
330. 

"  Hodges  V,  MuUikin,  1  Bland, 
503. 

^''  Oliver  v.  Pate,  43  Ind.  132;  Young 
Vol.  I.  — It) 


V.  State,  05  Ga.  525;  Vogel  v.  Gruaz, 
110  U.  S.  311. 

"  Parker  v.  Carter,  4  Muiif.  273;  (5 
Am.  Dec.  513;  Ba.ik  r.  Merscreau,  3 
Barb.  Ch.  528;  49  Am.  Dec.  189;  0611;- 
latt'  r.  Seligor,  43  \Vi8.  297;  Crane  v. 
Barkdoll,  59  Md.  5;>4;  Liiitliidim  v. 
Kemington,  5  Cranch  C.  C.  54t);  Moore 
r.  Bray,  10  Pa.  St.  519;  coiit.-n.  Do 
WoU  V.  Strader,  20  111.  22r);  79  Aiii. 
Doc.  371;  Smith  v.  Long,  100  111. 
488;  Hehhard  r.  Haugliian,  70  N.  Y. 
01;  Hattoa  t'.  Robin.-^on,  14  Pick.  410; 
25  Am.  Dec.  415;  Boriim  r.  Fouls,  15 
Ind.  50;  Randal  v.  \''ate3,  48  Mass. 
085;  Machcttc  y.  Wanless.  2  Col.  100;. 
Todd  V,  Muason,  53  Couu.  579. 


wlr?*^ 


§14 


PRINCIPAL   AND   AGENT. 


242 


vcyance.*  The  burden  lies  on  him  who  seeks  to  exclude 
communications  as  privileged,  to  show  facts  constituting 
the  privilege.^  But  the  rule  should  be  enforced  by  the 
court,  of  its  own  motion.^  The  opinion  of  the  attorney 
that  the  communications  arc  privileged  is  entitled  to 
great  weight.''  But  an  attorney  who  is  called  as  a  wit- 
ness in  a  proceeding  in  bankruptcy  is  not  entitled  to  add 
to  the  oath  which  he  takes  a  reservation  of  a  right  to 
refuse  to  answer  any  question  on  the  ground  of  privilege 
as  the  attorney  or  coun^  .  of  the  bankrupt.^ 

Illustrations. — A  practicing  attorney  also  carried  on  a 
liquor  store.  R.,  one  of  his  clients,  called  on  him  there,  and  in 
prcponco  of  several  others  put  a  supposed  case  to  him,  and 
asked  him,  if  such  a  case  existed,  would  there  be  any  liability. 
The  attorney  gave  his  opinion,  and  asked  if  the  case  put  was  a 
certain  real  transaction,  and  R.  said  it  was.  No  such  ease  was 
then  pending.  R.  paid  no  fee,  there  was  no  general  retainer, 
and  the  attorney  was  never  engaged  in  the  real  case.  The  sup- 
posed case  afterward  arising,  the  attorney  testified  on  the  trial 
to  the  interview,  and  that  he  did  not  consider  that  R.  was  ad- 
vising with  him  as  counsel  at  that  time.  Held,  improper:  Dncoti 
V.  Frishie,  80  N.  Y.  891;  36  Am.  Rep.  G27.  A,  one  of  two  plain- 
tiffs, called  upon  15,  an  attorney,  to  employ  hnn  to  bring  a  suit 
on  an  ofTicial  bond  of  a  justice  of  the  ^eace.  No  fee  was  paid, 
and  circumstances  prevented  B  from  bringing  the  suit;  but,  at 
the  time,  A  made  statements  in  regard  to  the  subject-matter  of 
said  suit,  which  the  defendant  in  the  present  case  proposed  to 
prove  against  A.  Held,  that  the  circumstances  were  privileged: 
Reed  v.  Smith,  2  Ind.  160.  A  foreigner,  about  to  sue  a  debt, 
employed  one  X.  to  act  as  interpreter  in  stating  the  case  to  l;er 
attorneys.  The  action  was  brought,  and  X.  swore  to  an  admis- 
sion by  the  debtor  of  the  indebtedness.  The  defendant  otI'ere<l 
to  show,  by  the  attorneys  of  the  plaintiff,  that  X.  had  said  to 
them  in  his  statement  of  the  case  to  them  that  he  never  heard 
such  admission.  Held,  that  the  evidence  was  inadmissible: 
il/aa.s  v.  Block,  7  Ind.  202.  In  order  to  show  assent  by  the 
original  parties  to  the  alteration  of  a  note,  evidence  was 
ofTered  of  thei^  having  proposed  to  the  plaintiff's  counsel  to 
confess  judgm-'nt  on  the  note  if  he  thought  they  could  do  it 
with  safety.    Held,  a  professional  consultation  and  inadmissible: 


'  Lockhard  v.  Brodie,   1   Teiiu.  Ch. 
384. 

-  Earle  v.  Grout,  4G  Vt.  J 13. 


3  Peoi)le  V.  Atkinson,  40  Cal.  284. 

*  Ortc.n  r.  McCord,  SSWis.  20o. 

*  Matter  of  Adams,  G  Ben.  56. 


on   a 

ind  in 
>,  and 
bility. 
was  a 
ic  was 
taincr, 
10  sup- 
lO  trial 
ran  ad- 
Bncoii 
plain- 
a  Buit 
;  paid, 
but,  at 
tter  of 
sed  to 
leged  -. 
debt, 
to  l;er 
dmis- 
fiered 
aid  to 
heard 
sible: 
y  the 
e   was 
sel  to 
do  it 
ssible : 

I.  284. 

20d. 
56. 


243      PRIVILEGES  AND   LIABILITIES   OP  ATTORNEYS.      §  147 

Bowers  v.  Briggs,  20  Ind.  139,  A  consulted  B,  an  aMorncy  at 
law,  to  draw  a  conveyance  of  bis  property  to  C,  and  at  tlic 
same  time  made  communications  to  B  in  regard  to  the  object 
of  the  conveyance,  and  B  declined  the  employment.  Held, 
made  to 
Crisler  v. 


B  in   his  professional  character,  and  inadmissible: 
Garland,  11  Smedos  &  M.  13G;  49  Am.  Dec.  49.     A 


solicitor  employed  to  foreclose  a  mortgage,  heing  examined  as 
witness,  was  asked  whether  he  had  recMved  any  written  instruc- 
tions from  his  client,  in  relation  to  Vno  sale  and  the  amount  to 
be  bid  by  him.  Held,  inadmissible,  being  a  matter  of  profes- 
sional confidence:  Stiiyvesant  v.  Pechham,  3  Edw.  Ch.  579.  In 
an  action  on  a  promissory  note  the  plaintiff's  attorney  was 
called  as  a  witness  to  prove  that  the  note  was  not  the  property 
of  the  plaintiff.  He  declined  to  state  any  communications  made 
to  him  by  his  client,  //^/r/,  that  they  wore  privileged:  Miller 
V.  Weeks,  22  Pa.  St.  89.  By  the  admissions  of  a  party,  a  cham- 
pcrtous  contract  was  established  boivveen  him  and  his  attorney. 
Held,  that  such  attorney  was  not  a  competent  witness  to  prove 
the  falsity  of  his  client's  statements,  and  that  no  such  contract 
was  entered  into:  Dowell  v.  Doivell,  3  Head,  502.  In  an  action 
against  the  grantees  in  a  deed,  upon  a  covenant  therein  that 
they  would  assume  and  pay  certain  specified  encumbrances,  as 
portions  of  the  purchase-money,  an  attorney  and  counselor  who 
drew  the  deed  was  asked  whether  the  deed  was  read  over  to  the 
grantees  after  it  was  drawn;  and  whether  the  quos+ion  was 
raised,  then,  as  to  whether  the  grantees  would  be  personally 
liable  on  the  deed.  Held,  inadniissible,  as  calling  for  ;)rivilcgcd 
communications  between  attorney  and  client:  Rogers  v.  Lyon, 
64  Barb.  373.  M.  told  his  attorney,  who  assisted  him  in  the 
confession  of  a  judgment  against  himself  in  favor  of  a  creditor, 
that  he  did  it  that  he  might  have  his  piano  sold  on  execution 
so  his  other  creditors  could  not  attach  it.  The  court  allowed 
the  attorney  to  determine  whether  he  would  disclose  the  com- 
munication, and  he  refused.  Held,  that  the  communication  was 
privileged,  and  that  the  fact  that  the  court  allowed  the  attorney 
to  determine  whether  he  would  testify  or  not  was  not  material: 
Maxham  v.  Place,  46  Vt.  434.  An  attorney  testified  that  he 
had  advised  a  clieno  seeking  to  collect  a  claim  for  intoxicating 
liquors  to  get  a  promissory  note  signed  by  the  debtor,  and  to 
indorse  it  for  value  before  it  was  due  to  an  innocent  third  per- 
son. Held,  in  an  action  on  the  note,  a  violation  of  the  rule  ex- 
cluding privileged  communications:  Highee  v.  Dresser,  103  Mass. 
523.  • 

§  147.    Privileged  Communications — Exceptions  to  the 
Rule.  —  But  the  rule  is  not  enforced  to  the  prejudice  of 


§147 


PRINCIPAL  AND  AGENT. 


244 


the  attorney,  or  where  it  will  deprive  him  from  obtaining 
or  defending  his  rights.  Hence  in  a  suit  between  attor- 
ney and  client,  the  former  may  disclose  communica- 
ti(»ns  made  to  him  when  such  disclosure  is  essential  to 
his  rights.*  In  a  suit  against  an  attorney  for  disobedi- 
ence of  instructions,  lo  may,  as  a  witness,  disclose  confi- 
dential communications  with  the  client.^  A  letter  from 
a  client  to  an  attorney,  complaining  that  the  latter  has 
betrayed  his  trust  in  certain  matters,  and  stating  that 
these  facts  have  been  communicated  to  another  lawyer 
for  the  purpose  of  obtaining  a  settlement  with  the  dis- 
honest attorney,  is  not  privileged;*  and  the  communica- 
tion is  not  privileged  when  made  in  the  presence  of  the 
other  party  to  the  suit  or  proceeding;^  or  where  made  to 
third  persons  present  at  the  time,  or  by  other  pcr-^ons  to 
each  other  or  to  the  client,^  or  to  the  attorney;"  or  where 
they  are  overheard  by  a  third  person;'^  or  a  communi- 
cation made  by  a  party  to  a  suit  to  an  attorney,  to  bo 
communicated  to  the  adverse  party ;^  nor  wliere  the  at- 
torney is  himself  a  party  to  the  transaction;^  nor  where 
the  communications  are  made  by  the  client  to  the  attor- 

^  Mitchell  V.  Brombcrger,  2  Nov. 
315;  90  Am.  Dec.  55C;  Rochester  etc. 
Bank  v.  Siiydain,  5  Uow.  Pr.  254. 

■i  Niive  V.  Bairti,  12  Iiul.  318. 

=»  Lafliii  V.  Herring  ton,  1  Black,  32G. 

*  Whiting  V.  Barney,  .30  N.  Y.  330; 
80  Am.  Dec.  385;  Britton  v.  Lorenz. 
45  N.  Y.  57;  Parish  v.  Gates,  29  Ala. 
254;  Carr  v.  Wold,  18  N.  J.  Eq.  41. 
But  where  communications  are  made 
to  an  attorney  by  either  of  two  or 
more  parties  in  the  presence  of  t'le 
others,  while  ho  is  employed  as  their 
common  attorney  in  matters  in  which 
they  are  mutually  interested,  and  in 
which  their  interests  are  adverse,  such 
communications  are  privileged  in  a 
suit  between  them,  or  either  of  tbein, 
and  a  third  person:  Root  v.  Wright, 
84  N.  Y.  72;  38  Am.  Rep.  495. 

"  Gallagher  v.  Williamson,  23  Cal. 
331;  83  Am.  Dec.  115;  Jackson  v. 
French,  3  Wend.  337;  20  Am.  Dec. 
699j  Goddard  v.  Gardner,  28  Conn. 


172;  House  v.  House,  CI  Mich.  09;  I 
Am.  St.  Rop.  570;  Mobdo  etc.  R.  R. 
Co.  ?i.  Yeates,  07  Ala.  104. 

OHatton  v.  Robin-son,  14  Pick.  410; 
25  Am.  Dec.  415;  Peikins  ?\  Gny,  55 
Miss.  153;  30  Am.  Rop.  510;  Ran- 
dolph r.  Qnidnick  Co.,  23  Fed.  Rep. 
278;  Althouse  v.  Wells,  40  Hun,  o;iO. 

''  In  this  case  the  third  person  may 
bo  compelled  to  testify  a.s  to  them: 
Hoy  ?•.  Morris,  13  Gray,  519;  74  Am. 
Dec.  050. 

8  Hendorson  v.  Terry,  02  Tex.  281. 

^  Thus  where  an  attorney  was  sum- 
moned as  garnishoo  in  an  attachment 
suit,  it  wa  J  held  that  he  was  bound  to 
answer  interrogatories  as  to  whether 
he  had  received  from  his  client  a  sum 
of  money  in  trust  to  pay  a  certain  per- 
centage to  such  of  his  creditors  as 
would  accept  tlio  same  in  full  satisfac- 
tion of  their  respective  debts:  Joaiie.^ 
V.  Frideiiberg,  3  Pa.  L.  J.  199;  Wil- 
liams V.  Young,  40  Iowa,  140. 


244 


245      PRIVILEGES   AND   LIABILITIES   OP   ATTORNEYS.      §  147 


»ra  obtaining 
twecn  attor- 
communica- 

cssential  to 
Cor  disobedi- 
iscloso  confi- 
\.  letter  from 
he  latter  has 

stating  that 
other  lawyer 
with  the  dis- 
!  communica- 
escnce  of  the 
rhcYG  made  to 
icr  por^'ons  to 
ey;"  or  where 
■  a  communi- 
ttorney,  to  bo 
wliero  the  at- 
n;''  nor  where 
t  to  tbe  attor- 

sc,  Cl  Mich.  09;  1 

Mobile  etc.  R.  R. 

la.  104. 
son,  11  Pick.  41G; 
erkins  v.  Guy,  5.) 
Rup.   510;   Ran- 
•o.,  23  Foil.  Rep. 

Tells,  40  Hun,  oM. 
tliiril  person  may 
stify  as  to  them: 
ray,  519;  74  Am. 

crry,  C2  Tex.  281, 
attorney  was  sum- 
in  an  attachment 
it  ho  was  hounil  to 
ries  as  to  whether 
m  his  client  a  sum 
pay  a  certain  pcr- 
liis  creditors  a.? 
,me  in  full  satisfac- 
tivo  debts;  Jeaiies 
a.  L.  J.  199;  Wil- 
Iowa,  140. 


ncy  of  the  other  party;*  nor  where  they  are  made  to  an 
attorney  who  is  acting  for  both  parties;^  nor  whore  it  is 
made  for  criminal  or  unlawful  purposes,^  except  where  it 
is  not  in  any  manner  necessarily  connected  with  the 
perpetration  of  the  crime,  and  cannot  in  any  way  aid  in 
the  commission  of  any  fraud  or  crime;^  nor  where  made 
to  satisfy  the  attorney's  scruples  as  to  the  transaction, 
and  without  any  view  of  obtaining  his  professional  ad- 
vice or  opinion;*  nor  where  no  retainer  was  paid,  and 
tliore  "was  nothing  to  show  that  the  plaintiffs  sought  tho 
advice  with  any  view  to  regulate  his  future  conduct  in 
regard  to  a  pending  or  expected  litigation";"  nor  when 
it  is  as  to  collateral  facts,  as,  for  example,  tho  hand- 
writing of  the  client;^  or  that  a  bond  was  lodged  with 
the  client  by  way  of  indemnity,  and  that  ho  expressed 
himself  satisfied  with  certain  security;^  or  the  terms 
of  a  compromise  offered  by  him  to  the  client's  credi- 


»  McLean  v.  Clark,  47  Ga.  73;  Mayer 
V.  Ilorniann,  10  Blatclif.  25G. 

■'  Guliuk  V.  Gulick,  39  N.  J.  Eq.  516. 
Wlicre  two  persons  employ  an  attor- 
ney in  tho  same  business,  comnumi- 
c:ilions  made  by  them  in  pursuance  of 
.siah  common  retainer  are  not  privi- 
leged inter  .ie:  Gulick  v.  Gulick,  39 
N.  J.  Eq.  51G;  Cady  v.  Walker,  62 
Mich.  1 J7;  4  Am.  St.  Rep.  834;  Han- 
Inn  ?'.  Doherty,  109  Ind.  37;  Goodwin 
Gas  Stove  Co. 's  Appeal,  lii  Pa.  St. 
oM;  2  Am.  St.  Rep.  696.  Where  au 
attorney  acts  for  several  parties  in  tho 
same  transaction,  he  cannot  testify  as 
to  what  took  place  between  them  and 
a  third  person  unless  all  of  his  clients 
consent,  but  as  betw(!en  the  f  irties 
themselves,  he  can  tell  what  was  said 
an  1  done:  Michael  v.  Foil,  100  N.  C. 
179;  Goodwin  Gas  Stove  etc.  Co. 'a  Ap- 
peal, 117  Pa.  St.  314;  2  Am.  St.  Rep. 

r.!)i.;. 

3  People  n  Blakeley,  4  Park.  Cr.  176; 
Coveney  i:  Tannahill,  1  Hill,  33;  37 
Am.  Dec.  289;  Orman  v.  State,  22  Tex. 
App.  604;  58  Am.  Rep.  663;  Dudley 
r.  B  'ck,  3  Wis.  274;  People  v.  Mahon, 
1  Utah,  205;  People  v.  Van  Alstine, 
57  Mich.  69;  State  r.  McChesney,  16 
:Mo.  App.  259.     Dcfeadajit,  on  trial  for 


murder,  had  consulted  an  attorney  to 
know  what  tho  law  was  if  ho  should 
kill  deceased,  fron\  whom  he  had  re- 
ceived great  provocation.  Tho  com- 
munication was  held  not  privileged: 
Orman  v.  State,  22  Tex.  App.  6)4; 
58  Am.  Rep.  662.  Where  tiie  oljjcct 
is  simply  fraud,  the  communication 
is  privileged:  Bank  v.  Mersercau,  3 
Barb.  Ch.  528;  49  Am.  Dec.  ISO. 

*  Graham  v.  People,  63  Barb.  468. 

*  Hatton  i\  Robinson,  14  Pick.  416; 
25  Am.  Dec.  415. 

«  Thompson  v.  Kilborne,  28  Vt.  750; 
67  Am.  Dec.  742.  But  to  constitute 
the  relation  so  as  to  render  the  com- 
munication privileged,  it  is  not  es- 
sential that  the  attorney  shall  iiavc  re- 
ceived a  retainer  or  fee;  Crisler  ?».  Gar- 
land, 11  Smedes&M.  136;  49  Auj.  Dee. 
49;  March  v.  Ludhim,  3  Sand.  Ch.  3; 
McMannus?).  State,  2Head,  213;  Cross 
V.  Riggins,  50  Mo.  335;  Andrews  v. 
Simms,  33  Ark.  771.  It  is  privileged, 
although  the  advice  was  given  upon  a 
hypothetical  statement  of  the  tacts, 
and  the  attorney  had  no  general  re- 
tainer: Bacon  v.  Frisbie,  15  Hun,  20. 

'  Johu-jon  r.  Daverne,  19  Johns.  134; 
10  Am.  Dec.  198. 

^  Heister  v.  Davis,  3  Yeatcs,  4. 


§147 


PRINCIPAL  AND   AGENT. 


24G 


tors;*  or  tho  contents  of  a  lost  will  drawn  up  by  liim;^ 
nor  as  to  tho  existence  of  a  paper,"  or  tho  execution  of  a 
deed;  its  date,  whether  it  has  been  altered,  and  the  date 
of  its  delivery;*  nor  by  whom  he  was  employed,'"'  or  tho 
fact  of  his  employment,"  or  the  names  of  the  persons  who 
intrusted  him  with  papers  and  their  purpose;'  nor  to  tho 
fact  that  he  brought  suit  for  a  certain  person,  recovered 
judgment,  and  paid  it  over  to  a  third  person  on  the  order 
of  his  client;*  nor  as  to  the  contents  of  receipts  in  his 
possession  which  the  client  could  bo  compelled  to  produce;" 
nor  as  to  the  fact  that  the  attorney  appeared  for  tlio  party 
without  authority;*"  nor  to  tho  fact  tliat  the  client  avus  too 
iiubecilo  to  make  communications  to  his  counsel;"  nor  to 
the  fact  that  the  client  called  himself  by  a  certain  name;'^ 
nor  as  to  how  he  obtained  possession  of  a  paper  which  is 
the  basis  of  his  client's  suit;'*  nor  as  to  the  amount  of  an 
attorney's  fee,  and  the  terms  on  which  it  was  paid;"  nor 
to  facts  which  the  attorney  might  havo  known  without 
being  such  attorney;*^  nor  to  knowledge  acquired  from 
otlier  sources,  and  not  from  the  client;*"  nor  to  a  com- 
munication (the  prosecuting  attorney  being  the  witness) 
made  by  tho  party  before  the  grand  jury;"  nor  as  to  any 
agreement  made  with  the  opposite  party  at  the  request  of 
his  own  client;**  nor  that  he  had  once  been  employed  by 


'  McTavish  v.  Denning,  Anth.  155. 
2  Graham  v.  O'Fiillon,  4  Mo.  338. 

*  Coveney  v.  lamiahill,  1  Hill,  32; 

37  Am.  Dec.  287;  Mitclicll's  Case,  12 
Abl).  Pr.  259;  nor  as  to  its  ownership: 
De  Witt  V.  Perkins,  22  Wis.  473. 

*  Bank  v.  Mursereau,  3  Barb.  Ch. 
528;  49  Am.  Dec.  189;  Pamdle  f.  Fos- 
ter, 3  Tenn.  Ch.  G58. 

''  Chirac  r.  Reinicker,  1 1  Wheat. 
280;  Satterlce  v.  Bliss,  36  Cal.  489; 
Martin  i'.  Anderson,  21  Ga.  301 ;  Brown 
r.  Payson,  6  N.  H.  443;  Gower  v. 
Emery,  18  Mo.  79;  Mulford  v.  Muller, 
3  Abb.  App.  330. 

«  Brighaii^  v.  ^McDowell,  19  Neb.  407. 

'  Reynolds  r.  Rowley,  3  Rob.  201; 

38  Am.  Dec.  233. 

^  Fulton  V.  Maccracken,  18  Md.  528; 
81  Am.  Dec.  (520. 


•  Andrews  v.  Railroad  Co.,  14  lud. 
169;  Ex  parte  Maulsby,  13  Md.  625. 

»"Coxr.  Hill,  3  Ohio,  411. 

"  Daniel  v.  Daniel,  39  Fa.  St.  191. 

^'^  Commonwealth  v.  Bacon,  135 
Mass.  521. 

»•»  Allen  V.  Root,  39  Tex.  589. 

"  Smithwick  r.  Evans,  24  Ga.  461; 
Shaughnessy  v.  Foj{g,  15  La.  Ann.  330. 

^•'  Htoney  v.  McNeil,  Harp.  557;  18 
Am.  Dec.  666. 

'*  Crosby  V.  Berger,  11  Paige,  379; 
42  Am.  Dec.  117;  Hunter  v.  Wation, 
12  Cal.  363;  73  Am.  Doc.  543;  Chirac 
V.  Reinicker,  11  Wheat.  280;  Rhoades 
V.  Selin,  4  Wash.  715;  Bogert  r.  Bo- 
gert,  2  Edw.  Ch.  399;  Rogers  v.  Dure, 
Wright,  136. 

"  State  V.  Van  Buskirk,  59  Ind.  384. 

^8  Thayer  1).  McEweu,  4111.  App.4l6, 


247     rmviLEGES  and  liabilities  op  attorneys.     §  M7 


certain  purties  to  bring  sonio  suit^  for  them  as  a  firm;' 
nor  for  an  attorney  wlio  prepares  a  bill  in  equity  si<;ned 
and  sworn  to  by  his  client,  and  filed  in  court,  to  testify 
where  his  client  was  described  in  said  bill  as  residing;" 
nor  to  facts  learned  from  the  opposite  party,  who  told 
them  to  the  counsel,  desiring  to  retain  him,  but  after  he 
had  been  retained  by  his  present  client;'''  nor  to  informa- 
tion received  from  the  party  by  one  in  the  character  of  a 
friend,  and  not  as  counsel;*  nor  to  information  received 
Avhen  not  acting  as  attorney,  though  ho  manages  the  gen- 
eral affairs  of  the  party;*  nor  to  an  alleged  admission  of 
payment,  made  by  his  client  after  judgment  recovered, 
and  before  execution  was  issued,  while  the  attorney's  au- 
thority to  issue  execution  and  satisfy  the  judgment  con- 
tinued;" nor  where  one  has  been  tried  and  ac([uitted,  and 
no  other  proceedings  in  relation  to  the  indictment,  its 
trial,  or  the  offense  charged  in  it  appear  to  have  been  in 
contemplation,  and  the  party  tried  has  afterwards  a  con- 
versation with  the  person  who  acted  as  his  counsel  in  the 
proceedings,  but  upon  a  matter  unconnected  with  them;'' 
nor  where  the  statement  was  not  made  with  the  object  of 
obtaining  professional  advice;^  nor  to  communications 
made  by  one  who  is  only  a  nominal  party  to  the  suit,  and 
has  no  interest  in  it;**  nor  to  acts  done  in  his  presence, 
as  the  execution  of  a  writing  or  the  signing  of  a  deed, 
etc;^"  nor  to  prove  the  execution  of  a  power  to  himself 
where  he  appears  under  a  power;"  nor  to  prove  matters 
which  occurred  on  the  trial  in  open  court,  against  his 

»  WaUo  V.  Bcckwitb,  1  N.  Mex.  182.  dcrmau  v.   People,  4   Mich.  414;    GO 

-  AlJen  V.  (Jocklaril,  73  Me.  345.  Am.  Dec.  3LM;  Flack  r.  Neill,  i'j  Tex. 

=>  Thonipsoii  V.  Wildou,  20  Ga.  539.  273;  :\reALanuu3  v.  State,  2  Head,  213; 

*  Goltra  z;.  Wolcott,  14  111.  80;  Uoif-  Coou   v.   .Swan.   30   Vt.    (3;   Lymle   r. 
man  r.  Smith,  1  Caiiics,  157. 

=  Wilson  V.  Godlove,  34  Mo.  337. 

« Clark  V.  llicharcla,  3  E.  D.  Smith, 
89. 

^  Mandeville  v.  Guern.sey,  38  Barb. 
225. 

*  Marsh    v.    Howe,    3G    Barb.   049;    N.  II.  1G3 
Braudou  v,  Gowing,  7  Rich.  459;  Al-        '^  Caiiiif  v.  Myers,  15  Johns.  245, 


ISIcGregor,  13  Allen,  182;  90  Am.  Dec. 
1S8. 

9  Allen  r.  Harrison,  30  Vt.  219;  73 
Am.  Dec.  303. 

'-'Covency  r.  Tannahill,  1  Hill,  33; 
37  Am.  Dec.  287;  Patten  v.  Moor,  29 


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§147 


PRINCIPAL  AND  AGENT. 


248 


client,  as,  for  instance,  what  title  was  in  question 
therein;*  nor  when  he  acted  as  the  agent  of  the  lender, 
in  nef^otiating  a  mortgage,  as  to  what  passed  between  him 
and  the  borrower  with  relation  to  alleged  usury.*  On 
a  question  of  marriage  and  legitimacy,  an  attorney  who 
drew  a  will  for  the  alleged  husband  now  deceased,  in 
which  the  children  of  the  connection  set  up  as  wedlock 
arc  described  as  the  "natural  children"  of  the  testator, 
may,  without  violating  professional  confidence,  testify 
what  was  said  by  the  testator  about  the  character  of  the 
children  and  his  relations  to  their  mother,  in  interviews 
b-twcon  the  testator  and  himself  preceding  and  connected 
'.\i  ••  *he  preparation  of  the  will."'*  An  attorney  for  a  de- 
fcn  iunt  on  a  criminal  charge  before  a  magistrate,  who 
sue  cqnently  withdraws  from  the  case,  may  bo  required 
to  testify  at  the  subsequent  trial  to  the  testimony  given 
by  a  witness  at  such  examination,  although  he  states  that 
he  can  only  do  so  by  refreshing  his  recollection  by  his 
minutes  taken  at  the  examination,  which  are  not  full, 
and  that  he  may  not  be  able  to  give  the  testimony  with 
entire  accuracy.*  Where  the  surety  for  a  county  official 
sues  his  principal  for  money  paid  to  his  use  in  satisfying 
his  bond  to  the  public,  the  testimony  of  the  prosecuting 
attorney  is  not  privileged  if  he  obtained  his  information 
as  the  law  officer  of  the  county,  and  as  a  member  of  a 
committee  appointed  to  obtain  a  surrender  of  the  princi- 
pal's property  in  settlement  of  his  liabilities  to  the  public.'' 
No  privilege  can  be  claimed  by  a  trustee,  as  against  his 
cestui  que  trust,  for  letters  passing  between  the  trustee  and 
his  solicitor  relating  to  the  trust  before  action  brought.** 
The  privilege  is  the  privilege  of  the  client,  and  may 
be  waived  by  him;'  but  such  waiver  must  be  distinct  and 


'  Levers  v.  Van  Buakirk,  4  Pa.  St. 

.-joa. 

■i  Woodruflf  r.  Hurson,  32  Barb.  557. 

^  Blackburn  v.  C'rawfords,  3  Wall. 
175. 

*  Commonwealth  v.  Goddard,  14 
Gray,  402. 


*  Lange  v.  Perlcy,  47  Mich.  .352. 

8  Mason  v.  Cattley,  48  L.  T.,  N.  S., 
631. 

7  Chase's  Case,  1  Bland  Cli.  20(5;  17 
Am.  Dec.  277;  Hatton  v.  Robinson,  14 
Pick.  41G;  25  Am.  Dec.  415;  McLcUan 
t>.  Longfellow,  32  Me.  494;  54  Am.  Dec. 


248 


tvinff 

'uting 

lation 

of  a 

rinci- 

blic.'' 

t  his 

c  and 

:ht.« 

may 

and 

|.)2. 
N.  S., 

!0();  17 
on,  11 
Lcllau 
1.  Dec. 


igl 


249      PRIVILEGES  AND  LIABILITIES   OF    .v^  FORNEYS.      §  147 

unconditioual.*  It  is  waived  b^  the  client  offering  him- 
self {IS  a  witness,"  or  by  his  calling  upon  the  attorney  to 
testify."  The  fact  that  an  attorney's  client  accused  of  a 
crime  turns  state  evidence  does  not  entitle  the  attorney 
to  testify  concerning  confidential  communications.'*  If, 
after  the  relation  of  attorney  and  client  has  ceased,  the 
client  voluntarily  repcf+s  to  the  attorney  what  ho  had 
communicated  while  that  relation  existed,  tlio  attorney 
is  a  competent  witness  as  to  this  communication.''  Where 
the  privileged  communication  is  made  by  or  allbcts  sev- 
eral clients,  a  majorit}'  of  them  cannot  waive  the  privilege 
against  the  wish  of  the  others,  though  the  dissentients  aro 
not  parties  to  the  suit  in  which  the  attorney  is  called  to 
testify."  Tho  common  attorney  of  two  or  more  parties 
adverse  in  interest  cannot  testify  in  a  suit  between  one 
of  them  and  a  third  person  to  communications  made  be- 
tween them  in  his  presence,  before  suit,  while  ho  was  act- 
ing as  such  attorney  in  respect  to  the  matter  in  question.^ 

Illustrations. — A  client  wrote  to  his  attorney  to  bring  a 
suit  for  divorce  at  once,  so  that  his  wife  might  have  time  to 
think  of  the  matter,  and  perhaps  consent  to  a  quiet  separation 
without  public  scandal.  He  also  orally  intitructed  him  to  with- 
draw the  suit  if  a  jury  trial  could  not  be  avoided.  7/c^/,  that 
iu  an  action  by  the  attorney  for  services  in  that  suit,  evidence 
of  those  instructions  was  proper:  Snow  v.  Gotihl,  74  Mc.  540; 
4?>  Am.  Rep.  604.  One,  by  profession  an  attorney,  was  ondcav- 
oring,  merely  as  a  neighbor,  and  without  any  suit  in  court,  to 
procure  from  an  insurance  company  the  allowance  of  a  chiim 
in  favor  of  another,  without  anything  being  said  by  either  party 
in  regard  to  his  being  engaged  in  the  inattor  or  paid  for  his 
services,  and  with  no  intention  or  expectation  on  liis  part  to 


5!)t);  Passmoro  v.  Passmorc,  50  Mich. 
(i'-'ij;  45  Am.  Rep.  62;  Rowland  v. 
riuiiiiner,  50  Ala.  182;  Sleeper  v.  Ab- 
bott, (50  N.  H.  102. 

'  I'ate  V.  Tite,  75  Va.  522. 

'  Iiiliabitaiits  V.  Henjhaw,  101  Mass. 
19:?;  3  Am.  Rep.  .333;  Kin-^  v.  Birretfc, 
1 1  Ohio  St.  21)1;  Oliver  v.  Pate,  43  In.l. 
1"-;  contra,  Duttenhofer  v.  State,  34 
Ohio  St.  91. 

*  Crittendea  v.  Strother,  2  Craach 


C.  C  404;  Fossler  v.  Scbribtr,  .38  111. 
172;  RiiUUcs  v.  Aikiii.  2'.)  Mo.  453; 
Benjamin  c.  Coventry,  11)  Wcnil.  353. 

*  Sutton  V.  State,  10  Tux.  App. 
400. 

*  Yordan  v.  Hess,  13  Jolins.  492. 

"  B-ink  of  Utica  v.  Mersircau,  3  Barb. 
Ch.  528;  49  A-n.  Dec.  189. 

'  Root  i\  Wriglit  S4  N.  Y.  72;  .38 
Am.  Rep.  495;  Hull  v.  Lyon,  27  Mo. 
570. 


§148 


PRINCIPAL  AND  AGENT. 


250 


charge  anything  therefor.  Held,  that  admissions  made  to  him 
by  the  claimant,  while  assisting  him  in  this  way,  in  regard  to 
the  nature  of  his  claim,  were  not  privileged:  Coon  v.  Swan,  30 
Vt.  G.  An  attorney  for  a  trust  estate  was  employed  to  draw  a 
deed  from  the  trustee  to  the  cestui  and  a  mortgage  back.  Held, 
that  statements  made  in  his  presence  by  one  to  the  other  were 
not  privileged:  Moffatt  v.  Hardin,  22  S.  C.  9.  An  attorney  who 
was  a  witness  in  his  client's  favor  was  compelled  by  Hid)j>oena 
duces  tecum  to  produce  a  written  agreement  with  his  client 
which  showed  that  his  fees  were  partly  contingent  upon  the 
result  of  the  suit.  Held,  proper:  Moats  v.  liymcr,  18  \V.  Va. 
G42;  41  Am.  Rep.  703.  A  and  B  called  on  an  attorney  and  re- 
quested him  to  make  a  bill  of  sale  from  A  to  B.  The  attorney 
refused,  telling  them  that  he  was  engaged  on  the  other  side  of 
the  business.  Held,  on  the  issue  of  the  hona  fides  of  a  similar 
bill  of  sale,  that  the  attorney  was  competent  to  testify  to  the 
above:  TucLr.r  v.  Finch,  GG  Wis.  17.  An  attorney  examined  as 
a  witness  in  bankruptcy  proceedings,  and  questioned  concern- 
ing a  certain  conveyance  made  to  him  by  the  bankrupt  and 
wife,  and  a  subsequent  conveyance  to  him  by  the  wife,  refused 
to  testify  thereon  as  matter  within  the  privilege  of  confidential 
communications  between  attorney  and  client.  Held,  that  the 
questions  were  not  within  such  privilege:  In  re  Bcllis,  3  Ben. 
38G.  A  bill  of  particulars  in  a  suit  pending  was  prepared  for 
the  ])lainti(T  under  las  direction,  by  a  person  not  an  attorney  at 
hav,  and  by  the  latter  handed  to  plaintiff's  attorney,  who  made 
no  use  of  it,  as  the  case  was  settled.  The  paper  afterwards 
came  into  the  hands  of  the  executor  of  the  other  party,  and  be- 
canic  important  evidence  in  favor  of  the  estate  upon  a  claim 
presented  by  the  former  plaintiff  against  it.  Held,  lliat  it  was 
not  a  privileged  communication:  Pulford^s  Appeal,  48  Conn.  247. 

§  148.  To  Become  Surety  for  Client. — In  England  at- 
torneys have  always  —  on  grounds  of  public  policy  —  been 
prevented  from  becoming  bail  or  surety  for  their  clients,' 
or  ill  the  courts  in  which  they  practice.''  This  rule  has 
been  adhered  to  in  the  United  States;*  sometimes  by 
statute,  sometimes  by  rule  of  court  or  judicial  decision.'* 

*  Weeks  on  Attorneys,  see.  i]9.  *  Umler  tlio  Wisconsin  statutes,  an 
■•' Weeks  on  Attorneys,  f'-c.  111).            attorney   at    law   practicing    in    any 

*  Coster  -v.  Wattioa,  15  Johns.  535;  county  in  tlie  state  is  absolutely  di.i- 
Lovo  V.  Sheffelin,  7  Fla.  40;  Massio  v.  nualilied  from  l)eing  surety  in  an  un- 
Minn,  17  Iowa,  ll^l;  Miles  r.  Clarke,  dertaking  in  any  action,  and  not 
4  Bosw.  (5152;  (Jilhank  r.  Stephenson,  merely  in  one  in  which  ho  i.i  profos- 
30  Wis.  155;  Br^nger  v.  Buttrick,  30  sionally  interested:  Gilbank  v.  Ste- 
Wis.  153.  phcuson,   30   Wis.   155;    Brangcr   v. 


250 


251       PRIVILEQES   AND   LIABILITIES    OF   ATTORNEYS.      §  149 

In  scmo  courts,  however,  attorneys  have  been  permitted 
to  become  sureties  for  their  clients.'  An  attorney  who 
undertakes  to  obtain  bail  for  his  client  will  be  held  re- 
sponsible for  any  fraud  or  deception  on  the  court  in  ob- 
taining and  justifying  the  bail.^ 

§  149.  To  be  Witness  in  Cause.  —  An  attorney  is  not 
disqualified  from  being  a  witness  in  his  client's  case," 
though  such  a  practice  has  been  frequently  discouraged 
by  courts.*  The  case  of  a  counsel  who  examines  the 
other  witnesses,  and  addresses  the  jury,  appearing  liim- 
sclf  as  a  witness  in  the  cause,  seems  still  stronger.  But 
there  seems  to  bo  no  satisfactory  adjudication  in  this 
country  except  those  maintaining  his  competency,'^  though 


Buttrick,  30  Wis.  153.  A  rule  of 
court  that  no  attorney  shall  bo  a 
surety  cxci'pt  with  tho  consent  of  the 
Cdurt  is  ilircctory,  and  hij  act  in  bo- 
cominy  oau  ij  neither  voiil  nor  voiil- 
aliK":  Ko'.in  ('.  Washer,  CD  Tex.  G7. 

'  Walker  v.  Holmes,  V2  Wcn.l.  G14; 
C'liurch  V.  Drumiiioud,  7  Lul.  17;  Ryek- 
niau  V.  Coleman,  13  Abb.  Pr.  3'J8; 
Dillon  r.  Watkin.s  2  "  i)ears,  44.");  Will- 
inont  V.  I'.Ieserolo,  48  Plow.  Pr.  4:j0; 
Si.,'()urney  v.  Waiidlo,  9  Paige,  3S1; 
Micklothwaite  v.  llhodes,  4  Sandf.  Ch. 

4:i4. 

-  Ill  ro  Hirst,  9  Phila.  21G. 

'  Piobinson  v.  Dauchy,  3  Barb.  20; 
Litdo  r.  McKeon,  1  Sand.  GJ7;  Reed 
r.  C.lcock,  1  Nott  &  McC.  51)2;  Hall 
r.  Roiiiro,  3  Met.  (Ky.)  51;  Newman 
i:  Hrudley,  1  Dall.  240;  PluUips  v. 
Biiilge,  II  Mass.  240;  Frear?'.  Drinker, 
8  Pa.  ,St.  520;  Folley  v.  Smith,  12 
N.  J.  L.  13'J;  Boulden  r.  Hcbel,  17 
Ser;;.  &  R.  312.  "Au  attorney  can 
recover  onlinnry  witness  fees  wlien  he 
i>tieis  himself  as  a  witness  in  his  own 
lie;  Leaver  v.  Whalley,  2  Dowl.  80; 
Taaks  r.  Schmidt,  25  How.  Pr.  340; 
er  i.s  c;dled  in  another's  case  during 
his  regular  attendance  at  that  term: 
Parks  V.  Brewer,  14  Pick.  192;  Mar- 
shall V.  Parsons,  4  Jur.  1017;  Ab- 
bott V.  Johnson,  47  Wis.  239;  but 
fees  when  so  in  attendance  wore  re- 
fiit^ed  in  McWiUiams  v.  Hopkins,  1 
Whart.    27G;    Cruiumer   v.    Huff,    1 


Wend.  25:  Jones  v.  Botsford,  1  Pug. 

6  Bur.  581;  see  Reynold  ir.  ^Valke^, 

7  Hill,  144.  Where  tho  cau.c  was 
conducted  by  one  member  of  a  firm  of 
attorney.s,  tho  fees  of  another  ineiidier 
called  as  a  wltnes:i  were  allowed:  P  ;t- 
lerv,  Hobson,  5  Bing.  N.  C.  128;  I 
Arn.  434.  Qiiiirc,  wiiether  an  attor- 
ney who  calls  himself  as  a  wit!ie;-3  can 
noio  recover  his  fees,  since  other  p:>r- 
tiescalling  themselves  cannot:  C!ri:uiell 
r.  Dcunison,  12  Wis.  4;i2;  Halo  i\ 
Merrill,  27  Vt.  738;  Nichols  r.  Bruns- 
wick, 3  Cliff.  88;  Parker  v.  Martin,  3 
Pitts.  IGG;  Grub  v.  Simpson,  G  Heisk. 
92;  Dclcomyn  r.  Chambeilain,  48 
How.  Pr.  409;  Stratton  v.  \J\>Um,  ?,Q 
N.  II.  581;  see  Howes  r.  Barber,  IS 
Q.  B.  588."  Mr.  Stewart's  note  to 
Flaacke  r.  Jersey  City,  33  N.  J.  E^. 
GO. 

*  See  Spencer  v.  Kinnard,  12  Tex. 
180;  Stratton  v.  Henderson,  20  111. 
G8;  Little  v.  MeKoon,  1  Sand.  007; 
State  r.  Woodside,  9  I  red.  490;  Frear 
V.  Drinker,  8  Pa.  St.  52);  and  see 
Churchill  v.  Corker,  25  C:i.  479. 

"Potter?,".  Inhabitants,  1  Cush.  519. 
InFollansbcen  Walker,  72P;i.  St.  230, 
13  Am.  Rep.  071,  the  law  wa.i  reviewed 
by  Read,  J.,  as  follows:  "  On  the  trial 
of  this  case,  A.  S.  Foster,  Ei£.,  was 
ofl'ered  as  a  witncoi  on  t'.io  part  of  the 
defense,  objected  to  by  t'.io  plaintiff's 
counsel,  and  rejected  by  tho  court  for 
tliu  following  reason:  '^Ir.  Foster  in 


§150 


PRINCIPAL   AND   AGENT. 


252 


it  has  been  otherwise  ruled  in  England,  and  Mr.  AVlmrton 
seems  not  to  fuvor  the  practice.'  In  California  it  is  said 
that  there  is  no  rule  of  law  Avhich  prohibits  an  attorney 
of  record,  who  is  a  witness  in  a  case,  from  summing  it  up 
before  the  court  or  jury.  If  a  rule  of  tho  court  prohibits 
such  attorney  from  arguing  a  case  without  permission  of 
tho  court,  the  court  may  give  such  permission.^ 

§  150.     Liability  to  Third  Persons. — The  members  of 
a  iirra  of  attorneys  are  liable  for  the  acts  of  each  other  in 


attorney  for  tho  defendant  Follansbee, 
opened  tlio  c;ido  for  him  to  tlio  jury, 
.ind  cxaniiaed  tho  witnesses  for  said 
defendant,  and  the  court,  on  this 
prouud,  exchidc.j  him  as  a  witness.' 
This  is  assiitnod  for  error.  In  Frear 
V.  Drinker,  8  Ta.  St.  5'Jl,  Mr.  Justice 
Rogerj  says:  'It  is  also  contended  an 
attorney  is  not  a  ewmpetent  witness  for 
his  client.  In  Ensland  it  has  beenlately 
ruled  that  an  attorney  is  not  to  give 
evidence  un<Icr  certain  circumstances.' 
lie  cites  two  case.-  before  Mr.  Justice 
Pattesonaiid  Mr.  Justice  Erie,  and  he 
says:  'The  furthest  tho  court  has  yet 
gone  is  to  discourage  the  practice  of 
acting  in  tho  double  capacity  of  attor- 
ney and  witn(^ss,  but  there  is  notiiing 
to  prohibit  an  attorney  from  being  a 
witness  for  his  client  when  he  tloes 

not  addre.5s  tho  jury It  is  said 

and  i  agree  that  it  is  a  highly  indecent 
practice  for  an  attorney  to  cross-ex- 
amine witnesses,  address  the  jury, 
and  give  evidence  himself  to  contra- 
dict tlio  witnesses.  It  is  a  practice, 
which,  as  far  as  possible,  should  bo 
discountcn:i!iccd  by  courts  and  coun- 
sel. But  these  cases  are  not  open  to 
this  objection,  because  it  appears 
negatively  that  the  counsel  diil  not 
adiU-ess  the  jury.  It  is  sometimes  in- 
disponsablo  that  an  attorney,  to  pre- 
vent injustice,  should  give  evidence 
fcr  his  client.'  In  the  earlier  cases 
in  Pennsylvania,  the  objection  to  the 
examination  of  the  attorney  in  tho 
cause  was  his  interest  in  it,  as  in 
the  case  of  the  late  Judge  Baldwin  in 
Miles  V.  O'llara,  1  Serg.  &  R.  32, 
in  1814.  In  Iho  first  case,  Newman  v. 
Bradley,  1  Dall.  240,  in  tho  year  1788, 


howell,  who  was  of  counsel  for  tho 
plaintiff,  gave  the  chief  evidence  to 
support  the  action,  and  ho  and  Tod 
argued  tho  cause  before  tlu  jury,  a:;d 
there  was  a  verdict  for  tho  ]daint'ff. 
'When  Howell  offered  iiim.elf  as  a 
w  less,  Levy  objected  th:;t  bo  wa:j 
i  jrestcd,  inasmuch  as  hi*  jiidgmtnt 
fee  depended  "^n  his  success  in  the 
cause.  But  the  objection  was  over- 
ruled by  the  court.'  The  two  Eng- 
lish cases  cited  by  Judgu  Regei-s  have 
since  been  overruled.  Pitt  T:;ylor, 
in  tho  second  volume  of  his  treatise  on 
the  law  of  evidence,  page  1 170,  section 
1240,  fourth  edition,  thus  states  tlio 
law:  'The  judges  at  visi  jtIhi  were 
at  one  time  inclined  to  regard  as  i.i- 
competent  to  teitti/i)  all  persons,  whether 
counsel,  attorneys,  or  parties,  who  be- 
ing engaged  in  a  cause  had  actuiilly 
addressed  the  jury  on  behalf  <.f  that 
side  on  which  they  were  afterwards 
called  upon  to  give  evidence.  Fur- 
ther investigation  of  the  subject, 
however,  ban  led  to  a  judicial  ac- 
knowledgment that  no  such  practice 
exists.'  The  authority  for  this,  Cor- 
bett  V.  Hudson,  22  L.  J.  Q.  B.  11, 
18.J2,  the  judgment  of  the  court  (of 
which  Mr.  Justice  Erie  was  one),  be- 
ing delivered  by  Lord  Cunpbell,  C.  .T. 
Tlio  question  may  therefore  be  consid- 
ered as  settled  in  England  and  Penn- 
sylvania, and  aljo  in  Massachuselts: 
Potter  r.  Inhabitants  of  Ware,  1  Cush. 
519.  There  was  therefore  error  in 
holding  Mr.  Foster  was  not  a  com- 
petent witness." 

1  Wliarton  on  Evidence,  sec.  420. 

■■»  Branson  v.  Caruthers,  4'J  Cal. 
374. 


4 


o-ro 


rRTVILEOES   AND   LIABILITIES   OF   ATTORNEYS.      §  152 


I   1 


the  firm  business.^  An  attorney,  like  any  other  agent,  is 
liable  to  a  third  person  for  money  collected  by  him  which 
he  pays  over  after  notice  of  his  claim.^  Attorneys  in  the 
exercise  of  their  proper  functions  as  such  are  not  liable 
for  their  acts  when  performed  in  good  faith,  and  for  the 
honest  purpose  of  protecting  the  interests  of  their  clients.* 
An  attorney  who,  by  his  representations  and  promised 
indorsement,  induces  a  party  to  take  an  assignment  of  a 
debt  placed  in  his  hands  for  collection  by  way  of  pay- 
ment of  a  note  against  his  client,  thereby  becomes  per- 
sonally responsible  to  the  assignee  for  its  collection.^ 

Illustrations. — An  attorney  collects  money  for  and  pays  it 
over  to  his  client.  A  third  person  shows  himself  entitled  to 
the  money.  Held,  that  he  cannot  recover  it  from  the  attorney: 
Wilmerdinga  v.  Fowler,  55  N.  Y.  C41. 

§  151.    Liability  for  Acting  without  Authority.  —  An 

attorney  is  lia')le  to  a  third  person  for  acting  for  him 
and  in  his  name  without  authority.^ 

§  152.    Liability  to  Third  Persons  on  Implied  Contracts. 

—  He  is  liable  for  work  done  in  his  client's  affairs  by 
another  at  his  request  when  il  is  done  as  assistance  to 
himself  personally  in  matters  properly  devolving  upon 
himself;  but  he  is  not  liable,  where  it  is  for  his  client's 
advantage,  and  not  his  own,  even  though  he  expressly 
request  it.®  But  ho  is  liable  for  money  advanced  by  a 
third  person  to  prosecute  the  action,  the  credit  of  the 
client  not  being  pledged  to  repay  it.'  He  is  not  liable  lor 
the  charges  of  a  person  employed  to  examine  partnership 
books  for  the  purposes  of  the  trial.* 

» Green  v.  Milbank,  3  Abb.  N.  C.  v.  Gibbs,  Pet.  C.  C.  155;  Coit  r.  Shel- 
138;  Smyth  v.  Harris,  31  111.  G2;  83    .Ion,  1   Tyler,    .304;   Munnilciiyson  v. 

Dorsett,  2  liar.  &  G.  374;  People  v. 
Braclfc,  0  Johns.  318;  BraJt  v.  Wal- 
ton,  8  Johns.  298;  Spauklin'?  r.  Swift, 
18  Vt.  214;  Adams  v.  Robinson,  1 
Pick.  4G1. 

"  Weeks  on  Attorneys,  sec.  127. 

'  Bell  r.  Mason,  10  Vt.  50'.'. 

8  Covt-U  V.  Hart,  14  Hun,  252. 


Am.  Dec.  202. 

^  Sims  V.  Brown,  6  Thomp.  &  C.  5; 
04  N.  Y.  G(iO. 

^  Campbell  v.  Brown,  2  Woods,  349. 

*  Hazelrigg  v.  Brenton,  2  Duvall, 
525. 

^  Smith  V.  Bowditch,  7  Pick.  138; 
Joucs  J.'.  Wolcott,  2  Allen,  247;  Field 


8153 


PRINCIPAL  AND  AGENT. 


254 


Illustrations.  —  A,  an  attorney  employed  to  conduct  a  suit, 
employed  B,  another  attorney,  to  assist  him,  but  did  not  pro- 
fess to  employ  him  on  behalf  of  his  client,  nor  did  it  appear 
that  he  had  authority  so  to  do,  and  ho  was  the  only  person 
who  did  employ  B.  Held,  that  A  was  personally  responsible 
without  proof  of  an  express  promise:  Scott  v.  IToxaic,  13  Vt.  50. 

§  153.  Liability  for  Costs  and  Pees. — The  attorney 
may  bo  made  liable  personally  for  the  costs  of  the  cause, 
whore  ho  is  guilty  of  gross  negligence  or  misbehavior,' 
as  where  he  draws  up  and  signs  an  impertinent  pleading,' 
or  makes  unnecessary  and  frivolous  motions.'  Where  the 
opposite  party  to  the  suit  has  been  forced  to  pay  costs 
through  the  ignorance  or  misbehavior  of  the  attorney,  tho 
latter  will  bo  ordered  to  reimburse  him  instead  of  his 
client.*  An  attorney  who  brings  an  action  in  the  name 
of  another,  in  which  he  is  beneficially  interested  by  virtue 
of  an  agreement,  that  he  shall  have  a  portion  of  the  re- 
covery as  compensation  for  his  services,  is  liable,  tho 
same  as  the  plaintiff,  for  defendant's  costs.^  An  attorney 
will  be  personally  liable  for  the  costs  of  a  disbarment 
proceeding  instituted  in  bad  faith."  The  attorney  is  per- 
sonally liable  to  the  sheriff  for  his  fees  for  serving  or  exe- 
cuting process  which  he  has  delivered  to  him,'  and  for 
reasonable  disbursements  made  by  the  officer  in  taking 
care  of  the  property.'     But  he  is  not  personally  liable  for 


'  Brown  t>.  Brown,  4  Ind.  G27;  Love- 
land  V.  Jones,  4  Ind.  184;  Ex  parte 
Bobbins,  G.3  N.  C.  300;  McVcy  v. 
Cantrell,  8  Hun,  522;  70  N.  Y.  295; 
26  Am.  Rep.  605. 

"Powell  V.  Kane,  5  Paige,  265;  2 
Edw.  Ch.  450;  Cushman  v.  Brown,  6 
Paige,  539. 

^  Jordan  v.  National  Shoe  Bank,  13 
Joj.es  &  S.  423;  In  re  Kelly,  6  Thomp. 
&  C.  117. 

*  Weeks  on  Attorneys,  sec.  128; 
Kane  v.  Van  Vranken,  5  Paige,  62; 
Bespass  v.  Morton,  Hardin,  226. 

*  Voorhces  v.  McCartney,  51  N.  Y. 
387. 

6  In  re  Kelly,  59  N.  Y.  595;  62  N. 
Y.  198. 


'  Adams  v.  Hopkins,  5  Johns.  252; 
Campbell  v.  Cothraii,  56  N.  Y.  279; 
Trustees  v.  Cowen.  5  Paige,  510; 
Camp  V.  Garr,  6  Wend.  535;  Ouster- 
hout  r.  Day,  9  Johns.  114;  Towlo  v. 
Hatch.  43  N.  H.  270;  Birbeck  v.  Staf- 
ford, 14  Abb.  Pr.  285;  23  How.  Fr. 
23G;  Tilton  v.  Wright,  74  Me.  214;  43 
Am.  Rop.  578;  Heath  v.  Bates,  49  Conn. 
342;  44  Am.  Rep.  234;  Van  Kirk  v. 
Sedgwick,  23  Hun,  37;  contra.  Wires 
V.  Briggs,  5  Vt.  101;  Preston  v.  Pres- 
ton, 1  Doug.  292. 

*  Tarbell  v.  Dickinson,  3  Cush.  34G. 
In  a  New  York  cose  it  is  said  that 
there  is  no  relation  between  an  attor- 
ney employed  to  prosecute  a  cause, 
and  other  officers  of  court,  whose  ser- 


254 


255      PRIVILEGES    AND   LIADILITIHS   OF    ATTOHXRYS.       §  153 

tho  f  OS  of  a  referee;*  nor  of  commissioners  in  parti'ion;' 
or  a  stenographer;'  nor  for  witness'  fees.'*  In  some  states, 
by  statute,  an  attorney  is  personally  liable  for  costs,  as, 
for  example,  where  he  institutes  a  suit  for  a  non-resident 
plaintiff,'^  or  indorses  tho  writ."  He  is  liable  for  fees  gen- 
erally where  ho  has  a  personal  interest  in  tho  suit/ 


hns.  252; 

Y.  279; 
ige,    510; 

Oiister- 
Towle  V. 

V.  Staf- 
low.  Pr. 

214;  43 
49  Conn. 

Kirk  V. 
a.  Wires 

V.  Pres- 


vices  become  necessary  in  the  course 
of  it,  whicli  can  give  such  clficcr  the 
right  to  an  attachment  against  the;  at- 
torney to  compel  payment  of  hid  foes; 
not  even  where  the  attorney  haa  col- 
locteJ  tho  fees  with  the  costs:  Lanin- 
rcux  r.  Morris,  4  How.  Pr.  245. 

'  llowell  7'.  Kinney,  1  How.  Pr.  105; 
Moore  v.  Porter,  13  Serg.  &  11.   100; 
atitcr,   Trustees  i\    Cow  en,    5   Paifje, 
510;  Judson  v.  Gray,  11  N.  Y.  410, 
SeUlen,  J.,  saying:  "Itisawell-settiod 
rule  of  the  common   law  that  where 
one  person  contracts,  a3  the  agent  of 
another,  and  the  fact  of  his  agency  is 
known  to  tlie  person  with  whom  lie 
contracts,  tho  principal  alone,  and  not 
the  agent,  is  responsible.     This  rule 
is  directly  applicable   to  tho  case  of 
attorney  and  client,  and  has  been  so 
applied  whenever    tho  question    has 
arisen,  except  in  New  York  state.     It 
was  thus  applied  in  England,  in  the 
casos  of  Hartop  v.  Juckes,  1  Maulo  & 
iS.  709;  Robins  v.  Bridge,  3  Mces.  & 
W.  1 14;  and  Maybery  v.  Mansfield,  9 
Ad.  &  E.,  N.  S.,  758;  in  Vermont,  in 
the  cases  of  Sargent  v.  Pettibonc,   1 
Aiken,  355,  and  Wires  v.  Briggs,  5  Vt. 
101;  in  Maryland,  in  tho  case  of  Mad- 
dock  V.  Craneh,  4  Har.  &  McH.  343; 
in  Pennsylvania,  in  Moore  v.  Porter, 
13  >Serg.  &  R.  100;  and  in  Michigan, 
in  Preston  v.  Preston,  1    Doug.  292. 
The  decisions  in  all  these  cases  were 
based  upon  tlie  general  rule  to  which 
I  have  referred.     In  tho  case  of  Rob- 
bins  r.   Bridge,   Lord  Abinger  says: 
'  The  attorney  is  known  merely  as  the 
agent,  the  attorney  of  tho  principal, 
and  is  directed  by  tho  principal  hini- 
sclf.     The  agent,  acting  for  and  on  the 
part  of  the  principal,  does  not  bind 
himself,  unless  he  ofifers  to  do  ro  by 
express    words.'      So    in    Wires    v. 
Briggs,  the  court  say:    'No  rule  of 
law,  it  has  been  said,  is  better  ascer- 


tained, or  stands  upon  a  stronger 
foundation,  tlian  tliis:  that  whero  an 
agent  names  his  i)rincipal,  the  principal 
is  rcspon::<ible,  and  not  the  agent';  an<l 
ill  Preston  v.  Preston,  the  l.mnuagc  of 
Felch,  J.,  is:  'In  conducting  the  suit, 
so  f.ir  iis  third  persons  are  concornt'd, 
the  attorney  ij  simply  tho  attent  of  ids 
client.  Tho  rule  ot  law  is  well  settled, 
that  an  agent  doris  not  become  per^ion- 
ally  liable,  unless  his  principal  is 
unknown,  or  there  is  no  re.sj)onbiblo 
principal,  or  the  agent  exceeds  las 
power,  or  becomes  liable  by  an  under- 
taking in  his  own  name.'" 

^  Lamoreux  v.  Morris,  4  How.  Pr. 
245. 

*  Bonynge  v.  Field,  12  Jones  &  S. 
581 ;  Bonynge  v.  Waterbury,  12  Hun, 
534;  Sheridan  v.  Genet,  12  Hun,  GGO. 
A  request  by  an  attorney  to  court 
officers,  stenographers,  etc.,  for  per- 
formance of  services  insidental  to  a 
cause,  does  not  raise  an  implied  liabil- 
ity of  the  attorney  to  pay.  Presum- 
ably the  liability  is  upon  the  client: 
Bonynge  ?•.  Waterbury,  12  Hun,  5o4; 
S.  P.,  Sheridan  v.  Genet,  19  N.  Y.  Sup. 
Ct.  GOO. 

*  Sargent  r.  Pettibone,  1  Aiken, 
355. 

*  Jones  V.  Savage,  10  Wend.  C21 ; 
Wright  V.  Black,  2  Wend.  258;  People 
V.  Marsh,  3  Cow.  334;  Waring  r.  Baret, 
2  Cow.  4G0;  Carmichael  v.  PeiKilcton, 
Dud.  (Ga.)  173;  Alexander  v.  Carpen- 
ter, 3  Denio,  2GG;  Ross  v.  Harvey,  32 
Ga.  388;  Christmas  v.  RusocU,  2  xMet. 
(Ky.)  112;  Boyce  v.  Bates,  8  How.  Pr. 
495;  Benson  v.  Whitiield,  4  .McCord, 
149;  Willmont  v.  Meserole,  16  Abb, 
Pr.,  N.  S.,  308. 

"Davis  V.  McArthur,  3  Mc.  27; 
Chapman  v.  Phillips,  8  Pick.  25;  Weeks 
on  Attorneys,  sec.  129. 

'  Cone  V.  Donaldson,  47  Pa.  St.  .%3; 
Voorhees  v.  McCartney,  51  N.  Y.  o87. 


§154 


PRINCIPAL  AND  AGENT. 


256 


Illustrations. — A,  not  having  any  interest  in  tho  land,  per- 
mits li  to  use  bis  name  as  a  lessor  of  tho  plaintiff  in  ojcctment, 
on  condition  that  ho  shall  not  bo  at  any  further  cxpenLJC.  Ji 
cniploys  an  attorney  to  bring  the  suit  in  tho  name  of  A,  without 
infornnng  him  of  the  condition  annexed  to  the  authority,  and  A 
is  compelled  to  pay  costs.  Held,  that  ho  has  a  remedy,  not  only 
against  15,  but  against  the  attorney;  altliough  tho  latter  was 
ignorant  of  the  condition:  Uradt  v.  Walton,  8  Johns.  298.  A 
custom  of  the  attorneys  of  a  county  to  hold  themselves  responsi- 
ble for  Hherift''s  fees,  in  cases  wh.crcin  they  were  employed,  held, 
not  to  subject  an  attorney  to  liability  therefor,  in  the  absence  of 
an  express  agreement,  or  of  proof  that  tho  attorneys  were  ac- 
customed to  pay  for  such  services,  regardless  of  tho  responsibility 
of  their  clients:  Doughty  v.  Paige,  48  Iowa,  483. 

§  154.  Liability  for  Trespass.  —  So  tho  attorney  is  per- 
sonally liable  for  trespass  where  the  process  is  irregular 
or  illegal,*  and  he  is  liable  for  procuring  or  advising  a 
judicial  officer  to  act  beyond  his  jurisdiction.^  An  attor- 
ney who  uses  tho  law  to  enforce  his  client's  demands, 
however  groundless,  is  not  liable  so  long  as  he  acts 
merely  as  attorney,  but  he  is  liable  when  he  bteps  beyond 
that  and  actively  aids  his  client's  purpose.^  lie  is  liable 
personally  for  illegally  issuing  a  fieri  facias*  He  is  not 
lictble  when  he  merely  communicates  to  tho  sheriff  his 
client's  instructions  to  make  a  levy  on  property  which 
turns  out  .o  belong  to  another.^  Thus  where  he,  obey- 
ing his  client's  instructions,  orders  the  seizure  of  prop- 
erty, he  is  not  liable  to  its  owner,  if  such  owner  is  other 
than  the  attachment  defendant."  Nor  is  he  liable  for  tho 
trespass  of  a  constable  having  charge  of  tho  execution.^ 
An  attorney  is  not  liable  for  any  illegal  seizures  that  may 
be  made  under  a  warrant  which  he  may  happen  to  pre- 
pare. But  if  he  also  send  his  clerk  to  assist  in  the  levy 
under  the  warrant,  he  is   liable  for  any  illegal  seizure 


*  People  V.  Montgomery,'  18  Wend. 
6.33;  frriswoM  v.  iSeilgwick,  C  Cow. 
45(i;  Newburry  v.  Lee,  .3  Hi)',  o23. 

^  Revill  V.  Pettit,  3  Mci,.  (Ky.)  314. 

8  Schalk  V.  Kingsley,  42  N.  J.  L. 
32. 


*  Newberry  v.  Lee,  3  Hil),  523. 

"  Ford  V.  Williams,  13  N.  Y.  577; 
67  Am.  Dec.  83;  aliter,  if  he  directs  it 
personally:  Id. 

"  Dawson  v.  Buford,  70  Iowa,  127. 

'  Seaton  v.  Cordray,  Wright,  102. 


256 


257       PRIVILEOES    AND    LIABILITIES    OP   ATTORNEYS.      §  151 


made'     So   if  ho  specially  advises  an   illegal  seizure  of 
property,  and  assists  at  the  sale,  lie  is  liable."     The  law  is 
summed  up  in  a  recent  case  thus:^   "An  attorney  is  not 
liable  with  his  client,  in  a  joint  action  of  trespass,  unless 
it  can  bo  shown  that  ho  has  gone  beyond  the  strict  lino 
of  his  duty.     So  long  as  ho  acts  strictly  in  the  execution 
of  the  duties  of  his  profession,  and  does  not  actually  par- 
ticipate in  the  commission  of  tho  trespass,  hois  not  liable. 
But  when  ho  stops  beyond  that  line,  and  actively  aids  his 
client  in  tho  execution  of  his  purpose,  ho  is  not  shielded 
from  responsibility.''     While  he  acts  merely  in  his  char- 
acter of  attorney,  making  use  of  the  process  of  tho  law 
to  enforce  his  client's  demand,  however  groundless  and 
vexatious  it  may  bo,  ho  is  not  amenable  to  suit.*^     In 
tho  latter  case  it  was  conceded  that  tho  attorney  would 
have  made  himself  liable  if  ho  had  done  something  be- 
yond the  more  delivery  of  tho  writ;  as,  by  going  with  tho 
ofUcer  to  assist  in  its  execution,  or  giving  some  direction, 
independent  of  that  in  tho  writ,  to  execute  it  in  an  un- 
authorized mode.     The    distinction  is  clearly  drawn   in 
Hardy  v.  Kcclcr,^  where  it  is  hold  that  an  attorney  is  not 
liable  for  any  illegal  seizure  that  may  be  made  under 
a  writ  issued  by  him;  but  where,  in  addition  to  issuing 
the  writ,  ho  sent  his  clerk  to  assist  in  the  levy  thereof, 
the  plea  that  ho  is  an  attorney  will  not  avail  as  a  defense. 
Ill  this   case  tho  attorney  employed   tho  workmen,   in- 
structed them  to  commit  tho  wrong  complained  of,  and 
paid  them  for  it.     Under  these  circumstances,  ho  cannot 
claim  that  ho  was  acting  in  the  legitimate  sphere  of  an 
attorney  at  law,  and  is  not  entitled  to  immunity."     The 
attorney  is  not  liable  for  having  mistaken  his  remedy.^ 

1  Hardy  v.  Keeler,  5G  111.  152.  Williams,  1.3  N.  Y.  577;  C7  Am.  Dec. 

^Peckinbaugh  v.  Quillin,    12  Neb.  8.3, 

E8G.  '"  Oakley  v.  Davis,  IG  East,  82;  Low- 

=*  Schalk  V.  Kingaley,  42  N.  J.   L.  ell  v.  Cliainpion,  G  Ad.  &  K.  107. 

32.  «:>GI11.  152. 

Mlunter  f.  Burtis,  10  Wend.  358;  ^Pouchor  v.  Blauchard,   13  Week. 

Greeu  v.  Elgic,  5  Q.  B.  99;  Ford  r.  Dig.  5. 
Vol.  L-17 


§155 


PRINCIPAL  AND  AOKNT. 


258 


An  attorney  of  ono  party  to  an  action  roforred  under  a 
rule  of  court  is  liable  to  an  action  by  tho  other  party  for 
conspiring  with  ono  of  tho  arbitrators  to  obtain  an  unjust 
award  uj)on  which  judgment  is  entered,  although  such 
judgment  remains  unreversed.* 

§  166.    Liability  for  Malicious  Prosecution.— And  tho 

attorney  is  personally  liable  for  maliciously  prosecuting  n 
suit  he  knows  to  be  groundless,  and  maliciously  arresting 
tho  defendant  thereunder,  or  attaching  his  property."  So 
he  is  liable  for  arresting  a  porson  on  an  execution  when 
lie  knows  it  to  bo  not  authorized  bv  law.'    To  render  him 


'  Hoosac  TnnncI  Dock  etc.  Co.  v, 
O'Brien,  137  Muss.  4'J4;  60  Am.  Rep. 
323. 

■••Burnap  -.-.  Marsh,  13  111.  5.35; 
Wigg  V.  Simonton,  12  Rich.  583; 
Wood  V,  Wier,  5  B.  Mon.  644;  War- 
field  v.  Campbell,  24  N.  Y.  359.  Tho 
act  must  ho  malicious:  Lynch  v.  Com- 
monwealth, lU  Scrg.  &  R.  3G8;  IG  Am. 
Dec.  582;  Hardy  v.  Keeler.  50  111. 
152;  Bicknell  v.  Dorion,  10  Pick.  490, 
Shaw,  C.  J.,  sayinjj:  "Wo  think,  in 
general,  it  is  true  tliat  an  action  can- 
not be  maintained  against  an  attorney 
on  the  ground  of  hia  instrumentality 
in  bringing  a  civil  action  against  the 
plaintiff,  unless  where  ho  has  com- 
menced such  suit  without  the  author- 
ity of  tho  party  in  whose  name  ho  sues, 
or  unless  there  be  a  conspiracy  to  bring 
a  groundless  suit,  knowing  and  under- 
standing it  to  be  groundless,  and  with- 
out any  intent  or  expectation  of  main- 
taining tho  suit.  The  former  case  is 
precluded  here,  not  only  by  the  whole 
course  of  the  proof,  but  by  the  form  of 
the  action.  The  attorney  and  client 
in  the  action  complained  of  arc  both 
made  defendants  in  this  suit;  of  course, 
therefore,  by  tho  plaintiff's  own  shovr- 
ing  the  suit  was  commenced  by  the 
attorney  iipon  the  retainer,  and  by 
the  authority  of  the  client.  Tho  case 
of  bringing  the  suit  without  the  au- 
thority of  the  plaintiff  iu  that  suit  is 
therefore  out  of  the  question.  Upon 
the  other  ground,  I  am  not  prepared 
to  say  that  if  a  person  applies  to  an 
attorney,  wishing  to  have  a  groundless 


suit  commenced  for  the  purpose  of  de- 
taining the  property  or  person  of  an- 
other under  the  forms  of  legal  procena, 
and  the  attorney  yields  to  such  a  re- 
quest, that  they  would  not  render 
themselves  liable  to  an  action  at  tlio 
suit  of  the  party  thus  injured.  It 
M-ould  be  very  different  from  the  case 
where  tho  client  represents  an  action 
to  bo  brought  on  his  responsibility, 
however  groundless  the  attorney  him- 
self may  think  it  to  be,  and  though  lio 
explicitly  declares  to  the  client  that  lie 
cannot  maintain  the  action.  '  Know- 
ing,' 'believing,'  or  'supposing'  it 
groundless  are  only  expressions  indi- 
cating different  degrees  of  tho  attor- 
ney's belief;  the  party  may  have 
grounds  for  proceeding  not  known  to 
the  attorney,  and  he  has  a  right  to 
judge  for  himself.  Take  tho  case  put 
in  1  Mod.  200:  The  attorney  himself 
drew  the  release,  and  therefore  knew 
that  the  client  had  no  cause  of  action. 
Ho  may  know  that  that  release  was 
obtained  by  gross  fraud,  and  there- 
fore no  bar  to  an  action.  In  order, 
therefore,  to  charge  an  attorney  upon 
this  ground,  it  must  not  only  appear 
that  there  was  an  agreement  to  bring 
an  action  which  was  in  fact  ground- 
less, and  which  the  attorney  supposed 
to  be  groundless,  but  that  it  was  agreed 
to  bring  an  action  understood  by  both 
parties  to  be  groundless,  and  brought 
as  such." 

*  Sullivan  v.  Jones,  2  Gray,  570; 
Deyo  V.  Van  Valkenberg,  5  Hill, 
242. 


2r)9       rniVILEQES   and    LIABILITIEg    OP   ATTORNEYS.       §   155 

liable  for  a  malicious  prosecution  by  his  client,  it  jnust 
appear  that  lie  knew  that  the  prosecution  was  both  mali- 
cious and  without  cause.*  lie  is  not  personally  liable  for 
ordering  a  levy  if  ho  acts  bona  fide  and  with  good  causo.^ 
From  the  mere  fact  that  he  acts  for  the  client  an  attorney 
is  not  to  bo  charged  with  his  evil  motives  and  intentions.' 

Ilu'strations.  —  An  attorney  procured  A's  comniitmont  for 
ootitonipt  in  not  paying  certain  referee's  fees.  A  court  of  com- 
petent jurisdiction  adjudged  A  to  be  guilty  of  the  contempt 
charged,  its  detcrniination  being  based  upon  an  erroneous  con- 
struction of  the  law.  The  order  of  commitment  was  8ubsc(iuently 
reversed  by  the  appellate  court.  Then  A  Bi^  d  the  attorney  for 
false  imprisonment.  Held,  that  the  action  could  not  bo  main- 
tained, the  order,  though  erroneous,  being  within  the  jurisdic- 
tion of  the  court  making  it,  and  that  the  ttorn«y  was  r.  I  liable 
because,  before  the  reversal,  he  had  opposed  a  uiotiya  for  A's 
disch  irge:  Fischer  v.  Langbein,  103  N.  Y.  84. 


>  Peck  t'.  Chouteau,  01  Mo.  140;  60 
Aui.  Rep.  230. 


»  Hunt  V.  Print  up,  28  Oa.  207. 

*  McKinney  v.  Curtisa,  CO  Mich.  611. 


§15G 


PRINCIPAL   AND   AGENT. 


260 


CHAPTER  XV. 


AUTHORITY  AND  POWERS  OF  ATTORNEY. 


be 
be 


§  irjG. 

§157. 
§]oS. 
§  1.19. 
§  lOO. 
§  101. 
§102. 

§  i(!:3. 

§  104. 
§  105. 
§10G. 
§107. 
§108. 
§  109. 
§170. 


§171. 


§172. 
§173. 


§174. 
§175. 


Authority  evidonced  by  retainer. 
Author!  y  to  appear  presumed. 
Court  may  order  authori.;y  to  bo  produced. 
Appearance  for  several  persons. 

AiJiiuarance  by  attorney  binds  party,  though  unauthorized. 
Delegation  of  authority. 
Law  piH'tnerahips. 
Law  clerks. 

Termination  of  authority  —  By  dissolution  of  partnership. 
Termination  of  authority —By  act  of  parties. 
Termination  of  authority  —  By  termination  of  suit. 
Tormination  of  autiiority  —  By  death. 
Termination  of  authority  —  Other  cases. 
Implied  powers  of  attorneys. 

IiniiHed  powers  of  attorneys  (continued)  —  Admissions — Affidavits  — 
Al  tering  securities  —  Appeal  —  Arbitration  —  Arrest  —  Assignment 

—  Attachment. 

Implied  powers  of  attorneys  (continued)  —  Compromise  —  Continuance 

—  Contract  —  Discharge  —  Discretion  —  Employing  counsel  —  Error 

—  Executing  bonds  —  Execution  —  (ruaranty. 

Implied  powers  of  attorneys  (continued) — Judgment —  Payment. 
Implied  jiowers  of  attorneys  (continued)  —  Process  —  Purchase  —  Rl-- 

lease  —  Sell  —  Set-off —  Sue  —  Supplementary  Proceedings  —  AVaiv- 

crij  a!id  releases. 
Extent  of  authority  as  to  time. 
Ratification  of  unaiithorized  acts. 


§  156.  Authority  Evidenced  by  Retainer. — The  rela- 
tion of  attorney  and  client  is  established  by  the  "retainer'"; 
that  is,  the  act  of  the  client  by  which  he  engages  a  law- 


yer to 


manage 


his  cause.^    A  written  retainer,  though 


I  Bouv.  Law  Diet. ;  Do  Wolf  r.  Stra- 
der,  1:0  111.  SlVj;  79  Am.  Dec.  .371. 
Blackuian  v.  Webb,  38  Kan.  608,  the 
court  saying:  "The  word  'retainer,' 
when  used  in  the  place  where  wo 
are  now  iising  it,  is  dcfinetl  as  fol- 
lows: 'The  act  of  a  client  by  which 
he  engages  an  attorney  or  counselor  to 
manage  a  cause,  cither  by  prosecuting 


it  when  he  is  plaintiflF,  or  defending  it 
when  he  is  defendant;  the  retaining 
fee':  Bouvier's  Law  Diet.,  tit.  He- 
tainer.  'The  act  of  employing  ov 
engaging  an  advocate,  barrister,  attor- 
ney, counselor,  solicitor,  or  proctor,  to 
appear  and  prosecute  or  defend.  Tlic 
Word  is  also  used  for  the  notice  servLcl 
by  an  attorney,  etc.,  on  the  opposite 


260 


261 


AVTnORITY   AND   TOWERS   OF   ATTORNEY. 


15G 


A.ffitlavit3  — 

Assignment 

oontinuaiu'o 
isel  —  Error 

lyment. 
chase  —  Hu- 
gs—  Waiv- 


'hc  rcla- 

'tainer''; 

iS  a  law- 

t hough 

efentling  it 
c  rL'taiuiiig 
tit.  lie- 
(laying  or 
.stcr,  attor- 
proctor,  tu 
fend.  Thu 
tico  sorvt'il 
le  op]_toaite 


hotter  for  both  parties/  is  not  e.s.scntial,  a  parol  retainer 
being  .sufficient."     The  attorney  of  the  phiintiff  controls 


party  or  attorney,  that  ho   has  hcen 
rv'taiu'Jil,  in  wliicli  nso  it  is  h^'  elision 
for  notice  of  ri'tainer;  anil  for  thi!  fee 
ji;ii,l  to  a  lawyer  upon  his  umlertaking 
a  cause,  in  wliich  use  it  is  ')y  elision 
f.ir    a   retaining   fee'.    Ahliott's    Law 
Diet.,  tit.   R.'tainer.     It  will  bo  seen 
tliat   the  word  'retainer,'  as  used  in 
cisiM  of  Lhis  kind,  niean-i,  —  1.  The  act 
oi'  the  client  in  employing  his  attorney 
or  counsel;   "2.   The  notice  of   tiie  re- 
tainer served  upon  the  opposite  party 
or  liis  attorney;    'A.  Tlie  retaining  fee. 
....  When  an  attorney  is  engaged 
to  prosecute  or  defend  in  an  action, 
his  entire  services  in  that  action  are 
cng  igod  for  his  client,  and  he  cannot 
p  rt'orm  services  for  the  adverse  party. 
He  is  retained  l>y  his  client  for   that 
eatiro  action;    and  whether  hia  client 
limy  over   call    upon  him   to  perform 
sn-vic'.'s  or  not,  he  cannot  perform  ser- 
vice) in  that   action  for   the  adverse 
p iity,  nor   can  he  receive  any  fee  or 
O(iiiii)ensation  from  the  adverse  party. 
All  his  skill  and  ability  for  that  case 
is  at  the  conunand  of   his  client.     A 
rctuiuer  of  an  attorney  at  law  is  pre- 
sumably worth  something  to  the  client, 
and  presumably  a  loss  to  the  attorney; 
and  whether  tlie  attorney  is  ever  called 
upon  to  perform  any  services  or  not, 
iu  that  case  ho  may,  when  the  case  is 
terminated,  recover  for  whatever  the 
cviilciioe  shows  the  retainer  was  worth. 
Wliotlier  ho  may  in  any  case  recover  a 
retaining   fee  and   also  an  additional 
amount  lor  his  services,  we  are  not  now 
called  upon  to  determine.  And  neither 
are    wo    called    upon     to    determine 
M  hetlier  ho  could  iu  any  case  recover 
as  a  retaining  fco  more  than  his  entire 
services  would  bo  worth  if  ho  should 
devote  his  services  to  the  entire  case, 
and  through  all  its  stagos,  from   the 
beginning  to   the  end.     All  that  wo 
are    now   required    to   determine    is, 
whether  he   can   recover  a  retaining 
fcj  at  all,  in  a  case  where  no  such  fee 
was   expressly   and    specifically   con- 
tracted  for,  but  only  a  gen'iral  con- 
tract of  employment  Avas  made.     Wo 
hell     tliat    he    can     recover."      An 
a^ent  by   retaining   an   attorney    for 
liis  principal  does  not  create  the  rela- 
tiuu  of  attorney  and  client  bctwecx- 


himself  (tlic  aaent)  and  tlie  attorney: 
Porter  r.  Peckham,  44  C'al.  2()4. 

'  In  Owen  I'.  Ord,  :{  Cir.  &  P.  :i!-l9, 
L(H'd  Tenterden,  C  J.,  said  "  tliat  a 
formal  written  retainer  is  better  for 
the  attorney  because  it  gets  rid  of  all 
difficulty  about  proving  his  retainer, 
and  it  would  also  be  better  for  somo 
clients,  as  it  would  put  tiiem  on  tlicir 
guard  and  prevent  tlieui  from  being 
drawn  into  lawsuits  witliout  their 
express  direction."  .See  iMc Alexander 
V.  Wright,  3  T.  B.  Mon.  bS'J;  IG  Am. 

Dec.  m 

■■'  Manchester  Bank  v.  Fellows.  23 
N.  H.  3()'->;  Hardin  r.  Ilo-Yo-Po- 
Nubby,  27  Miss.  5(17;  lllr.shliehl  r. 
Landman,  .S  E.  D.  Smith,  2J8.  In 
Hardin?,'.  Ho-Yo-Po-iNubliy,  the  court 
say:  "An  attorney  is  an  oliicer  of 
court,  and  rospfnisiblo  to  the  court  for 
the  propriety  of  his  professional  con- 
duct, and  the  proper  use  of  the  privi- 
leges ho  has  as  such.  No  warrant  of 
attorney  is  reipiired  by  our  law.5  or 
practice  to  enalilo  him  to  appear  for 
and  to  represent  a  patty  in  court,  llu 
is  permitted,  liy  almost  luiivcrsid  prac- 
tice in  this  country,  to  ilo  so  under 
verl)al  retainer,  and  it  is  only  in  c.isoa 
of  clear  want  of  autliority,  or  abujo  of 
his  privilegj,  that  he  is  held  to  bo  in- 
competent to  institute  a  suit  or  to 
represent  a  party  in  court.  Tiio  pre- 
sumption is  in  favor  ol  his  authority, 
and  thougli  ho  may  I)o  refpiircd  to 
show  it,  yet  if  ho  iicts  in  good  faith, 
and  the  want  of  autliority  is  not  iii;i::i- 
fest,  he  wdl  not  1)0  held  to  have  acted 
without  authority,  beciuse  it  is  not 
shown  accordin.,'  to  strictly  leg;d  rules. 
If  this  were  not  ;:o,  the  ;;reatest  iiicim- 
venience  in  practice  woul  1  coutiiuKiUy 
occur,  both  to  clients  and  attoiiieys; 
for  suits  are  fre(pie:itly  instituted  by 
attorneys,  under  tlio  authority  of  let- 
ters from  their  clients,  who  are  stran- 
gers, and  whoso  handwriting  is  un- 
known to  them,  and  could  not  bo 
proved  without  great  trouble  and 
delay.  If  recpiired,  in  such  a  case,  to 
produce  his  authority,  the  pro:luction 
of  the  letter,  though  ho  mi-ht  lie  un- 
able to  prove  the  handwriting,  would 
besutlicient;  and  so  of  a  letter  written 
by  a  ijarty  purporting  to  bo  the  ageut 


§156 


PRINCIPAL  AND  AGENT. 


262 


the  prosecution  of  the  action  as  against  the  defendant, 
and  the  court  will  deny  a  motion  to  dismiss  it,  founded 
on  a  written  consent  of  the  plaintiff  personally,  if  the 
attorney  for  the  plaintiff  refuses  his  consent.  If  the  de- 
fendant has  obtained  any  right  to  have  the  action  dis- 
missed, he  should  set  it  up  by  pleading,  as  a  defense.*  If 
a  party  who  has  an  undivided  interest  in  a  tract  of  land, 
which  is  the  subject  of  a  partition  suit,  employs  an  attor- 
ney to  act  for  him  in  relation  to  his  interest  therein,  the 
relation  of  attorney  and  client  docs  not  exist  between  the 
employer  and  attorney,  as  to  the  interest  of  the  party  for 
whom  the  employer  acted  as  agent.'  An  authority  may  bo 
implied  as  well  as  shown  by  proof  of  an  express  retainer.' 
Wheu  an  attorney  is  employed  by  a  party,  the  law  implies 
a  contract  between  them;  and  before  a  new  partner  of 
such  attorney  can  be  made  a  party  to  the  contract,  there 
must  be  some  agreement  or  understanding  to  place  the 
latter  in  a  position  which  would  entitle  him  to  make  a 
claim  against  the  client  who  did  not  originally  employ 
him.*  The  authority  of  the  attorney  to  appear  may  bo 
inferred  from  circumstances;  as,  that  he  was  the  general 
attorney  of  the  defendant,  and  the  defendant  though 
knowing  of  it  did  not  object  to  his  appearance.^  It  is  in 
the  discretion  of  the  court  to  hear  an  attorney  as  amicus 
curiic,  concerning  a  proceeding  in  which  ho  is  not  coun- 
sel." An  amicus  curise  is  heard  only  by  the  leave  and  for 
the  assistance  of  the  court,  and  upon  a  case  already  before 


of  the  plaintiflF.  All  that  is  required 
to  bo  shown  ill  such  cases,  in  tho  tirst 
instance,  i^,  tliat  the  attorney  has  acted 
in  good  faith,  and  under  an  authority, 
appearing  to  be  genuine,  though  in- 
formal. It  tlien  devolves  upon  the 
party  impoacliing  the  authority  to 
show  by  positive  proof  that  it  is  in- 
valid and  insutiieieut  in  substance." 

'  McConnell  v.  Brown,  40  Ind. 
384. 

^  Porter  v.  Peckham,  44  Cal.  204. 

•"  Tally  V.  Reynolds,  1  Ark.  99;  31 
Am.    Doc.   737;    Rogers   v.    Park,    4 


Humph.  480.  Held,  insufficient  in 
Day  V.  Adams,  03  N.  C.  '254.  O.ie 
who  has  contracted  to  act  a3  attorney 
for  a  partnership  canuol;  claim  to  bo 
employed  by  it  in  a  content  among 
tho  beneficiaries  of  a  trust,  in  which 
contest  tho  firm  is  inci^icatally  in- 
volved in  the  capacitj  of  trustee: 
Cutcheon  r.  Loud,  Mich.  (1SS8). 

*  Davis  V.  Peck,  54  Barb.  425. 

^  Bogardus  v.  Livingston,  2  Hilt. 
236. 

"  State  i\  Jeiiersou  Iron  Co.,  GO  Tex. 
312. 


263 


AUTHORITY   AND   POWERS   OF   ATTORNEY 


§157 


it.  He  has  no  control  over  the  suit,  and  no  right  to  in- 
stitute any  proceeding  therein,  or  to  bring  the  case  from 
one  court  to  another,  or  from  a  single  judge  to  the  full 
court,  by  exceptions,  appeal,  or  writ  of  error.* 

Illustrations.  —  B,  being  indebted  to  A,  mortgaged  a  tract 
of  land  to  him  as  security.  C,  a  creditor  of  B,  obtained  judg- 
ment against  him,  which  was  levied  on  the  mortgaged  prem- 
ises, and  purchased  by  C.  A  obtained  a  rule  on  C  to  f  uow  cause 
v.hy  an  injunction  to  stay  waste  should  not  bo  granted,  and 
why  service  of  the  subpoena  upon  the  attorney  of  C,  who  was  the 
plaintiff  at  law,  in  an  action  against  A  for  slandering  the  title 
of  C  to  tlio  land,  should  not  bo  considered  as  service  on  C. 
Jlcld,  that  the  two  actions  were  wholly  unconnected,  and  the 
attorney  of  C  could  not  be  considered  as  representing  him  in 
the  latter  suit:  Ilitner  v.  Suchly,  2  Wash.  C.  C.  405. 


s  amicus 


§  157.    Authority  of  Attorney  to  Appear  Presumed.  — 

AVhere  an  attorney  appears  for  a  person,  his  authority  to 
do  so  is  presumed,"  both  in  the  trial  and  in  the  appellate 
court.^  An  attorney  appearing  for  an  infant  will  be  pre- 
sumed to  have  been  authorized  by  his  next  friend.'  The 
right  of  an  attorney  of  record  to  control  and  manage  the 
action  cannot  be  questioned  by  the  opposite  parly  while 
he  remains  such  attorney.^  A  party  to  an  action  may  ap- 
pear in  his  own  proper  person  or  by  attorney,  but  he  can- 
not do  both.     If  he  appears  by  attorney,  he  must  bo  heard 


'  Miirtin  r.  Taplcy,  119  Mass.  IIG. 

•^  Brown  v.  Nichols,  42  N.  Y.  3D; 
Hamilton  v.  Wright,  37  N.  Y.  502; 
Jaclcson  v.  Stewart,  G  Johns.  34;  Oo- 
hora  r.  Bank,  9  Wheat.  73S;  Clai  k  v. 
V.'illctt,  35  Cal.  C40;  Lawaon  o:i  Pre- 
suuiptivc  Evidence,  50,  52;  Cartwell 
V.  ilenifce,  2  Ark.  350;  Lester  v.  Wat- 
kins,  41  Miss.  G47;  Weeka  on  Attor- 
neys, sec.  190;  Hill  r.  Mcndcnhall,  21 
Wall.  453;  Martin  v.  Walker,  1  Abb. 
A(hn.  579;  Turner  i'.  Caruthers,  17  Cal. 
431;  Silkinan  v.  Boigcr,  4  E.  D.  Smith, 
2;jli;  Henck  v.  Toilhunter,  7  liar.  &  J. 
275;  10  Am.  Dec.  301;  Manchester 
Bank  V.  Fellows,  28  N.  H.  302;  Bridg- 
toii  V.  Bennett,  23  Me.  420;  Tenobscot 
Boom  Corp.  r.  Lamson,  IG  Me.  224;  33 


Am.  Dee.  C5G;  Field  r.  Proprietors,  1 
Cndi.  11;  Caul  v.  CJroat,  1  LV.v.  113; 
Tally  V.  Reynolds,  1  Ark.  99;  3!  Ar;i. 
Dee.  737;  Leslie  r.  Fischer,  C2  111. 
118;  Rogers  r.  Park,  1  liump'i.  480; 
Bunton  v.  Lyford,  37  N.  H.  512;  75 
Am.  Dec.  Ml;  Harsh-jy  v.  lilackmr.rr, 
2D  Iowa,  IGl;  8;/  Ai:i.  Dec.  ClO;  Nor- 
oerg?'.  Hcineman,  5'.) Mich.  210;  Sclditz 
V.  Meyer,  Gl  Wij.  418. 

^  Ricketson  v.  Cor.:pton,  23  Cal.  (337; 
Frost  r.  Lav.der,  ."4  ,aich.  235;  N;)Mo 
V.  Bank  of  Kentucky,  3  A.  K.  Mar  !i. 
2G3;  Shroudciibeck  v.  Phanix  F.ro 
Ins.  Co.,  15  Wis.  G32. 

*  Ililliard  v.  Carr,  0  Ala.  557. 

*  Commissioners  i:  Youn  er,  29  Cal. 
147;  87  Am.  Dec.  1G4. 


§  158 


PRTXCTPAL    AND    AGENT. 


2G4 


through  him,  and  cannot  himself  assume  control  of  tho 
caso.^ 


g  158.     Court  may  Order  Authority  to  be  Produced.  — 

Bui  Iho  {ittorncy  may  bo  compelled  by  the  court  to  show 
his  iiuthority  to  appear  for  a  party  whom  ho  pretends  to 
bo  authorized  to  represent,  and  this  may  be  reciuired  at 
tho  instance  of  the  opposite  party  as  well  as  of  the  party 
for  whom  he  a{)pears.^  To  invoke,  however,  this  power,  the 
opi^osite  party  must  show  facts  tending;  to  i>i'ove  that  tho 
attorney  liad  no  such  authority.'  An  ailidavit  that  the  aili- 
ant  is  informed  and  believes  that  tho  attorn  ^y  is  not  au- 
thorized is  insufficient.'*  Where  a  party  denies,  luider  oath, 
that  a  plea  filed  in  his  name  by  an  attorney  was  tiled 
with  liis  authority,  and  tho  alle<];ation  is  borne  out  by  tho 
proof,  the  act  of  the  attorney  is  not  binding."  In  Ken- 
tucky, tho  adverse  party  can  demand  the  attorney's  author- 
ity only  where  ho  shows  his  rights  arc  jeopardized  without 
it,  or  that  he  was  disturbed  by  being  brought  into  litiga- 
tion without  tho  consent  of  the  other  j^arty."     One  cannot 


'  Cuiii;nissio!icr3  r.  Younger,  29  Cal. 
147:  {^7  A:;i.  Dec.  1G4. 

-  1\  oplo  r.  JLiriposa  County,  .SO  Cal. 
CS;';  Ci):ami.:;.'..i()iicr  r.  Purdy,  'M  Burl). 
L'i'iG;  Hoj-i-i  r.  I'aik,  4  lluuipli.  480; 
Wojt  r.  Houston,  ;)  llarr.  (Ucl)  1"); 
Nil'.;ni:in  r.  Jjoi::ei',  4  I'l  I).  Smith, 
'JwO;  KuowUon  r.  J'la-itatio:i,  14  Mc. 
20;  Clark  r.  AVillctt,  1^5  Cal.  5:M; 
King  of  Npain  r.  Oliver,  2  Wash.  C.  C. 
4-JO;  Standil'er  r.  Dowlon,  Hemp.  2v);i; 
Ex  parte  CiUospie,  3  Yei-g.  'S'2'i. 
Where  an  attorney  sues  out  a  writ  of 
error  v.itliout  the  sanction  of  the  plain- 
till:'  named  in  tho  writ,  the  same  will 
1)0  (li.sinioscd  on  motion  at  tho  attor- 
ney's eo.!;t:  Anonymous,  11  111.  488; 
i'l-ye  r.  Calhoun  County,  14  111.  l.']2; 
I'owcll  r.  f^paul.linji,  'Mi.  Greene,  443; 
Bell  I'.  Usury,  4  Litt.  .3.S4;  Critehlield 
r.  Torter,  3  Ohio,  518.  When  a  per- 
son wlio  has  not  been  admitted  to 
ptMctiee  a?i  an  attorney  is  cniployed 
to  pro.^ccute  or  defend  a.'suit,  ho  must, 
if  his  authority  i3  qacstioncd,  produce 


and  file  it  with  the  clerk:  Stevens  r. 
Fuller,  .5,-.  N.  IT.  443. 

■*  IV'oplo  r.  JIaripoja  County,  151) 
Cal.  ()S3:  iNIcKieriian  r.  I\drie':,  4 
How.  (Miss.)  3315;  Ninety-ni.ie  I'l'.'.iu- 
titfj  r.  Vanderhili,  4  ])uer,  (("'J; 
Thomaa  v.  Steele,  22  Wi.^.  207; 
Tur:ier  r.  Caruthcr.-i,  17  Cal.  4;:!; 
Penoh^^eot  Coi'p.  i\  L'.m.on,  1',)  Jh'. 
224;  .•53  Am.  Dee.  CmO;  IJ'idi^ton  r.  Y.m- 
nett,  23  Me.  420;  .Ma;ielie.;ter  r.a;;k  t: 
FelloW:=,  28  X.  11.  312;  Allen  ?•.(  Ireen, 
1  Hail.  448;  Tally  r.  Ueynold.s,  1  Ark. 
t)l>;  31  Am.  Dee.  737;  lielt  r.  Wil.cu, 
G  J.  J.  Marsh.  4!):);  22  Am.  Dee.  88. 

■*  i\'Oi>le  V.  iMarii)osa County,  3'.>C:d. 
G83;  C.irtwcll  v.  McJiii'ee,  2  Ark.  3."ii;. 
A^  to  M'hat  was  con.iidered  sii(lie!e.;t 
authority,  see  Savory  r.  Savery,  8 
Iowa,  217;  Bush  r.  Miller,  13  B:irl,. 
481;  nughe.5  v.  O.d.orn,  42  lad.  4.10; 
Crignon  r.  Seluuitz,  IS  Wi.i.  (520. 

^  li)ecuir7;.  Lejcune,  l')L:i.  Ann.  ."(il'. 

'■■  .McAlexandcr  v.  Wright,  3  T.  B. 
Mou.  194. 


2G5 


AUTHORITY   AND   POWERS   OP  ATTORNEY. 


§loS 


prove  his  authority  to  appear  as  attorney  for  a  party  in  a 
suit  before  a  justice,  by  producing  a  letter  from  a  third 
person  asking  him  to  appear;  nor  will  tho  fact  that  a  third 
person  is  liiniself  a  lawyer  ha  suflicicnt  to  give  authority, 
ii  it  does  not  distinctly  appear  that  ho  is  attorney  for  tlio 
l):irty.'  If  an  attorney,  who  is  ruled  to  produce  his  au- 
thority to  bring  a  suit,  liles  tho  affidavit  of  the  plaintiff's 
agent  that  he  was  directed  by  tho  plaintiff  to  cause  suit  to 
bo  brouglit,  and  that  he  employed  said  attorney  in  pursu- 
ance of  such  direction,  the  showing  of  authority  is  suffi- 
cient." If  not  objected  to  in  the  lower  it  cannot  bo 
inquired  into  in  the  appellate  court.^  An  objection  to 
the  right  of  counsel  to  appear  in  defense  of  an  action 
cannot  bo  made  after  the  term  at  which  the  appear- 
ance is  first  made.''  A  motion  for  a  rule  on  the  plain- 
tiff to  file  his  warrant  of  attorney  must  be  made  beforo 
plea.'' 

Illustrations.  —  On  a  rule  for  an  attorney  to  show  his  au- 
thority to  prosecute  a  suit,  on  affidavit  of  defendant  that  ho 
believed  tho  attorney  had  not  coinraunicated  directly  with 
l)l.untifl'  by  letter,  and  that  tho  authority  was  derived  from 
Komo  person  or  persons  who  had  not  sufficient  authority  from 
plaintiff,  who,  defendant  believed,  did  not  know  of  tlie  suit, 
heJil,  not  sufficient  to  show  want  of  authority:  Low  v.  Settle, 
22  W.  Va.  387.  A  party  addressed  a  letter  to  his  wife,  say- 
ing, "  I  would  rather  give  what  I  am  worth  to  some  honest 
person,  as  to  sufler  the  defendant  to  have  one  dollar.  Ho  as 
you  have  employed  lawyer  N.  to  assist  you,  I  hope  you  will 
obtain  justice;  you  arc  doing  just  what  I  intended  doing";  and 
afterwards  wrote  to  his  brother  in  regard  to  the  case,  "Goon 
with  it,  and  do  tho  best  you  can":  Ilchl,  that  there  was  no 
authority  given  to  tho  wife  or  brother,  as  agent,  to  employ  an 
authority,  and  that  tho  letters  were  not  a  sufficient  compliance 
wlih  the  act  requiring  an  attorney  in  a  cause  to  file  a  power  of 
attorney  to  act  for  the  party:  Day  v.  Adams,  03  N.  C.  254.     In 

MVestbrook    v.    Blood,    50    Mich.  A.  K.  Marsh.  203;  Shroudenhcck   >: 

44.3.  Insurance  Co.,  15  Wis.  GD'J. 

-  Hughes  V.  Osborn,  42  Iiiil.  450.  *  Kuowitou  v.  Plantation  No.  4,  1-t 

^Stato   V.   Carothur.s,   1  G.  Greene,  Mc.  20. 

4iU;  Dnnnian  v.  Ilartwcll,  9  Tex.  405;  *  Mercicr   v.    Meroier,  2   Dall.    142; 

tiO  Aia.   JJcc.   170;  NoIjIo  v.  Bank,  3  Suttou  v.  Cole,  3  Pick.  232. 


§150 


PRINCIPAL  AND   AGENT. 


26G 


an  action  on  a  promissory  note,  the  defendant  obtained  a  nilo 
on  the  attorney  of  the  plaintiff  to  show  the  authority  under 
which  ho  appeared  to  prosecute  the  action,  which  rule  was 
based  upon  an  affidavit  alleging  that  the  plaintiff  (the  indorsee) 
and  the  payee  of  the  note  resided  in  Rome,  in  the  state  of  New 
York;  tliat  the  plaintiff,  some  time  in  the  year  1855,  told  the 
affiant  that  the  payee  of  the  note  had  simply  transferred  to 
him  the  note  sued  on,  as  collateral  security,  and  upon  the 
express  understanding  and  condition  between  them  that  he 
sliould  not  bring  suit  on  the  same  against  the  defendant;  the 
attorney  answered  the  rule  under  oath,  stating  that  in  July, 
1855,  ho  received  a  letter  from  D.  and  L.,  of  Rome,  New  York, 
whom  he  believed  to  be  the  attorneys  at  law  of  that  place,  in- 
closing the  note  sued  on,  stating  that  the  note  was  the  property 
of  the  plaintiff,  and  instructing  him  to  put  it  at  once  in  process 
of  collection,  which  showing  the  court  held  sufficient:  Held, 
the  affidavit  filed  on  the  part  of  defendant  did  not  make  out  a 
prima  facie  case,  that  the  court  might  well  have  refused  the  rule 
in  the  first  instance,  and  that  the  showing  made  by  the  attor- 
ney was  sufficient:  Savery  v.  Savery,  8  Iowa,  21 7. 

§159.    Appearance  for  Several    Persons. —  Where  a 

counsel  appears  expressly  for  certain  defendants,  his  sig- 
nature to  papers  in  the  cause  subsequently  as  "attorney 
for  defendants  "  will  be  construed  as  limited  to  those  for 
whom  he  expressly  appeared.'  Where  several  defendants 
appear,  each  by  his  own  attorney,  the  attorney  of  one  can- 
not give  or  accept  notices  for  the  others.^  An  appearance 
in  a  suit  where  there  are  several  defendants,  for  the  de- 
fendants generally,  is  prima  facie  an  appearance  for  all.* 
The  entry  of  an  appearance  by  an  attorney  for  the  defend- 
ants in  an  action  against  a  partnership  will  be  construed 
as  an  appearance  for  them  as  partners,  and  no  '  .r  ''Ijem 
individually.*  One  co-defendant  may  employ  :  Corney 
for  the  other  co-defendants,  and  his  appearnr  tor  all 
will  bind  all.' 


1  Spanagel  v.  Dellinger,  42  Cal.  148. 

»  llobba  V.  DuflF,  43  Cal.  485. 

'Kenyon  ?•.  Schreck,  52  111.  382; 
American  Ins.  Co.  r.  Oakley,  9  Paige, 
49l>;  38  Am.  Dec.  561. 


♦  Phelps  V.  Brewer,  9  Cash.  390;  57 
Am.  Dec.  50. 

"  Abbott  V.  Dutton,  44  Vt.  546;  8 
Am.  Rep.  394. 


266 


267 


AUTHORITY   AND   P0WER3    OP  ATTORNEY. 


160 


Illustrations.  —  Plaintiff's  attorney  entered  the  suit  ^.o  the 
use  of  a  thirJ  person.  Held,  on  defendant's  objection,  that  the 
authority  of  tlie  attorney  would  be  presumed:  Hagcr  v.  Cochran, 
66  aid.  253. 


:ney 
I  all 


§  160.  Appearance  by  Attorney  Binds  Party  though 
Unauthorized. — In  general,  an  appearance  by  an  attor- 
ney binds  the  party  for  whom  he  appears,  whether  the 
attorney  was  employed  by  him  or  not.^  The  remedy  is 
against  the  attorney,'  though  upon  direct  application  to 
the  court  relief  will  be  granted  to  the  party.'  lie  must 
make  application  at  once,*  and  in  the  same  suit  in  which 
the  unauthorized  appearance  was  made.'    A  person  in 


» St.  Albaus  V.  Bush,  4  Vt.  68;  23 
Am.  Dec.  24G;  Spaulding  v.  Swift,  18 
Vt.  214;  Newcomb  v.  Peck,  17  Vt. 
S02;  Abbott  v.  Dutton,  44  Vt.  54G; 
8  Am.  Rep.  394;  Ferguson  v.  Craw- 
ford, 7  Hun,  2o;  Bunton  v.  Lyf  nl,  37 
N.  H.  512;  75  Am.  Dec.  144;  a,,  1  see 
note  to  this  case  in  75  Am.  Dec.  146- 
151.  In  Hamilton  v.  Wright,  37  N.  Y. 
502,  it  is  said:  "Receiving  their  au- 
thority from  the  court,  they  are 
deemed  its  oflBcers.  Their  commis- 
sions declare  them  entitled  to  confi- 
dence, and  in  a  just  sense  their  license 
is  an  assurance  not  only  of  their  com- 
petency, but  of  their  character  and 
title  to  confidence.  The  direct  con- 
trol of  the  courts  over  them  as  oflicers, 
by  way  of  summary  discipline  and 
punishment,  to  compel  the  perform- 
ance of  their  duty,  or  to  suspend  or 
degrade  tliem,  is  retained  and  exer- 
cised as  a  guaranty  of  their  fidelity. 
It  is  no  denial  of  the  rule  that  where 
there  are  .special  circumstances  calling 
for  its  relaxation,  the  courts  may  and 
do  relieve  from  its  rigid  application. 
The  exception  arising  from  such  spe- 
cial circumstances  strengthens,  as  well 
a>>  recognizes,  the  rule  itself.  Hence, 
when  au  appearance  is  entered  by  an 
attorney  without  an  authority,  the  in- 
quiry whether  such  attorney  is  of  suffi- 
cient responsibility  to  answer  for  his 
unauthorized  conduct  to  the  party  in- 
jured thereby,  is  entertained.  And 
it  may  bo  proper  always  to  inquire 
whether  the  injury  to  the  party  is 
irremediable,  unleas  such  appearance 


be  set  aside,  and  the  proceedings 
founded  thereon  vacated.  In  exer- 
cise of  their  general  equitable  control 
over  their  own  judgments,  the  court 
may  and  should  consider  whotlier  they 
can  relieve  the  party  for  wliom  an  un- 
authorized appearance  is  made,  with- 
out undue  prejudice  to  the  party  wlio 
has  in  good  faith  relied  iip')n  such  ap- 
pearance, and  the  official  character  of 
the  attorney  who  appears." 

»Cyphert  v.  McClune,  22  Pa.  8t. 
195;  Spaulding  v.  Swift,  18  Vt.  214; 
Governor  v.  Lassiter,  83  N.  C.  S8; 
Bunton  v.  Lyford,  37  N.  H.  512;  75 
Am.  Dec.  144. 

"  Ellsworth  V.  Campbell,  31  Barb. 
135;  Denton  v.  Noyes,  6  Johns.  298; 
5  Am.  Dec.  237;  Decuir  i\  Le  Jeune, 
15  La.  Ann.  569. 

♦Cyphert  v.  McClune,  22  Pa.  St. 
195. 

*  Abbott  V.  Dutton,  44  Vt.  546;  8 
Am.  Rep.  394.  In  Brown  ?•.  Nichols, 
42  N.  Y.  30,  Ingall.5,  J.,  says:  "The 
law,  as  settled  in  this  state,  rests  upon 
principle  as  well  as  authority.  The 
attorney  is  an  officer  of  the  court  act- 
iug  under  oath,  and  liable  to  bo  dis- 
graced and  punished  for  such  gross 
violation  of  duty  as  to  fraudulently 
appear  in  an  action  without  authority; 
and  I  apprehend  the  instances  are  rare 
indeed  when  it  has  occurred.  Again, 
a  contrary  rule  would,  it  seems  to  me, 
be  impracticable,  as  the  title  to  real 
property  depends  to  a  great  extent 
upon  the  records  of  the  courts;  it 
would  be  a  great  liardship  to  compel 


§161 


PRINCIPAL   AND   AGENT. 


2G8 


whoso  name  an  attorney  has  prosecuted  an  unauthorized 
and  unsuccessful  ejectment  suit  is  liable  to  the  defendant 
for  the  costs.*  A  judgment  obtained  upon  the  unauthor- 
ized appearance  of  an  attorney  cannot  bo  attacked  collat- 
erally." 


§161.  Delegation  of  Authority. — The  attorney  has 
no  authority  to  delegate  his  powers  to  others;  i.  e.,  to 
employ  a  substitute;^  for  the  relation  of  attorney  and 
client  is  one  of  trust  and  confidence,  and  implies  a  per- 
sonal execution  of  the  duties  which  it  confers."*  lie  can- 
not delegate  his  authority  to  make  a  collection  to  another 
attorney,  so  that  the  client  will  be  liable  for  costs  incurred 
in  the  attempt  to  collect;*  therefore,  the  attorney  has  no 
implied  authority  to  employ  associate  or  assistant  counsel,*'' 
unless  the  case  requires  it,  and  the  client  is  absent  and 


parties  in  tracing  titles  acquired 
tlirough  such  records,  in  every  in- 
stance where  a  judgnient  has  been 
euteri'il,  to  iuiiuire  into  the  particu- 
lar auth(.-ity  which  an  attorney  had 
to  appear  i;i  ^i.eii  actions.  Indeed, 
the  ellbct  of  such  a  rule  would  be  to 
create  positive  distrust  as  to  the  sound- 
ness and  re;,;ularity  of  cuch  titles.  I 
think  t'.ie  objections  on  tie  grounds  of 
hardship  and  danger  u"ged  against 
uphol.lin^  such  appearance  by  an  at- 
torney I'e.-ib  more  in  thcorv  than  prac- 
tice. If  a  party  will  emit  to  apply 
to  the  court  for  relief  against  an 
unautliorized  anpearance  of  an  attor- 
ney, ho  should  not  be  allowed  to  at- 
tack proceedings  collaterally  upon 
such  ground." 

1  Hamilton  v.  Wright,  37  N.  Y.  502. 

-  Brown  v.  Nichols,  42  N.  Y.  30. 

"  Weeks  on  Attorneys,  sec.  24G;  In 
re  Bleakley,  5  Paige,  31 1 ;  Johnson  v. 
Cunningham,  1  Ala.  249;  Ratclilf  v. 
Baird,  14  Te.x.  43;  Kellogg  v.  Norris, 
10  Ark.  IS;  Dickson  v.  Wright,  52 
Miss.  oSa;  24  Am.  Kcp.  G77;  Smalley 
r.  (ireene,  52  Iowa,  241;  35  Am.  Rep. 
2t)7;  Danley  r.  Crawl,  28  Ark.  95. 

*  Hitchcock  V.  McGehee,  7  Port.  556; 
Kellogg  V.  Norris,  10  Ark.  18;  Pollard 
V.  Kowlaud,   2  Blackf.  22;  Cornelius 


V.  Wash,  Breese,  98;  12  Am.  Dec.  145. 
An  attorney  may  ciiiploy  an  agent  to 
receive  money  for  him  in  his  ]>rofes- 
sional  business,  and  his  act;}  will  Ijind 
the  client:  McEwcn  t'.  Mazyck,  3 
Rich.  210. 

^  Antrobus  v.  Slierman,  C5  Iowa, 
230;  54  Am.  Rep.  7. 

«  Paddock  v.  Colby,  18  Vt.  485;  Gil- 
lespie's Case,  3  Yerg.  'S'2o.  An  attor- 
ney has  no  right  to  retain  another 
attorney  at  the  client's  expcnae;  and 
that  the  client  sees  bucli  latter  attor- 
ney in  court  assisting  in  tlie  trial, 
and  does  not  object,  does  not  render 
the  client  liable:  Young  ?•.  (.'rawford, 
23  Mo.  App.  432.  An  attorney  can- 
not recover  from  his  client  fees  of  as- 
sociate counsel  without  proving  tlsat, 
at  his  client's  request,  he  has  either 
paid  or  become  responsilde  therefor: 
Cook  V.  Richer,  4  E.  1).  Smith,  2:-3. 
Where  an  attorney  enters  into  a  con- 
tract with  a  client  to  prosecute  an 
action  to  final  judgment  for  a  stipu- 
lated sum,  and  such  attorney  employs 
a  second  one  to  assist  him  in  the  case, 
the  client  will  not  be  liable  for  fees 
for  such  second  attorney  unless  he  in 
some  manner  requests  his  employment 
or  retention  in  the  case:  Sedgwick  v. 
Bliss,  Neb.  Sup.  Ct.,  1888. 


2G0 


AUTHORITY  AND  POWERS  OV    ATTORNEY. 


§  101 


Gil- 


aiKi 

ttor- 

trial, 

judcr 

liortl, 

cau- 
if  as- 
ll:at, 
jitlier 

J  for: 


uu 
Jitipu- 
Iploys 
1  ease, 
foes 
10  in 
liucnt 

Jli  V. 


cannot  bo  consulted;*  or  the  client  knows  of  the  substitu- 
tion and  accepts  the  services;"  or  the  attorney,  havini; 
prepared  the  case,  is  taken  sick,  and  employs  a  substitute 
to  argue  it.'  An  attorney  is  not  authorized  merely  by 
virtue  of  tlic  intrusting  to  him,  by  a  client,  of  a  note  for 
collection,  without  special  instructions  to  delegcue  to  an- 
other the  right  to  receive  payment  of  such  claim;  and  ii' 
the  debtor  make  payment  of  the  note  to  an  agent  of  the 
attorney,  known  to  him  to  be  such,  and  Mho  has  not  at 
the  time  the  note  or  other  evidence  of  indebtedness  in 
possession,  such  payment  is  no  defense  as  againr^t  tlio 
owner  of  the  note.'*  The  wife  of  an  attorney  has  no  au- 
thority t'^  receive  payments  of  claims  put  into  his  hand- 
for  collection.^  By  the  death  of  the  attorney  the  power- 
of  his  substitute  cease."  An  agreement  by  one  lawyer 
to  turn  over  to  another  notes  which  ho  has  in  hi.i  hands 
for  collection  cannot  be  enforced." 

Illustrations.  —  An  attorney  who  received  a  note  for  col- 
Icction  sent  it  to  another  atlornoy,  wlio  collected  the  nniount 
and  failed  to  pay  it  over.  Hchl,  that  the  first  attorney  h;id  r.o 
right  of  action  in  his  own  name  against  the  second,  unless  be 
could  ehow  some  special  property  or  lien  in  or  upon  the  anjount. 
as  a  claim  for  commissions,  or  an  iiidorsi'ment  of  the  note  in 
blank  for  collection:  Ilcrron  v.  BuUltf,  3  Snecd,  497.  Oiio  at- 
torney confided  a  note  to  another  for  collection,  and  took  hi:-; 
receipt  therefor,  but  without  giving  instructions  with  respect  li> 
the  ownership.  After  the  money  was  collected,  it  was  nMuittcil 
to  the  payee  of  the  note,  whose  name,  however,  was  indorsed  on 
the  note.  Held,  that  tliis  remittancj  (the  payee  not  being  t';o 
owner)  did  not  discharge  the  collecting  attorney  from  liability 
to  his  immediate  principal;  and  that  the  action  of  the  latter 
for  the  money  would  not  be  defeated  by  proof  that  he  was  him- 


'  r.rigg3  V.  Georgia,  10  Vt.  68. 

•'Smith  V.  Lipscomb,  13  Tex.  532. 
An  attorney  cmploj'eil  to  tlcfcnil  a 
suit,  who  is  compelleil  by  circumstan- 
ces to  engage  a  substitute  to  perforna 
the  duty,  may  maintain  an  action  for 
the  whole  servicea  rendered.  The  cli- 
ent, if  dissatiyficd  with  the  substitu- 
tion, should  tender  compensation  for 
the  services  already  reudex-eJ,  and  re- 


scind the  contract:  Fcnno  i'.  English, 
22  Ark.  170. 

'■^  Rust  V.  L-.rue,  4  Litt.  412;  14  Aiii. 
Dec.  172. 

*  Dickson  V.  Wright,  52  Mis.3.  5S5; 
24  Am.  Rep.  C77. 

"  Day  r.  Boyd,  G  Heisk.  458. 

"  Periosr.  Ayciaona,  3  Vv'atts&  8.G4. 

'  Smalley  r.  Greene,  52  loua,  241; 
35  Am.  Rej).  267. 


§102 


PKIXCIPAL  AND  AGENT. 


270 


self  tho  aRcnt  of  tho  indorsee,  unless  the  indorsee  had  assorted 
liis  rig]»t  to  tlio  n)oney  ns  ngiiinst  his  agent:  Leum  v.  Pn'k,  10 
Ala.  l-l^.  Defendants  residing  in  New  York,  and  having  a 
eliiin)  against  0.,  who  lived  in  Nebraska,  gave  it  to  a  law  and 
colleeting  ageney  in  New  York,  with  instruetions  to  eolleet. 
The  elaiin  was  forwarded  by  the  agency  to  attorneys  in  Ne- 
braska, who  obtained  judgment  by  confession,  and,  upon  exe- 
cution issued  thereon,  a  portion  of  the  judgment  was  collected; 
this  was  forwarded  to  the  agency  in  New  York,  but  no  part 
was  paid  over  to  defendants,  and  they  were  ignorant  of  the 
collection.  At  the  time  the  judgment  was  obtained,  O.  was  in- 
solvent, and  this  was  known  to  said  attorneys.  In  an  action 
by  the  assignee  in  bankruptcy  of  O,  hchl,  that  there  was  no 
relation  of  attorney  and  client  between  defendants  and  the  at- 
torneys in  Nebraska,  and  as  they  neither  authorized  any  act 
violative  of  tho  bankrupt  act,  nor  r  :tified  it,  they  were  not 
responsible  therefor,  and  plaintiff  was  not  entitled  to  recover: 
Hoover  v.  Grcenhmim,  61  N.  Y.  305.  An  attorney  residing  in  a 
particular  county  brought  an  action  in  the  district  court  of  an- 
other county,  and  after  the  filing  of  the  petition  wrote  to  a  firm 
of  attorneys  in  the  county  where  the  action  was  brought,  re- 
questing them  to  file  the  proper  pleadings  to  make  up  the  issues 
and  informed  them  that  to  enable  them  to  do  so  his  client 
would  call  upon  them  to  state  necessary  facts,  and  saying:  "I 
will  see  you  paid  for  your  trouble."  The  client  thereupon 
called  upon  the  attorneys  a  number  of  times,  and  they  filed  tho 
necessary  papers  to  make  up  the  issues,  and  assisted  in  the  trial 
of  the  case,  and  in  procuring  a  decree  for  the  client,  nothing 
being  said  by  her  to  them  about  the  contract  made  by  her  with 
the  attorney  who  filed  tho  petition,  and  they  had  no  knowledge 
of  such  contract.  Held^  that  the  client  was  liable  for  tho  fees 
of  the  attorneys  employed  to  assist  in  the  case:  Sedgwick  v. 
Bliss,  Neb.  Sup.  Ct.,  1888. 


§  162.  Law  Partnerships. — A  law  partnership  does 
not  confer  on  each  member  of  the  firm  the  ordinary  and 
extensive  powers  of  mercantile  partners.*     A  person  re- 


'  Wteks  on  Attorneys,  sec.  244.  An 
action  was  brought  against  a  firm  of 
attorneys  on  a  note  given  by  one  of 
them  for  a  firm  debt.  Held,  that  the 
burden  was  on  tl»e  plaintiff  to  prove 
that  the  other  partner  had  authorized 
the  giving  of  the  note,  or  that  it  was 
necessary  to  the  carrying  on  of  the 
firm  business,  or  that  it  was  usiial  in 
similar  partnerships:  Smith  v,  Sloan, 


37  Wis.  285;  19  Am.  Rep.  757.  "We 
gather  from  all  the  authorities, "  said 
the  court,  "that  the  distinction  be- 
tween a  trading  and  a  non-trading 
partnership,  in  respect  to  the  power  of 
a  partner  to  bind  his  copartner  by 
negotiable  instruments,  is  not  limited 
to  a  mere  presumption  of  such  author- 
ity in  one  case  and  the  absence  of  sucli 
presumption   in    the    other,    as   the 


270 


271 


AUTHORITY   AND   TOWERS   OF   ATTORNEY. 


§1G2 


taiiiing  a  firm  of  lawyers  is  entitled  to  their  joint  services, 
and  none  of  them  can  leave  his  service  and  go  on  the 
other  side  of  the  case.'  One  member  of  the  firm  may  sue 
for  a  demand  due  the  firm,''  hut  there  may  be  a  sct-olF 
against  the  firm.'  While  a  client  is  entitled  to  the  per- 
sonal services  of  the  attorney  he  retains,  yet  if  he  retains 
a  firm,  either  member  v'^an  perform  the  service;  and  if  it 
is  performed  with  the  diet's  assent  by  a  person  in  their 
employ,  the  client  cannot  vesist  paying  a  fair  compensa- 
tion on  the  ground  that  it  was  not  personally  rendered.'* 
If  attorneys,  who  are  copartners,  accept  a  retainer,  it  is  a 
joint  contract,  continuing  to  the  termination  of  the  suit, 
and  neither  can  be  released  from  the  obligations  they 
have  assumed,  so  far  as  their  clients  are  concerned,  by  a 
dissolution  of  their  firm,  or  any  other  act  or  agreement 
between  themselves."  An  attorney  cannot  bind  his  part- 
ner by  a  promise  to  indemnify  an  officer  for  committing 
one  to  jail;  but  the  partnership  may  warrant  the  inference 
that  he  acted  for  both,  and  a  subsequent  ratification  by 
the  partner  binds  him.*  One  member  of  the  firm  receiv- 
ing notes  for  collection  is  responsible  for  the  acts  of 
another  who  attends  to  the  collecting,^  and  one  partner  is 
liable  for  the  negligence  and  unskillfulnejs  of  the  other.* 

learned  connsel  for  the  plaintiff  ar- 
gued; but  we  think,  and  must  so  hold, 
that  one  partner  in  a  non-trading  part- 
nership cannot  bind  his  copartner  by  a 
bill  or  note  drawn,  asceptcd,  or  in- 
dorse*! by  him  in  the  name  of  tlie  firm, 
not  oven  for  a  debt  which  the  firm 
owes,  unless  he  have  express  authority 
therefor  from  bis  copartner,  or  unless 
the  giving  of  such  instruments  is  ne- 
cessary to  the  carrying  on  of  the  firm 
business,  or  is  usual  in  similar  part- 
nerships; and  that  the  burden  is  upon 
tlie  hohler  of  the  note  who  sues  upon 
it  to  prove  such  authority,  necessity, 
or  usage.  It  may  be  proper  to  reuiark 
in  tliis  connection,  by  way  of  illustra- 
tion, that  it  is  probably  a  usual  prac- 


tice for  one  party  in  a  firm  of  attor- 
neys to  draw  bills  in  the  firm  name 
upon  clients  for  services  and  disburso- 
meuta;   also  checks  upon  bauka  for 


partnership  funds;  and  perhaps,  also, 
to  transfer  notes  belonging  to  the  firm 
by  indorsement.  la  actions  involving 
questions  of  tlie  validity  of  such  bills, 
checks,  or  indorsements  as  against  tlio 
other  partners,  the  party  asserting 
their  validity  would  be  bound  to  es- 
tablish it  in  the  manner  above  indi- 
cated. " 

>Id.;  Walker  v.  Goodrich,  16  111. 
341 ;  Morgan  v.  Roberts,  38  III.  Go. 

^  Piatt  V.  Hulen,  23  Weml.  456. 

3  Piatt  V.  Hulen,  23  Wend.  430. 

*  Egglestoni'.  Boardman,37  Mich.  14. 

*  Walker  v.  Goodrich,  10  111.  341; 
S.  P.,  Morgan  v.  Roberts,  .38  111.  05. 

«  Marsh  v.  Gold,  2  Pick.  285. 

'  Mardis  v.  Shackleford,  4  Ala.  493; 
Dwight  i:  Simon,  4  La.  Ann.  490; 
Poole  V.  Gist,  4  McCord,  259. 

*  Warner  r.  Griswold,  S  Wend.  665; 
Livingston  v.  Cox,  G  Pa.  St.  360. 


§§  ig;3,  1G4 


nilNCIPAL   AND   AGENT. 


272 


TLM'PTitATin>:s.  —  A,  nn  nttornoy  nt  ];iw  nHrociafcil  witli  D, 
nuK'ivi  (1  from  (.'  a  dcnuuul  for  collection.  A  rctircfl  fi-oin  jTnc- 
tico  1111(1  left  till'  diiiiii  with  J>,  who  hccaiiK!  copartner  with  D; 
and  I)  iind  1)  l'n»u}.'Iit  Huit  iind  recovered  judgment  on  the  de- 
ininid,  and  the  fiheriff  collected  tho  money  on  execution,  and 
l)aid  it  over  to  P.  Ifihl,  in  an  action  hy  (I  against  A  to  iccovi  r 
the  money  collected  on  execution,  that  th(^  Blu'rifl' was  just  illeil 
in  paying  the  money  to  J),  and  that  A  was  liahlo  therel'or: 
WilLiii.^ihi  V.  (li'iuniUl,  \'l  Sniedes  <lk  M.  ()()'.).  A  law  firm  was 
cmploye(l  to  assist  in  the  prosecution  of  a  suit  in  the  htate  court, 
and  tlm  fe(>  was  contin;.'-ent  oi\  succe;s;  the  plaintid',  witliout 
consent  of  his  counsel,  dismissi'd  his  suit  helbre  trial,  ]iaiil  his 
attorneys  for  their  services  uj)  to  date,  and  em[)loyed  one  of 
tlu.'m,  after  tho  dissolution  of  th(!  ])arfnership,  to  bring  suit  in 
i\w  circuit  court  of  the  United  States  for  tho  samo  purpose. 
llrUl,  that  tliis  was  a  separate  and  distinct  suit,  and  the  old 
lirm  was  not  entitled  to  any  of  tho  foes  earned  in  tho  new  Buit: 
Tovillnsnn  v.  Pohlcy,  W.  Va.,  18H8. 

§  163.  Law  Clerks.  —  A  clerk  may  represent  the  lawyer 
in  tho  ordinary  business  of  tho  oflice,'  but,  unlike  n  part- 
ner, he  is  not  })rohil)itcd  from  commencing  business  him- 
self, and  acting  against  his  master's  former  clients.'^  But 
tho  clerk  has  no  authority  to  discontinue  an  action,^  nor 
bind  a  client  by  a  discharge  without  satisfaction.'* 


§  164.  Termination  of  Authority  —  By  Dissolution  of 
Partnership. — A  dissolution  of  a  partnership  existing 
between  attorneys  does  not  alTect  engagements  already 
made.®  In  the  absence  of  any  showing  to  tho  contrary,  a 
law  firm  will  bo  presumed  to  have  completed  its  contract 
of  retainer  even  after  dissolution.  But  the  now  firm,  al- 
though succeeding  to  tho  old  one,  cannot  rcco^'er  on  tho 
original  contract."  The  liability  of  each  member  of  a 
partnership  of  attorneys  to  collect  money  recovered  hv 
judgment  continues  after  the  dissolution  of  the  partncr- 

'  Power?'.  Kent,  1  Cow.  211;  Coojjer  *  Irvine  v.  Spring,  7  Robt.  (X.  Y.) 

V.  Carr,  8  .Tohn-..  :!G0;  Jackson  r.  Yale,  293. 

1  Cow.  215;  Birkbeck  v.  Stafford,   It  *C;irteri'.  Taluott,  10  Vt.  471. 

Abb.  Tr.  285.  =■  WoolvS    on    Attorney.-i,    tc;;.     I'JI; 

iiBroben  r.   Thorp,    1   Jacob,    300;  Walker  <•.  Gcodric'.i,  10  J 11.  ::-ll. 

Corning  v.  Cooper,  7  Paiye,  CS7.  "  Mosbicr  v.  Kitchell,  87  111.  18. 


273 


AUTIIORITV   AND    POWERS   OF   ATTORNEY. 


§1C5 


ship,  notwithstanJinf,'  such  dissolution  mav  have  taken 
phice  before  the  business  intrusted  to  them  was  completed, 
and  the  only  way  that  such  liability  can  bo  released  is  by 
notice  of  the  dissolution.  In  the  absence  of  such  notice, 
as  the  client  intrusted  his  business  to  the  firm,  he  has  a 
right  to  look  to  each  member  thereof  for  its  faithful  per- 
forraauco.* 

§  165.    Termination  of  Authority —By  Act  of  Parties.  — 

The  client  may  determine  tho  authority  by  expressly  re- 
voking it,''  but  not  without  first  paying  his  charges,'  and 
as  to  third  parties,  not  without  notice  to  them.^  A  party 
has  a  general  right  to  change  his  attorney,  and  will 
always  be  allowed  to  do  so  where  the  attorney  lias  in  his 


nor 


n tract 
1- 


11,  a 


tho 
tncr- 


(X.  Y.) 


191; 


IS. 


» Smyth  V.  Harvio,  31  111.  G2;  83 
Am.  Dec.  202. 

»  Bathgate  v.  Haakin,  59  N.  Y.  5.13; 
Langdon  v.  Caatlctou,  30  Vt.  iiSS; 
Hiizlett  V.  Gill,  5  Kobt.  Oil;  WulU  v. 
Hatch,  43  N.  II.  24U;  Ogdcii  v.  Dovlin, 
45  N.  Y.  8up.  Ct.  U;{1;  Eliot  f.  Law- 
toii,  7  Allen,  274;  83  Am.  Dec.  U8.3. 
An  attorney  cannot  defend  hit)  client's 
suit  without  his  constant,  and  such 
consent  may  bo  witlidrawn  at  any 
time.  It  is  immaterial  that  the  inter- 
ests of  another  client  of  tho  attorney 
requires  that  the  suit  should  be  de- 
fended: Yoakley  v.  Hawley,  5  Lea, 
070. 

^  Weeks  on  Attorneys,  sec.  248; 
Board  v.  Brodhead,  44  How.  Pr.  441; 
Parker  v.  Willianisburgh,  13  How.  Pr. 
250;  HofTman  v.  Van  Nostrand,  14 
Abb.  Pr.  330;  Wilkinson  v.  Tilden, 
14  Ted.  Rep.  778;  Greenfield  v.  New 
York,  28  Hun,  320;  Carver  r.  United 
■States,  7  Ct.  of  CI.  409.  Plaintifif's 
attorney  may  continue  suit  against 
defendant  to  recover  amount  of  his 
fee  after  plaintiff  has  dismissed:  Jones 
r.  Morgan,  39  Ga.  310;  99  Am.  Dec. 
458. 

*  Comfort  V.  Stockbridge,  38  Mich. 
342.  Payment  of  judgment  or  decree 
to  an  attorney  of  record,  who  obtained 
it,  before  his  authority  is  revoked,  and 
due  notice  of  such  revocation  given  to 
tile  defendant,  is  valid  and  binding  on 
Vol.  I. -18 


the  plaintiff,  so  far.  at  least,  as  the  de- 
fendant is  concerned;  Yoakum?'.  Td- 
den,  3  W.  Va.  107;  100  Am.  Dec.  738; 
Lewis  t\  Sumner,  13  Met.  200,  Sliaw, 
C.  J.,  saying:  "Nothing  is  moro  im- 
portant in  a  litigation  in  court  than 
tor  a  party  to  know  who  is  his  ad- 
versary's accredited  agent,  and  with 
whom  ho  may  safely  deal  in  that 
capacity.  Hence,  tho  great  need  in 
all  courts  of  setting  apart  officers 
recognized  as  attorney?,  and  deter- 
mining their  qualiticatioas,  rights,  and 
powers.  When,  therefore,  an  appear- 
ance is  entered  for  a  party  by  a  regu- 
lar attorney,  all  parties  liave  a  riglit 
prima  facie  to  regard  liim  as  the  ac- 
credited representative  of  sucli  party. 
It  would  be  a  great  misdemeanor  in 
an  attorney  reiulering  him  liable  to 
censure  and  punisliincnt,  as  well  as  to 
an  action  for  damages  in  a  proper  case, 
if  he  were  to  enter  an  appearance  with- 
out an  authority:  Smitli  v.  Bowditch, 
7  Pick.  137;  Field  v.  Gilibs,  Pet.  C.  C. 
I.'jS.  It  follows  from  tliis,  that  when 
once  an  attorney  has  been  recognized 
as  the  representative  of  a  party  on  tlie 
record,  he  shall  bo  presumed  so  to 
continue  until  his  authority  is  re- 
voked, and  his  appearance  withdrawn 
and  due  notice  thereof  given;  and  the 
court  of  common  pleas  and  this  court 
have  rules  prohibiting  the  change  of 
attorneys  without  notice." 


§105 


PRINCIPAL  AND   AGENT. 


274 


hands  security  for  his  charges  and  disbursements.'  But 
if  the  attorney  has  been  unfaithful  to  his  trust,  he  may 
be  ordered  to  deliver  up  such  f-ecurities.'^  A  client  can- 
not substitute  in  an  action  one  attorney  for  another, 
without  showing  some  reason  other  than  his  mere  will  to 
make  a  change,  except  on  payment  of  the  costs  and  coun- 
sel fees  earned.  The  attorney  is  not  bound  to  consent  to 
a  substitution,  or  to  deliver  the  papers  on  which  he  has  a 
lien,  until  the  amount  of  his  just  demands  is  ascertained 
by  the  court  or  a  referee,  and  paid  to  him.''  An  attorney 
once  admitted  to  represent  a  party  cannot  be  discharged 
unless  with  the  consent  of  the  court  until  the  suit  is 
ended.  While  his  name  continues  on  the  record,  the 
adverse  party  has  the  right  to  treat  him  as  the  authorized 
attorney,  and  a  service  of  notice  on  him  is  as  valid  as 
if  served  on  the  party  himself.*  The  attorney  may 
terminate  the  relation  by  withdrawing  from  the  suit  at 
any  stage  of  the  proceedings,®  but  he  is  as  a  rule  bound  to 


» In  re  Paschal  10  Wall.  483;  Mun- 
ford  I'.  Murray,  Hopk.  3G9. 

»  Sloo  V.  Law,  4  Blatchf.  208. 

'  Supervisora  v.  Brodhead,  44  How. 
Pr.  411;  compare  Supervisors  v.  Brod- 
head, 44  How.  Pr.  4-26. 

*  Walton  V.  Sug-,  Phill.  98;  93  Am. 
Dec.  .'580. 

5  In  Tenney  v.  Berger,  93  N.  Y.  524, 
45  Am.  Rep.  2G3,  48  N.  Y.  Sup.  Ot.  11, 
the  employment  of  counsel  by  the  client 
witli  whom  the  attorney  could  not  cor- 
dially co-operate,  for  personal  reasons, 
was  held  a  good  ground  for  the  attor- 
ney's witlidrawal,  and  that  he  might 
recover  for  the  services  already  ren- 
dered. Said  the  court:  "The  rule  of 
law  undoubtedly  is,  as  claimed  by  the 
defendant,  that  an  attorney  who  is 
retained  generally  to  conduct  a  legal 
procof'ling  enters  into  an  entire  con- 
tract to  conduct  the  proceeding  to  its 
termination,  and  that  he  cannot  aban- 
don the  service  of  his  client  without 
justifiable  cause  and  reasonable  notice. 
This  rule  has  been  laid  down  in  many 
authorities:  Menzies  v,  Rodrigucs,  1 
Price,  92;  Stokea  v.  Trumper,  2  Kay 


&  J.  232;  Creswell  v.  Byron,  14  Ves. 
272;  NichoUsv.  Wilson,  2Dowl.,  N.  S., 
1032;  Harris  v.  Osbourn,  2  Car.  &  M. 
629;  Whitehead  v.  Lord,  11  Eug.  L. 
&  Eq.  589;  Davis  v.  Smith,  48  Vt.  54; 
Batligate  v.  Haskin,  59  N.  Y.  535; 
2  Oreenl.  Ev.,  sec.  142;  Weeks  on  At- 
torneys, sees.  255, 316;  Cordery  on  Law 
of  Solicitors,  62.  If  an  attorney,  witli- 
out  just  cause,  abandons  his  client 
before  the  proceeding  for  which  he  was 
retained  has  been  conducted  to  its 
termination,  he  forfeits  all  right  to 
payment  for  any  services  which  he  ha.s 
rendered.  The  contract  being  entire, 
he  must  perform  it  entirely,  in  order 
to  earn  his  compensation,  and  he  is  in 
the  same  position  as  any  person  who  is 
engaged  in  rendering  an  entire  service, 
who  must  show  full  performance  be- 
fore he  can  recover  the  stipulated 
compensation.  While  the  attorney  is 
thus  bound  to  entire  performai'ne,  and 
the  contract  as  to  him  is  treated  as  an 
entire  contract,  it  is  a  singular  feature 
of  the  law  that  it  should  not  be  treated 
as  an  entire  contract  upon  the  other 
side;  for  it  is  held  that  a  client  nay 


274 


275 


AUTHORITY   AND   POWERS   OF   ATTORNEY. 


§  165 


give  reasonable  notice,'  though  Parke,  B.,  in  one  case 
said:  "Tliere  might  bo  instances  where  he  would  be  at 
liberty  to  do  so  without  notice,  because  a  case  might  occur 
so  plain  as  not  to  require  notice.""  An  attorney  is  not 
justified  in  withdrawing  from  a  case  merely  because  his 
client  refuses  to  pay  some  demand  pertaining  to  another 
proceeding.'  An  attorney  who  refuces  to  go  on  with  his 
client's  case  because  the  client  fails  to  furnish  money  must 
be  deemed  to  assent  to  the  substitution  of  another  attorney; 
and  it  is  within  the  discretion  of  the  court  to  determine 
upon  what  terms  the  substitution  shall  be  made,  and  as  to 
whether  the  judgment,  when  obtained,  shall  be  chargeable 
with  the  fees  of  the  attorney  first  employed.*     The  Mich- 


.N.S., 
&  M. 

Eiig.  L. 
Vt.  M; 
Y.   53-); 

is  on  At- 
on  Law 
ly,  with- 
client 

ch  he  was 
to   its 
right  to 
h  lie  has 
g  entire, 
in  order 
he  is  in 
in  who  is 
e  service, 
ance  he- 
tipulatctl 
torney  is 
■•■le,  and 
3d  as  an 
r  feature 
0  treateil 
he  other 
ent  nay 


discharge    his   attorney,    arbitrarily, 
^athout  any  cause  at  any  time,  and  be 
liable  to  p?v  him  only  for  the  services 
which  he  haa  rendered  up  to  the  time 
of  hia  discharge:  Ogden  v.  Devlin,  45 
N.  Y.  Sup.  Ct.  631;  Trust  v.  Repoor, 
15  How.  Pr.  570;  Gustine  v.  Stoddard, 
23  Hun,  99.    W  hat  shall  be  a  sufficient 
cause  to  justify  an  attorney  in  aban- 
doning a  case  in  which  he  heis  been 
retained  has  not  been  laid  down  in 
any  general  rule,  and  cannot  be.     If 
the  client  refuses  to  advance  money  to 
pay  the  expenses  of  the  litigation,  or 
if  he  unreasonably  refuses  to  advance 
money  during  the  progress  of  a  long 
litigation  to  his  attornr      o  apply  upon 
his  compensation,  sufficient  cause  may 
tbus  be  furnished  to  justify  the  attor- 
ney in  withdrawing  from  the  service 
of  his  client.     So  any  conduct  on  the 
part  of  the  client,  during  the  jirogress 
of  the  litigation,  which  would^aend  to 
degrade  or    humiliate   the  attorney, 
such  as  ci,' tempting  to  sustain  his  case 
by  tlie  subornation  of   witnesses  or 
any  other  unjustifiable  means,  would 
furnish  sufficient  cause.    The  attorney 
is  al  waya  interested  to  know  with  whom 
he  is  to  bo  associated  in  the  trial  of  a 
cause.    Tlie  counsel  is  supposed  to  be 
his  superior,  and  is  usually  employed 
on  account  of  his  superior  ability,  ex- 
perience,  reputation,   or  professional 
Btanding;  and  after  an  attorney  has 
engaged  in  a  cause,  it  would  seem 


to  be  quite  proper  that  he  should  be 
consulted  as  to  the  person  who  is  to 
bear  the  important  relation  to  him  of 
counsel.  The  client  would  certainly 
have  no  right,  against  the  protest  of 
the  attorney,  to  introduce  as  counsel 
in  the  case  a  person  of  bad  character, 
or  of  much  inferior  standing  and  learn- 
ing,— one  not  capable  of  giving  discreet 
or  able  advice.  It  would  humiliate  an 
attorney  to  sit  down  to  the  t.lal  of  a 
cause,  and  see  his  case  ruined  by  the 
mismanagement  of  counsel.  The  re- 
lations between  attorney  and  counsel, 
too,  are  of  a  delicate  and  confidential 
nature.  They  should  have  faith  in 
each  other,  and  their  relations  should 
be  such  that  they  can  cordially  co- 
operate. While  a  client  has  the  un- 
doubted right  to  employ  any  counsel 
he  chooses,  yet  it  is  fair  anil  proper, 
and  professional  etiquette  requires, 
that  he  should  consult  the  attorney, 
and  other  counsel  in  the  case,  so  that 
they  can  withdraw,  if,  for  any  reason, 
they  do  not  desire  to  be  associatetl 
with  them." 

'  Bathgate  v.  Haskin,  59  N.  Y.  533; 
Hoby  V.  Built,  3  Barn.  &  Adol.  350; 
Love  V.  Hall,  3  Yerg.  408. 

'  Nicholls  V.  Wilson,  11  Mees.  &  W. 
107. 

*  Cairo  etc.  R.  R.  Co.  v.  Koerner, 
3  III.  App.  248. 

♦  In  re  H.,  93  N.  Y.  381. 


§1G6 


PRINCIPAL  AND  AGENT. 


276 


igan  statute  providing  for  a  stay  of  proceedings  in  the 
cause,  for  the  appointment  by  the  client  of  another  attor- 
ney or  solicitor  in  case  "any  attorney  or  solicitor  shall 
die,  be  removed,  or  suspended,  or  cease  to  act  as  such," 
does  not  apjily  to  a  case  where  a  practicing  attorney  for 
any  reason  declines  to  go  on  with  a  particular  case  while 
still  continuing  in  practice,  but  is  intended  to  provide  for 
those  cases  only  in  which  the  attorney  or  solicitor,  by 
reason  of  death,  disability,  or  other  cause,  has  ceased  to 
practice  in  the  court.* 

Illustrations. — An  attorney,  receiving  a  claim  for  collection, 
stated  in  his  receipt  therefor  that  the  money,  when  collected, 
was  to  be  paid  to  a  third  person.  Held,  this  was  merely  au 
authority  to  the  attorney  to  dispose  of  the  proceeds  of  the  claim 
in  that  manner,  and  such  authority  could  at  any  time  be  re- 
voked: Swartz  V.  Earls,  53  111.  237.  An  attorney  residing  in 
Washington  removed  therefrom,  and  gave  up  the  management 
of  a  case  in  the  court  of  claims  to  another  attorney  without  the 
knowledge  of  his  client.  Held,  a  voluntary  withdrawal  from 
the  case,  and  the  client  was  entitled  to  have  an  attorney  of  her 
own  choosing  substituted:  Jones  v.  United  States,  15  Ct.  of  CL 
204. 

§  166.  Termination  of  Authority  —  By  Termination 
of  Suit. — The  general  authority  of  the  attorney  ceases 
with  the  entry  of  judgment,  or  at  least  the  issue  of 
execution  within  the  year.^  So  a  party  may  sue  out  a 
writ  of  execution,  scire  facias,  or  attachment  on  an  award 
or  writ  of  error,  by  a  different  attorney,  without  giving 
notice  of  the  change,^  or  commence  garnishment  proceed- 
ings.'* So  after  judgment  the  attorney  has  no  authority 
to  revive  or  reverse  the  judgment.^     The  authority  cou- 


*  Coon  ?'.  Plymouth  Flauk  Road  Co., 
32  Mich.  248. 

^  Jackson  v.  Bartlctt,  8  Johns.  3G1 ; 
Kellogg  V.  Gilbert,  10  Johns.  220;  G 
Am.  Dec.  335;  Gorham?'.  CJale,  7  Cow. 
739;  17  Am.  Dec.  549;  McLain  v. 
Watkins,  43  111.  24.  Assignment  of  a 
judgment  by  the  plaintiff  puts  an  end 
to  the  authority  of  his  attorney  in  the 
cause;  if,  indeed,  the  entry  of  judg- 
ment does  not:  Mordecai  v.  Charles- 


ton, 8  S.  C.  100.  After  judgment  in 
a  justice's  court,  there  is  an  implied 
authority  to  the  attorney  to  receive 
service  in  subsequent  proceedings: 
Clark  t\  McGregor,  55  Mich.  412. 

'*  Thorp  V.  Fowler,  5  Cow.  44(3; 
State  V.  tJulick,  17  N.  J.  L.  435;  Mc- 
Laren V.  Charrier,  5  Paige,  530;  Bur- 
gess V.  Abbott,  G  Hill,  135. 

*  Hinkley  v.  Company,  9  Minn.  55. 

"  llichardsou  v.  Talbot,  2  Bibb,  352. 


277     AUTHORITY  AND   POWERS   OP  ATTORNEY.     §§  167,  163 

tinues,  unless  expressly  revoked,  for  a  time  for  the  purpose 
of  enforcing  the  judgment.*  In  some  states,  moreover, 
it  is  held  that  the  authority  is  not  terminated  until  judg- 
ment is  satisfied.'' 

§  167.    Termination  of  Authority — By  Death.  —  The 

authority  of  the  attorney  is  revoked  by  the  death  of  the 
client,*  and  he  has  no  authority,  without  a  new  retainer, 
to  appear  for  the  client's  executor  or  administrator.* 
Where  a  party  litigant  dies  after  verdict,  the  authority  of 
his  attorney  to  act  for  him  is  thereby  determined,  and*  ho 
can  neither  give  nor  receive  notice  of  motion  for  new 
trial  or  of  appeal.'  So  the  authority  will  be  determined 
by  the  death  of  the  attorney.*  Contracts  for  the  service 
of  attorneys  who  are  partners  in  business,  calling  for 
professional  skill,  entitle  the  client  to  the  service  of  each 
partner,  and  are  determined  by  the  death  of  either  part- 
ner.' It  seems  that,  in  the  absence  of  any  special  agree- 
ment therefor,  it  is  not  the  duty  of  a  survivor  of  a  firm 
of  lawyers,  dissolved  by  death,  to  carry  on  pending  litiga- 
tion, without  charge,  for  the  benefit  of  the  estate  of  the 
deceased.* 

§  168.    Termination  of  Authority — Other  Cases. — The 

authority  is  terminated  by  the  removal  or  suspension 


^Lusk  V.  Hastiaga,  1  Hill,  656; 
Adams  V.  Bank,  23  How.  Pr.  45; 
Laiigilonv.  Castleton,  30  Vt.  285;  Gray 
V.  Wass,  1  Me.  257;  Flanders  v.  Sher- 
man, 18  Wis.  575;  Dearborn  v.  Dear- 
born, 15  Mass.  316. 

''  (iray  v.  Wass,  1  Me.  257;  Nichols 
r.  Dennis,  R.  M.  Charlt.  188;  Flan- 
dors  V.  Sherman,  18  Wis.  575. 

^  ( Ueason  v.  Dodd,  4  Met.  333;  Wood 
V.  Hopkins,  3  N.  J.  L.  689;  Putnam 
V.  Van  Buren,  7  How.  Pr.  31;  Austin 
r.  Monroe,  4  Lans.  67;  Judson  v.  Love, 
35  Cal.  463;  Risley  v.  Fellows,  10  111. 
531;  Beach  v.  Gregory,  2  Abb.  Pr. 
200;  Balbi  v.  Duvet,  3  Edw.  Ch.  418 


(except  in  extraordinary  cases,  see 
Booth  V.  Steer,  7  Jur.  078);  Hamers 
V.  State,  57  Ind.  1;  Clark  r.  Parish, 
1  Bibb,  547;  Cami)bell  v.  Kincaid,  3 
T.  B.  Mon.  68;  Adams  v.  Nellis,  59 
How.  Pr.  385;  Wilson  v.  Smith,  22 
Gratt.  493;  Amore  v.  La  Mothe,  5 
Abb.  N.  C.  146;  Doty  v.  Dexter,  61 
Mich.  348. 

*  Gleason  v.  Dodd,  4  Met.  333. 

*  Judson  V.  Love,  35  Cal.  403. 

®  Weeks  on  Attorneys,  sees.  243, 
256;  Hildreth  v.  Harvey,  3  Johns. 
Cas.  300. 

'  McGiU  V.  McGill,  2  Met.  (Ky. )  258. 

»  Sterne  v.  Goep,  20  Hun,  390. 


169 


PBINCIFAL  AND  AOENT. 


278 


from  oflBce  of  the  attorney,*  or  his  ceasing  to  act  as  attor- 
ney, or  his  removal  from  the  state,''  or  by  war.' 


§  169.  Implied  Powers  of  Attorneys.  —  The  retainer 
to  prosecute  or  defend  a  suit  confers  on  the  attorney  very 
large  powers.  A  client  who  puts  his  case  into  the  hands 
of  an  attorney  impliedly  authorizes  such  action  as  the 
latter,  with  his  superior  knowledge  of  the  law,  decides  to 
be  legal,  necessary,  and  proper  in  the  prosecution  or  de- 
fense of  the  suit.*  Agreements  made  by  attorneys  in  a 
cause,  as  to  the  manner  of  conducting  it,  will  bind  the 
clients,  and  be  enforced  by  the  courts,  even  though  they 
are  not  strictly  legal  contracts.  But  they  must  be  just  and 
equitable.*  The  client,  as  in  the  case  of  other  kinds  of 
agency,  is  bound  by  all  the  acts  of  the  attorney  within 
the  scope  of  his  authority.*    As  between  the  client  and 


•  Weeks  on  Attorneys,  sec.  248. 

^  Chautauque  Co.  Bank  v.  Rialey,  6 
Hill,  375. 

sfilackwell  v.  Willard,  65  N.  C. 
55j;  6  Am.  Rep.  749. 

♦Foster  v.  Wiley,  27  Mich.  244; 
Lacoste  v.  Robert,  11  La.  Ann.  33; 
Union  Bank  v.  Geary,  5  Pet.  98; 
Fanners'  Bank  v.  Ketchum,  4  McLean, 
120;  Hart  v.  Spalding,  1  Cal.  213; 
Gorham  v.  Gale,  7  Cow.  739;  Lawson 
t,  Bettison,  12  Ark.  401;  Commis- 
sioners V.  Younger,  29  Cal.  147;  87 
Am.  Dec.  164.  "  A  client  has  no 
right  to  interfere  with  the  attorney  in 
the  due  and  orderly  conduct  of  the 
suit,  and  certainly  cannot  olaim  to  re- 
tain a  judgmsnt  obtained,  and  an  exe- 
cution issued  fraudulently  ";  Read  v. 
French,  28  N.  Y.  293. 

*  Lockwood  V.  Black  Hawk  Co.,  34 
Iowa,  235;  McCann  v.  McLennan,  3 
Neb.  25.  In  Howe  v.  Lawrence,  22 
N.  J.  L.  99,  the  court  say:  "Juptice 
requires  that  agreements  fairly  made 
between  attorneys  o/  parties  in  the 
progress  of  a  cause,  relating  to  the 
conduct  of  suit,  should  be  fairly  and 
faithfully  enforced,  not  because  they 
are  technically  contracts,  and  legally 
binding  upon  the  parties,  but  because 
the  administration  of  justice  is  thereby 


facilitated.  An  agreement  to  waive 
an  irregularity,  to  postpone  or  delay 
a  trial,  to  take  short  notice  of  argu- 
ment, to  permit  a  cause  to  be  brought 
to  hearing  summarily,  these,  and  ar- 
rangements like  them,  do  not  partake 
of  the  essence  of  legal  contracts. 
They  are  founded  upon  no  consider- 
ation; they  require  no  mutuility;  if 
violated,  no  action  lies  for  their  breach. 
The  court  may  refuse  to  enforce  them, 
unless  reduced  to  writing  and  tiled,  or 
they  may  enforce  them  in  whole  or  in 
part,  at  their  discretion.  In  short, 
they  are  regarded  as  a  part  of  the 
machinery  for  the  conduct  of  the 
cause  entirely  under  the  control  of 
the  court,  and  they  will  be  enforced, 
or  not,  as  the  substantial  rights  of  the 
parties  and  the  ends  of  justice  may 
require.  And  undoubtedly,  in  the 
exercise  of  this  discretion,  courts  will 
see  that  if  a  mutual  agreement  bo 
made,  or  a  consent  be  given,  or  i 
waiver  of  right  be  made  upon  one  side 
in  consideration  of  a  consent  or  a 
waiver  of  right  upon  the  other,  that  it 
shall  not  be  partially  enforced,  to  the 
prejudice  of  the  rights  of  either." 

*  Weeks  on  Attorneys,  sec.  210; 
Russell  V.  Lane,  1  Barb.  519;  Cham- 
bers V.  Hodges,  23  Tex.  104;  Fairbanks 


279 


AUTHORITY  AND  POWERS   OP  ATTORNEY. 


§170 


the  opposite  party,  the  former  is  bound  by  every  act 
which  the  attorney  does  in  the  regular  course  of  practice, 
and  without  fraud  or  collusion,  however  injudicious  the 
act  may  be.*  The  client  may  be  bound  by  stipulations 
of  his  attorney,  made  before  a  suit  is  instituted.^  The 
attorney  of  a  party  has  the  exclusive  control  of  the  con- 
duct and  management  of  a  suit,  and  neither  the  party 
nor  his  agent  or  attorney  in  fact  has  authority  to  sign  a 
stipulation  for  a  continuance.'  Where  a  party  to  an  ac- 
tion has  an  attorney  of  record,  a  stipulation  signed  by 
the  party  in  person,  granting  time  to  file  a  statement,  will 
be  disregarded.  The  attorney  has  the  exclusive  manage- 
ment and  control  of  the  case;  and  his  temporary  absence 
from  the  county  ^oes  not  affect  the  rule.* 

Illustrations. — The  plaintiffs  in  a  suit  instructed  their  attor- 
ney to  settle  on  certain  terms,  coupled  with  a  certain  condition, 
and  afterwards  spoke  to  the  defendants  of  the  terras  as  terras  of 
settlement,  without  saying  anything  about  the  condition;  and 
the  attorney  never  mentioned  the  condition,  but  settled  upon  the 
other  terms  proposed,  and  the  defendants  believed  that  the  attor- 
ney had  authority  to  settle  as  he  did.  Held,  that  the  plaintiffs 
were  bound  by  the  settlement:  Peru  Steel  etc.  Co.  v.  Mlvipple 
File  etc.  Co.,  109  Mass.  464.  A  mortgagee  directed  his  attorney 
to  foreclose  by  publication.  This  the  attorney  did,  and  then 
without  orders  from  the  mortgagee  brought  suit  on  the  mort- 
gage. Held,  that  the  proceedings  by  publication  were  waived, 
the  suit  being  within  the  scope  of  the  attorney's  authority: 
Burgess  v.  Stevens,  76  Me.  559. 

§  170.  Implied  Powers  of  Attorneys  (Continued)  Ad- 
missions —  Aflldavits  —  Altering  Securities  —  Appeal  — 
Arbitration — Arrest  — Assignment  —  Attachment.  —  The 

attorney  has  authority  to  make  admissions  und  represen- 


V.  Stanley,  18  Me.  296;  Rice  r.  Wil- 
kin3,  21  Me.  558;  Sampson  v.  Ohleyer, 
22  Cal.  200;  Lawson  v.  Bettison,  12 
Ark.  401 ;  Bethel  v.  Carinack,  2  Md.  Ch. 
U3;  Nave  v.  Bainl,  12  Ind.  318;  North 
Mo.  R.  R.  Co.  V.  Stephens,  30  Mo. 
150;  88  Am.  Dec.  138. 


'  Weeks  on  Attorneys,  sec.  222. 

*  Heffermau  v.  Burt,  7  Iowa,  !^20;  71 
Am.  Dec.  445. 

'  Nightingale  v.  Oregon  Central  R. 
R.  Co.,  2  Saw.  338. 

♦  Mott  V.  Foster,  45  Cal.  72. 


§170 


PRINCIPAL  AND   AGENT. 


280 


tations  of  fact  cither  in  court  or  out  of  it.*  The  admis- 
sions of  an  attorney,  to  bind  his  client  must  be  distinct 
and  formal,  and  made  for  the  express  purpose  of  dispens- 
ing with  formal  proof  of  a  fact  at  the  trial.'^  But  if  made 
long  after  a  case  has  been  tried,  and  his  employment  is 
ended,  they  are  not  binding,'  and  his  admissions  alone 
cannot  prove  his  employment.*  Where  counsel  for  the 
plaintiff  admitted  that  he  could  not  recover  on  a  count, 
and  the  question  was  one  of  law,  it  was  held  that  as  coun- 
sel could  not  make  the  law,  his  admission  would  not  be 
binding  on  his  client.^  He  may  make  oath  to  a  petition 
in  insolvency,*  may  verify  papers  by  affidavit,'  may  sub- 
stitute one  security  for  another,*  may  bind  his  client  on 
a  recognizance  for  appeal,*  and  of  course  (and  it  is  his 

neys,  to  obtain  and  give  mutual  con- 
cessions, in  writing,  of  all  the  material 
facts,  not  intended  to  bo  controverted, 
and  so  narrow  the  litigation  to  the 
Ijrecise  matters  in  controversy.  It 
saves  expense,  avoids  surprise  and 
delay,  and  often  prevents  the  loss  of 
a  good  cause  by  an  unexpected  caU 
for  proof,  which  could  easily  have 
been  obtained,  if  it  had  been  antici- 
pated that  such  fact  would  bo  called 
in  question.  This  practice  of  adinit- 
ting  facts  is  the  more  necessary,  since 
the  disuse  of  special  pleadings,  which 
was  designed,  and  to  some  extent  had 
the  effect,  to  narrow  the  issue  ou 
record  to  some  one  or  a  few  questions 
of  fact." 

'■'  Treadway  v.  Sioux  City  etc.  R.  R. 
Co.,  40  Iowa,  52C. 

3  Waldon  v.  Bolton,  55  Mo.  405. 

*  Weeks  on  Attorneys,  sec.  225. 
s  Mitchell  V.   Gotten,   3    Fla.    136. 

Hasty,  inconsiderate  admissions  made 
by  the  attorney  in  the  course  of  a  trial 
do  not  bind  the  client,  though  ho  was 
present  and  did  not  dissent:  Davidson 
V.  GiflFord,  100  N.  C.  18. 

•  O'Ncil  V.  Glover,  5  Gray,  1 14. 
'  Wright  V.  Parks,    10  Iowa,  342; 

Bates  V,  Pike,  9  Wis.  224. 

*  Monson  v.  Hawloy,  30  Conn.  51; 
79  Am.  Dec.  233. 

•  Adams  v.  Robinson,  1  Pick.  4C1 ; 
Ricketson  v.  Compton,  23  Cal.  636; 
aliter,  Uolbrook's  Case,  5  Cow.  35. 


1  Pike  V.  Emerson,  5  N.  H.  393;  22 
Am.  Dec.  468;  Talbot  v.  McGee,  4  T. 
B.  Mon.  377;  Farmers' Rank  v.  Sprigg, 
11  Md.  389;  Smith  r.  Dixon.  3  Met. 
(Ky.)  438;  Starke  i>.  Keenan,  11  Ala. 
819;  Weuans  «.  Lindsey,  1  How. 
(Miss.)  577;  Gdkeson  v.  Snyder,  8 
Watts  &  S.  200;  Rogers  v.  Green- 
wood, 14  Minn.  333;  Harvey  v. 
Thorpe,  28  Ala.  250;  65  Am.  Dec. 
344;  Rosenbaum  ?'.  State,  33  Ala.  362; 
Central  Branch  R.  R.  Co.  v.  Shoup, 
28  Kan.  394;  42  Am.  Rep.  163;  Wil- 
son V.  Spring,  64  111.  14.  In  Lewis  v. 
Sumner,  13  Met.  272,  Shaw,  C.  J., 
said:  "The  importance  of  upholding 
agreements  and  concessions  like  the 
present,  between  attorneys  and  coun- 
sel of  litigating  parties,  is  greater 
than  it  might  seem  at  first  blush, 
and  is  enhanced  by  our  present  prac- 
tice. In  most  cases  of  controverted 
facts,  many  facts  are  embraced  in  the 
issue  which  are  not  really  in  dispute 
between  the  parties;  but  each  must 
be  prepared  to  prove  all  the  facts 
necessary  to  his  own  case,  unless  he 
can  previously  obtain  a  concession 
from  the  adverse  party,  in  a  form 
which  he  can  rely  upon  at  the  trial. 
It  is  therefore  a  wise,  useful,  and  ben- 
eficial practice,  resorted  to  by  those 
who  are  most  careful  in  preparing 
causes  for  trial,  and  a  practice  well 
deserving  to  be  encouraged  by  the 
courts,  for  the  parties,  by  their  attor- 


280 


281 


AUTHORITY   AND   POWERS   OP  ATTORNEY. 


§170 


duty  to  do  SO  in  a  proper  case)  may  take  an  appeal/  but 
may  not  agree  that  no  appeal  will  bo  taken.'  An  attor- 
ney who  tried  a  cause  below  is  not  authorized  to  appear 
in  the  appellate  court  without  a  new  retainer/^  A  con- 
tract with  an  attorney  to  attend  to  a  suit  in  the  district 
court  alone  does  not  authorize  him,  without  further  au- 
thority, to  take  the  cause  to  the  supreme  court;  nor  can 
ho  recover  compensation  for  services  in  the  supremo 
court  without  showing  that  he  was  employed  to  render 
the  service,  or  was  in  some  way  recognized  by  his  client 
as  attorney  in  the  suit.*  An  attorney  cannot  prosecute 
an  appeal  after  his  client  has  settled  the  suit,  although, 
under  a  contract  between  the  attorney  and  client  the 
former  was  to  have  as  his  compensation  part  of  the  land 
recovered,  there  being  no  question  of  an  attorney's  lien 
in  the  case.®  He  may  refer  the  cause  to  arbitration,"  but 
the  client  may  revoke  the  submission  before  it  is  acted 
on/  The  attorney  cannot  change  the  terms  of  a  submis- 
sion entered  into  by  hiy  client.*  Formerly  it  was  held 
that  there  must  be  a  case  pending  to  authorize  an  attor- 


;.  R.  R. 


'  Grosvenor  v.  Danforth,  16  Mass. 
74;  Richardson  v.  Talbot,  2  Bibb,  382; 
Bach  V.  Ballard,  13  La.  Ann.  487.  A 
city  attorney  has  power  to  take  an 
appeal  in  behalf  of  the  city:  Connett 
V.  Chicago,  114  111.  233. 

2  People  V.  Mayor,  11  Abb.  Pr.  6G; 
alttav.  Pike  v.  Kuierson,  5  N.  H.  393; 

22  Am.  Dec.  408. 

3  Covin  V.  Phy,  24  111.  37. 

*  Hopkins  v.  Mallard,  1  G.  Greene, 
117. 

'•>  Lavender  v.  Atkins,  20  Neb.  206. 

*  Buckland  v.  Conway,  16  Mass.  396; 
Stokcly  i\  Robinson,  34  Pa.  St.  315; 
Morris  v.  Grier,  76  N.  C.  410;  Lee  v. 
Grinic3,  4  Col.  185;  Talbot  v.  McGee, 
4  T.  B.  Mon.  377;  Scarborough  v.  Rey- 
nolds, 12  Ala.  252;  Coleman  v.  Grubb, 

23  Pa.  St.  393;  Brooks  v.  Durham,  55 
N.  H.  559;  Jenkins  v.  Gillespie,  10 
Smedes  &  M.  31;  48  Am.  Dec.  732; 
Cahill  V.  Benn,  6  Binn.  99;  Smith  v. 
Bossard,  2  McCord,  406;  Beverly  v. 


Stephens,  17  Ala.  701 ;  Bates  v.  Vischcr, 
2  Cal.  355;  Wado  v.  Powell,  31  Ga.  1; 
White  V.  Davidson,  8  Md.  109;  63  Am. 
Dec.  699;  Pike  v.  Emerson,  5  N.  H. 
.393;  22  Am.  Dec.  408;  Wilson  v. 
Young,  9  Pa.  St.  101;  Jones  v.  Hor- 
sey, 4  Md.  300;  59  Am.  Dec.  81 ;  Til- 
ton  v.  U.  S.  Life  Ins.  Co.,  8  Daly,  84; 
Williams  v.  Tracy,  95  Pa.  St.  308; 
Evars  v.  Kami)haus,  59  Pa.  St.  379; 
North  Whitehall  v.  Keller,  100  Pa.  St. 
105;  45  Am.  Rep.  301 ;  North  Mo.  R.  R, 
Co.  V.  Stepliens,  36  Mo.  150;  88  Am. 
Dec.  138;  alder,  Ilaynes  v.  Wright,  4 
Hayw.  (Tenu.)  313.  In  McCJinnis  i\ 
Curry,  13  W.  Va.  29,  it  is  held  that 
an  attorney  cannot  make  an  agreement 
in  'pais  to  refer  his  client'.s  cause  to 
arbitration,  though  he  may  give  such 
consent  in  open  court. 

'Colenuja  v.  Grubb,  23  Pa.  St. 
393. 

*  Jenkins  v.  Gillespie,  10  Smedea 
&M.  31;  48  Am.  Dec.  732. 


§171 


PRINCIPAL  AND  AGENT. 


282 


iicy  to  refer,'  but  that  is  probably  not  now  required.*  An 
attorney  retained  to  make  a  motion  to  change  the  place  of 
trial  has  authority  to  consent  to  a  reference  of  the  action.* 
lie  may  issue  a  capias  ad  satisfaciendum,  and  arrest  the 
defendant;*  may  sue  out  scire  facias  against  bail.*  Ho 
has  no  authority  to  assign  or  transfer  to  a  third  person  a 
note  in  his  hands  for  collection,"  nor  a  judgment  obtained 
by  his  client.^  An  attorney  to  whom  a  creditor  confides 
a  discretionary  power  to  collect  a  debt  may  bind  his 
client  by  assenting  to  an  assignment  of  the  debtor's  prop- 
erty for  the  benefit  of  his  creditors.*  He  may  direct  an 
attachment  of  property,  or  on  mesne  process,"  or  discharge 
property  from  such  attachment."* 

§171.  Implied  Powers  of  Attorneys  ( Continued )  —  Com- 
promise—  Continuance  —  Contract — Discharge — Discon- 
tinuance— Employing  Counsel —Error — Executing  Bonds 
— Execution — Guaranty. — Whether  an  attorney  or  coun- 
sel has  a  right  to  compromise  a  cause,  from  his  ordinary 
retainer,  is  a  question  on  which  the  decisions  differ.  In 
England,  after  some  hesitation,"  the  right  has  been  al- 
lowed." In  America,  some  courts  hold  that  an  attorney 
has  an  implied  authority  to  compromise  a  suit;"  others 


*  Kyd  on  Awards,  sec.  45;  Jenkins 
V.  Gillespie,  ]0  Smedes  &  xM.  31;  48 
Am.  Dec.  732. 

^  See  note  to  Hutchius  v.  Johnson, 
30  Am.  Dec.  G29. 
s  Tiffany  v.  Lord,  40  How.  Pr.  481. 

*  Hyams  v.  Michel,  3  Rich,  303. 

'  Dearborn  v.  Dearborn,  15  Mass. 
316. 

«  Goodfellow  V.  Landis,  3C  Mo.  1C8; 
Annely  v.  De  Saussure,  12  S.  C.  4S8; 
Card  V.  ''.Vullnilge,  1.8  Oliio,  411; 
Peuniman  v.  Patchiu,  5  Vt.  340;  Ter- 
huno  V.  Colton,  10  N.  J.  Eq.  21 ;  Rus- 
sell ?'.  Drummond,  0  Ind.  210;  White 
V.  Hildreth,  13  N.  H.  104. 

'  Head  r.  Gervais,  Walk.  (Miss.) 
431;  12  Am.  Dec.  677;  Boren  v.  Mc- 
Gehee,  C  Port.  432;  31  Am.  Dec.  CL>5; 
Wilson  V.  Wadleigh,  30  Mo.  490; 
Campbell's  Appeal,  2D  Pa.  St.  401;  72 


Am.  Dec.  641 ;  Mayer  v.  Blease,  4  S.  C. 
10;  Maxwell  v.  Owen.  7  Coldw.  030; 
Fassitt  ?'.  Middleton,  47  Pa.  St.  214; 
80  Am.  Dec.  535. 

*  Gordon  v.  Coolidge,  1  Sum.  537. 

'  Jenney  v.  Delesdernier,  20  Mo.  183; 
Fairbank  v.  Stanley,  18  Mo.  200;  Kirk- 
sey  V.  Jonc3,  7  Ala.  022. 

'>*  Moulton  r.  Bowker,  115  Mass.  30; 
15  Am.  Rop.  72;  Monson  v.  Hawley, 
30  Conn.  51;  79  Am.  Dec.  233;  Benson 
V.  Carr,  73  Me.  76. 

•'  Swinfen  v.  Swinfeu,  24  Beav.  549; 
2  De  Gex  &  J.  381. 

^'  Strauss  v.  Francis,  L.  R.  1  Q.  B. 
379;  Tliomas  v.  Harris,  27  L.  J.  Ex. 
35b;  Ex  parte  Wonham,  21  Week. 
Rep.  104. 

"  Wicland  v.  White,  109  Mass,  392; 
Doon  r.  Donaher,  113  Mass.  151;  Pot- 
ter V.  Parsons,  14  Iowa,  280:  Levy  v. 


282 


283 


AUTHORITY   AND   POWERS   OP   ATTORNEY. 


§171 


I  Q,  B. 

J.  Ex. 

Week. 


that  he  has  not;*  and  in  any  event  the  power  cannot  exist 
after  judgment"  or  award,'  or  against  the  consent  of  tho 


Brown,  5G  Miss.  83;  Bonnoy  v.  Mor- 
Till,  57  Me.  :}8(i;  Peoplo  v.  Quick,  92 
111.  580;  Jeffries  v.  New  York  Miit. 
Lite  Ins.  Co.,  110  U.  S.  305.  la  Do 
Louis  I'.  Mock,  2  G.  Greene,  55, 50  Am. 
Dec.  401,  it  is  said  that  equity  is  tlis- 
iucliued  to  disturb  a  comprotiiise  iimdo 
by  fill  attorney  unless  it  works  injus- 
tice, and  is  injurious  to  his  client.  In 
Whipplo  V.  VVhitrnan,  13  R.  I.  512,  43 
Am.  Rep.  42,  a  fair  compromise  made 
with  tlie  a.ssent  of  the  party  in  inter- 
est, though  witliout  tlio  knowledge  of 
the  plaintiff  of  record,  was  upheld, 
thougli  tho  court  ruled  that  an  at- 
torney had  no  implied  authority  to 
C():npromi.se.  "Tho  decisions,"  said 
Durleo,  C  J.,  "on  tho  power  of  an 
attorney  to  compromise  are  contradic- 
tory. In  England,  however,  the  doc- 
trine estublislied  by  tho  later  cases, 
after  some  vacdlation,  is,  that  tho  attor- 
ney lias  power  by  virtue  of  his  retainer 

'Smith  V.  Dickson,  3  Met.  (Ky.) 
4r>S;  Maiidevillo  v.  Reynolds,  OS  N.  Y. 
528;  Vail  v.  Jackson,  15  Vt.  314;  Der- 
wort  V.  Loonier,  21  Conn.  245;  Pick- 
ett V.  Merchants'  Bank,  32  Ark.  34G; 
Holker  V.  Parker,  7  Cranch,  452;  Hus- 
ton r.  Mitchell,  14  Serg.  &  R.  307;  16 
Am.  Dec.  50(5;  Stokely  v.  Robinson, 
34  Pa.  St.  315;  Preston  v.  Hill,  50 
Cal.  43;  19  Am.  Rep.  647;  Fitch  v. 
Scott,  3  How.  (Miss.)  314;  34  Am. 
Dec.  80;  Granger  v.  Batchelder,  54 
Vt.  248;  41  Am.  Rep.  840;  Black  v. 
Rogers,  75  Mo.  441;  Moye  r.  Cogdell, 
&J  N.  C.  93;  Adams  v.  Roller,  35 
Tl!X.  711;  Maddux  v.  Bevau,  39  Md. 
4S.");  Walden  v.  Bolton,  55  Mo.  405; 
Speurs  V.  Ledergerber,  50  Mo.  405; 
Wadhams  v.  Gay,  73  111.  415;  Am- 
brose V.  McDonald,  53  Cal.  28;  House- 
nick  V.  Miller,  93  Pa.  St.  514;  Isaacs 
V.  Zugsmith,  103  Pa.  St.  77;  Whipple 
V.  Whitman,  13  R.  I.  512;  43  Am. 
Rep.  42;  Mackey  v.  Adair,  99  Pa.  St. 
143;  North  Whitehall  v.  Keller,  100 
Pa.  St.  105;  45  Am.  Rep.  361 ;  Robin- 
son V.  Murphy,  09  Ala.  543;  Miller  v. 
Lane,  13  111.  App.  648;  Whittington 
V.  Ross,  8  111.  App.  234;  Do  Louis  v. 
Meek,  2  G.  Greene,  55;  50  Am.  Dec. 
491;  Stuck  v.  Reese,  15  Iowa,    122; 


to  compromiso  tho  action  in  which  he 
is  retained,  provided  ho  acta  ftonu  fldn 
and  reasonably,  and  tloes  not  violate 
the  positive  instructions  of  hi.s  client, 
and  tliat  tho  compromiso  will  bind  tliu 
client,  even  if  ho  does  violate  instruc- 
tions, unless  tho  violation  is  known  to 
the  adverse  party:  Swinfen  v.  Swin- 
fen,  18  Com.  B.  48^;  Swinfen  i\  Lord 
(.'helmsford,  5  Hurl.  &  N.  890;  Cham- 
bers V.  Mason,  5  Com.  B.,  N.  S.,  .'iO; 
Chown  V.  Parrott,  14  Com.  B.,  N.  S., 
74;  Prestwich  v.  Poley,  18  Com,  B., 
N.  S.,  800;  Fray  v.  Voules,  1  El.  &  K. 
839;  Butler  v.  Knight,  L.  R.  2  Ex. 
109;  Tlionias  r.  Harris,  27  L.  J.,  N.  S., 
Ex.  353;  In  re  Wood,  Ex  parte  Wen- 
ham,  21  Week.  Rep.  104.  Tho  rea.soii 
is,  tho  attorney,  within  tho  scope  of 
his  retainer,  is  considered  tho  general 
agent  of  the  client.  And  it  is  strongly 
argued  in  support  of  the  power  that  it 
ought  to  be  upheld,  both  as  a  matter 

Fritchey  v.  Bosley,  56  Md.  94;  David- 
son V.  llozier,  23  Mo.  387;  Shaw  v. 
Kidder,  2  How.  Pr.  244;  Barrett  v. 
Railroad  Co.,  45  N.  Y.  028;  Hamrick 
V.  Coombs,  14  Neb.  381;  Filby  v.  Md- 
ler,  25  Pa.  St.  204;  Treasurers  v.  Mc- 
Dowell, 1  Hill  (S.  C),  184;  20  Am. 
Dec.  100;  Pierce  v.  Brown,  8  Biss. 
534;  North  Missouri  R.  R.  Co.  v.  Ste- 
phens, 36  Mo.  150;  88  Am.  Dec.  l.'{8; 
Wctherbee  v.  Fitch,  117  111.  07;  Eaton 
V.  Knowles,  01  Midi.  020.  In  Texas, 
it  is  said  that  although  strictly  an 
attorney  has  not  authority,  as  such, 
to  compromise  a  claim,  yet  the  court 
will  only  interfere  where  tho  com- 
promise was  clearly  unreasonable, 
and  the  client  entirely  blameless  and 
free  from  laches:  Roller  r.Wooldridge, 
46  Tex.  485.  Tlie  same  view  is 
taken  in  Holker  v.  Parker,  7  Cranch, 
436. 

2  Weeks  on  Attorneys,  sec.  231,  cit- 
ing Jones  ti.  Ransom,  3  Ind.  327;  Jen- 
kins r.  Gillespie,  10  Suiedes  &  M.  31; 
48  Am.  Dec.  732;  Pondexter  i\  Ver- 
non, 9  Humph.  84;  Wilson  v.  Jennings, 
3  Ohio  St.  528. 

'^  Township  of  North  Whitehall  v. 
Keller,  100  Pa.  St.  105;  45  Am.  Rep. 
301. 


§171 


PRINCIPAL   AND   AGENT. 


284 


client.*  In  Indiana  it  is  said  that  in  extraordinary  cases 
M'horc  delay  might  prove  injurious,  and  there  is  no  oppor- 
tunity for  communication  between  an  attorney  and  his  cli- 
ent, the  former  may  compromise  a  claim  without  special 
authority.^  In  a  number  of  cases  the  courts,  while  recog- 
nizing the  principle  that  the  attorr  oy  has  no  implied  au- 
thority to  compromise,  have  refused  to  set  aside  such 
compromises  when  fair  and  judicious,  and  not  to  the  in- 


of  publio  policy  and  for  the  good  of 
tlio  client,  iuamniich  as  tliu  attorney 
gnnurally  knows  vastly  better  than  the 
client  whether  it  is  better  to  risk  the 
trial  of  the  suit  or  to  compromise  it, 
and  is  often  called  upon  to  do  the  one 
or  the  other  sudileidy  in  the  absence  of 
the  client:  See  Wharton  on  Agency, 
sec.  51)0.  The  English  doctrine  linda 
support  in  a  few  American  cases: 
Wicland  v.  White,  109  Mass.  302; 
Potter  V.  Parsons,  14  Iowa,  28(5; 
Holmes  V.  Rodgers,  ISCal.  191;  North 
Miisouri  R.  R.  Co.  v.  Stephens,  3G 
Mo.  150;  88  Am.  Dec.  138;  Reinholdt 
V.  Alberti,  1  Binn.  469;  but  the  main 
current  of  decision  in  this  county  runs 
powerfully  against  it:  Weeks  on  At- 
torneys at  Law,  sec.  228;  Ambrose  v. 
McDonald,  53  Cal.  28;  Preston  v.  Hill, 
50  Cal.  43;  19  Am.  Rep.  647;  Levy  v. 
Brown,  56  Miss.  83;  Picket  v.  Mer- 
chants' Nat.  Bank  of  Memphis,  32 
Ark.  340;  Walden  v.  Bolton,  55  Mo. 
405;  Man.levillew.  Reynolds,  68  N.  Y. 
528;  Wadhams  v.  Gay,  73  111.  415; 
People  V.  Quick,  92  111.  680.  The 
American  courts,  however,  show  a 
leaning  in  favor  of  such  compromises, 
when  lairly  made,  and  readily  uphold 
them  if  they  can  find  grounds  on 
which  to  do  so.  'Although,'  says 
Chief  Justice  Marshall,  in  Holker  v, 
Parker,  7  Cranch,  430,  452,  '  an  attor- 
ney at  law  merely  as  such  has,  strictly 
speaking,  no  right  to  make  a  com- 
promise, yet  a  court  would  be  disin- 
clined to  disturb  one  which  was  not 
so  unreasonable  in  itself  as  to  be  ex- 
claimed against  by  all,  and  to  create 
an  impression  that  the  judgment  of  the 
attorney  has  been  imposed  on  or  not 
fairly  exercised.'  See  also  Roller  v. 
Wooldridge,  46  Tex.  485;  Potter  v. 
Parsons,  14  Iowa,  286.    In  the  case 


at  bar  there  are  several  reasons  why 
the  court  should  not  disturb  the  com- 
promise. Tiie  compromise  was  in 
itself  fair  and  reasonable,  if  not  emi- 
nently ailvantageous.  Wc  mention 
this  rather  as  a  favorable  feature  than 
as  an  absolute  reason  for  upholding 
the  compromise,  since  a  party  who 
prefers  litigation  to  settlement  is  gen- 
erally entitled  to  enjoy  his  preference: 
Fray  v.  Voules,  1  El.  &  E.  839.  The 
case  here,  however,  was  peculiar  in 
its  circumstances.  The  plaintiff  was 
suing,  not  for  himself,  but  as  trustee 
for  his  wife.  She  was  the  real  owner, 
so  to  speak,  of  the  lawsuit.  Under 
our  statute  (Gen.  Stat.  R.  I.,  c.  152, 
sec.  6),  she  might,  for  aught  we  can  see, 
have  assigned  for  valuable  considera- 
tion her  equitable  or  beneficial  interest 
in  the  suit,  or  in  the  debt  sued  for, 
absolutely  and  without  joinder  witli 
her  husband,  to  some  third  person,  or 
even  to  the  defendant  himself.  But  if 
she  had  the  right  to  do  this,  we  do  not 
see  why  she  had  not  also  tiie  right,  in 
the  absence  of  her  husband,  acting 
under  the  advice  of  trustworthy 
friends,  to  enter  into  a  fair  and  rea- 
sonalde  compromise  of  the  suit.  To 
hold  that  the  husband  might  arbi- 
trarily reject  a  compromise  which  she 
desired,  would  be  to  put  her  com- 
pletely at  his  mercy.  It  seems  to  us 
that  the  most  M'hich  he  cotdd  require, 
considering  his  purely  titular  relation 
to  the  suit,  would  be  indemnity  for 
his  costs  and  expenses  as  trustee, 
which,  in  the  case  here,  he  seems  to 
have  substantially  got  in  the  settle- 
ment. " 

1  Preston  v.  Hill,  50  Cal.  43;  19  Am. 
Rep.  64''. 

'^  Union  Mut.  Life  Ins.  Co.  v,  Bu- 
chanan, 100  Ind.  63. 


284 


285 


AUTHORITY   AND   POWERS   OP   ATTORNEY. 


§171 


c.  lui] 


jury  of  tlio  client.'  An  attorney  cmploycJ  to  obtain  pos- 
session of  real  estate  by  legal  proceedings  cannot  bind 
his  principal  by  an  agreement  to  pay  a  sum  of  money  for 
the  possession.'*  If  orders  be  given  by  the  creditor  to  an 
attorney,  "to  obtain  immediate  security"  for  a  demand, 
the  whole  manner  of  doing  it  is  left  in  the  discretion  of 
the  attorney,  and  the  creditor  is  bound  by  his  acts.'  An 
attorney  who  is  a  director  in  a  railroad  company,  and  is 
oj^enly  employed  to  prosecute  a  suit  against  the  road,  may 
compromise  the  suit  and  recover  his  fees  for  legal  services 
in  the  case.*  Where  an  attorney  compromises  his  client's 
claim  without  express  authority,  the  client  may  ignore 
such  settlement  and  recover  from  the  adverse  party  the 
full  amount  of  his  demand.®  lie  has  authority  to  agree 
to  a  continuance."  He  cannot  contract  for  the  sale  of 
land,^  nor  to  refund  money  overpaid,*  nor  can  ho  contract 
generally  as  to  the  subject  of  the  litigation."  An  attor- 
ney has  no  authority,  by  virtue  of  his  employment  as 
such,  to  instruct  a  sheriff  to  conduct  a  business,  such  as  a 
restaurant,  upon  which  an  attachment  has  been  levied, 
and  thereby  bind  his  client  for  the  expenses  incurred.*'' 
He  cannot  discharge  the  debt  without  satisfaction."  Ho 
may  dismiss  or  discontinue  an  action;*'*  or  agree  to  a  non- 
suit."   He  has  no  authority  to  enter  a  retratix}*    In  an 


•  Whipple  V.  Whitman,  13  R.  I.  512; 
43  Am.  Rep.  42;  Williams  v.  Nolan, 
58  Tex.  708;  Black  v.  Rogers,  75  Mo. 
441. 

^  Stuck  V.  Reese,  15  Iowa,  122. 
»  Rice  V.  Wilkins,  21  Me.  558. 

*  Christie  v.  Sawyer,  44  N.  H.  298. 
'Jones  V.  Inness,  32  Kan.  177. 

"  Weeks  on  Attorneys,  sec.  23G;  but 
not  to  agree  with  other  attorneys  not 
to  try  causes  during  a  particular  time: 
Robert  v.  Commercial  Bank,  13  La. 
628;  33  Am.  Dec.  570, 

'Burkhardt  v.  Schmidt,  10  Phila. 
118. 

■*  Ireland  v.  Todd,  36  Me.  149. 

•Annely  v.  De  Saussure,  12  S.  C. 
488. 


"  Alexander  v.  Denaveaux,  53  Gal. 
663. 

"  Kellogg  V.  Gilbert,  10  Johns.  220; 
6  Am.  Dec.  335;  Simonton  v.  Barrell, 
21  Wend.  3G2. 

I'^Gailard  v.  Smart,  6  Cow.  385; 
McLeran  v.  McNainara,  55  Cal.  508; 
Paxton  V.  Cobb,  2  La.  137;  Rogers  %•■ 
Greenwood,  14  Minn.  .333.  An  attor- 
ney for  the  defendant  in  an  action  in 
ejectment  has  authority  to  bind  his 
client  by  a  stipulation  to  dismiss  a  de- 
mand by  defendant,  under  the  statute, 
for  a  second  trial:  Bray  v.  Doljeuey, 
Minn.,  1888. 

"  Lynch  v.  Cowell,  12  L.  T.  548. 

"  Lambert  v.  Saodford,  2  Blackf. 
137;  18  Am.  Dec.  149. 


§172 


PRINCIPAL   AND  AGENT. 


280 


action  ngainst  a  married  woman,  tho  court  will  not  sanc- 
tion an  order  of  discontinuance,  entered  on  the  plaintiff's 
consent,  without  tho  knowledge  of  tho  defendant's  coun- 
sel; for  the  court  is  called  uj^on  to  protect  her  and  her 
counsel  and  attorney  from  such  consent.'  He  cannot 
employ  counsel,^  nor  pledge  his  client's  credit  for  fees.^ 
He  may  order  briefs  printed  at  the  client's  expense.*  Ho 
has  power  to  bring  a  writ  of  error  to  revise  a  judgment/' 
lie  may  execute  a  recognizance  on  appeal."  But  it  has  been 
held  that  he  has  no  authority  to  indemnify  a  person  who 
becomes  a  surety  on  an  injunction  bond,'  or  to  execute  a 
replevin  bond.*  He  may  sue  out  an  execution  or  an 
alias  execution,'  and  control  tho  execution.*"  Ho  has  no 
authority  to  stay  an  execution."  An  attorney  who  is  em- 
ployed to  prosecute  a  suit  for  the  collection  of  a  claim 
has  implied  authority  to  sign,  in  his  client's  name,  an 
agreement  to  indemnify  the  sherifif  for  a  levy  on  exe- 
cution." An  attorney,  though  authorized,  is  not  bound 
to  receive  money  collected  for  his  client  on  execution.** 
Ho  may  give  an  ofiBcer  indemnity  for  serving  an  execu- 
tion." Ho  may  not  bind  his  client  to  indemnify  a  third 
party  who  has  become  his  security  in  an  injunction  suit.'* 
He  cannot  indorse  a  note  left  with  him  for  collection." 

§  172.    Implied   Powers  of  Attorney    (Continued)  — 
Judgment  —  Payment. — He  may  confess  or  agree  to  con- 

'  Narragangus  Prop.  v.  Wentworth, 
36  Mc.  3:i9. 

»  Cheever  v.  Mi.  rick,  2  N.  H.  376. 

!»  Read  v.  French,  28  N.  Y.  293. 

'^  Reynolds  v.  Ingersoll,  11  Smedes 
&  M.  249;  49  Am.  Dec.  87;  contra, 
Albertson  v.  Goldaby,  28  Ala.  711;  65 
Am.  Dae.  380. 

'*  Sfihoregge  v.  Gordon,  29  Minn.  367. 

"  Poole  V.  Gist,  4  McCorJ,  259. 

"  Clark  V.  Randall,  9  Wis.  135;  76 
Am.  Dec.  252. 

'*  White  V.  Davidson,  8  Md.  169;  68 
Am.  Dec.  699. 

1*  Child  V.  Eureka  Powder  Works, 
44  N.  H.  354;  White  v.  HUdreth,  13 
N.  H.  104. 


'  McKenzie  v.  Rhodes,  13  Abo.  Pr. 
337;  21  How.  Pr.  467. 

'  Unless  the  client  be  absent:  Briggs 
V.  Georgia,  10  Vt.  68;  but  a<io  Rogers 
1).  McKenzie,  81  N.  C.  16*. 

^  Mostyn  v.  Mostyn,  L.  R.  5  Ch. 
457. 

*  Weisse  v.  New  Orleans,  10  La. 
Ann.  46;  Williamson-Stewart  Paper 
Co.  I'.  Bosbyshell,  14  Mo.  App.  534. 

*  Grosvenor  v.  Danforth,  16  Mass. 
74. 

'  Adams  v.  Robinson,  1  Pick.  462; 
but  see  Ex  parte  Holbrook,  5  Cow.  35; 
Clark  V.  Courser,  29  N.  H.  170. 

'  White  V.  Davidson,  8  Md.  169;  63 
Am.  Dec.  699. 


280 


287 


AUTHORITY   AND    POWERS   OP   ATTORNEY. 


§172 


IIo 


third 
suit.'^ 


16 


fcss  judgment.'  Where  one  was  arrested  on  a  charge 
of  viohiting  a  city  ordinance,  gave  an  invalid  rocog- 
ni/anco  in  three  hundred  dolhirs  to  appear  for  trial,  but 
failed  to  appear,  and  money  to  that  amount,  taken  from 
him  by  the  arresting  oflficer,  was  placed  in  the  hands  of 
the  city  attorney,  it  was  held  that  an  attorney  moroly  re- 
tained in  the  defense  had  no  authority  to  direct  that  the 
money  bo  paid  into  the  city  treasury.*  IIo  may  receive 
payment  of  a  judgment,"  or  give  a  receipt  for  money  due;* 
'•eceive  payment  of  a  debt  due  the  client,^  or  receive  part 
payment.*  The  employment  of  an  attorney  at  law  to 
examine  the  title  to  lands  on  which  a  mortgage  loan  is 
about  to  be  made  does  not  authorize  him  to  receive,  as 
agent  of  the  proposed  lender,  his  employer,  money  from 
the  borrower,  to  bo  used  in  satisfying  prior  liens.  His 
duty  extends  only  to  ascertaining  and  reporting  the  liens. 
If  the  borrower  furnishes  him  with  money  to  pay  them, 
and  he  misapplies  it,  the  employer  is  not  liable.'  A  so- 
licitor or  agent  who  is  employed  to  procure  the  assign- 
ment of  a  bond  and  mortgage,  or  to  invest  money  upon 

>  Denton  v.  Noyes,  G  Johns.  298;  5  Scott,  21  Ar'.,:.  396;  Erwin  v.  Blake,  8 

Am.  Dec.  237;  Lyon  v.  Williams,  42  Pet.  17;  Yoakum  v.  TiMea,  3  W.  Va. 

Ga.    108;  Thompson  v.    Pershing,  86  167;   100  Am.    Dec.   738;   Harper   v. 

Inil.  303;  Potter  v.  Parsons,  14  Iowa,  Harvey,  4  W.  Va.  5^9. 

28G;  Farmers'  Bank  v.  Sprigg.  11  Md.        *  Yoakum  v.  Tilden,  3  W.  Va.   1()7; 

389;   Holmes  v.  Rogers,  13  C'al.   191;  100  Am.  Dec.  738;  Miller  v.  Scott,  21 

Jones   V.   Williamson,   5    Cold.    371;  Ark.  396. 

contra,   Edwards  v.  Edwards, .  29  La.        ''  Yates  v.  Freckleton,  2  Doug.  623; 

Ann.  597;  People  v.  Lamborn,  2  111.  Langdonv.  Potter,  13  Mass.  319;  Ely 

123;  Wadhams  v.  Gay,  73  111.   415;  v.  Harvey,  6  Bush,  620;  Carroll  Co.  v. 

riisterr.  Wade,  69  Cal.  133.  Cheatham,  48  Mo.  38.");   Ruckman  v. 

'*  Bloomington  v.  Heiland,  67  111.  278.  Allwood,  44  111.  183;  Miller  v.  Scott, 

'  Johnson  v.  Gibbons,  27  Gratt.  632;  21  Ark.  396;  McCarver  «.  Nealey,  1  G. 

Frazier  v.  Parks,  56  Ala.  363;  Langdon  Greene,  360;  Gray  v.  Wass,  1  Me.  257; 

V.  Potter,   13  Mass.   320;   Wilson  v.  Branch  r.  Burnley,  1  Call,  147;  Megary 

Stokes,  4  Muof.  455;  Brackett  v.  Nor-  v.  Funtis,  5  Sand.  376;  Ducett  v.  Cun- 

to.;,  4  Conn.  617;   10  Am.  Dec.   179;  ningham,  39  Me.  386;  Erwin  v.  Blake, 

Carroll  Co.  v.  Cheatham,  48  Mo.  385;  8  Pet.  18;  Patten  v.  FuUerton,  27  Me. 

Conway  Co.  ».  Little  Rock  R.  R.  Co.,  58;   State  v.   Hawkins,  28  Mo.    .36(); 

39  Ark.  50;  Wycoff  v.  Bergen,  1  N.  Varley  v.  Garrad,  2  Dowl.  Pr.  490; 

J.  L.  214;  McCarver  v.  Nealey,  1  G.  Hudson  v.  Johnson,  1  Wash.  (Va.)  9; 

Groenc,   360;    State  v.    Hawkins,   28  Carroll  Co.  v.  Cheatham,  48  Mo.  383; 

Mo.  306;  Ely  v.  Harvey,  6  Bush,  620;  Jackson  v.  Mayor,  78  Ga.  343. 

McDonald  v.  Todd,  1  Grant  Cas.  17;        «  Pickett  v.  Bates,  3  La.  Ann.  627. 

Branch  v.  Burnley,  1  Call,  147;  Rogers        '  Josepbthal  v.  Heyman,  2  Abb.  N. 

f.  iMcKenzie,  81  N.  C.  164;  Miller  v.  C.  22. 


§172 


PRINCIPAL  AND   AGENT. 


288 


such  securities,  is  not  thereby  authorized  to  receive  cither 
the  principal  or  interest,  where  his  client  or  constituent 
takes  and  retains  the  possession  of  the  securities.*  lie 
may  not  receive  payment  in  anything  hut  lawi'iil  money ,'^ 
He  cannot  take  depreciated  money;'  as  confederate  notes.'* 
lie  cannot  take  real  estate,"  nor  other  securities,"  nor 
a  bond,'  nor  county  warrants,*  nor  notes  of  third  per- 
sons," nor  a  draft  on  a  third  person,'"  nor  an  assignment 
of  another  judgment."  Although,  as  a  general  rule,  where 
a  note  has  been  left  with  an  attorney  with  authority  to 
receive  payment  thereof,  payments  made  to  such  attor- 


1  Williams  v.  Walker,  2  Sand.  Ch. 
32'). 

"•^kent  V.  Ricaras,  3  Md.  Ch.  392; 
Campbell  r.  Bagley,  10  La.  Ann.  172; 
Wright  ('.  Daily,  20  Tex.  730;  Clark  v. 
Kingsland,  1  Sincdos  &  M.  248;  Nolan 
V.  Jackson,  Hi  111.  272;  Lawson  r.  Bct- 
tison,  12  Ark.  408:  Walker  r.  Scott.  13 
Ark.(>44;  West  c  Ball,  12  Ala.  340;  Mil- 
Ijr  i\  Kilmonston,  8  Blackf.  291;  Com- 
iiiissioners  v.  Rose,  1  Dcsaus.  Eq.  409; 
Huston  /'.  Mitchell.  14  Scrg.  &  R.  307; 
10  Am.  Dec.  500;  Wilkinson  r.  Hollo- 
way,  7  Leigh,  277;  (Jivens  ?'.  Briscoe, 
3  J.  J.  M;irsh.  529;  TrumhuU  v.  Nich- 
olson, 27  111.  149;  Maddux  r.  Bovan, 
39  Md.  493;  Moye  v.  Cogdcll.  09  N.  0. 
93;  Wiley  v.  Mahood,  10  W.  Va.  200; 
Kent  V.  Chapman,  18  W.  Va.  4So;  Me- 
Carver  v.  Nealey,  1  G.  Greene,  300; 
Perkins  v.  Grant,  2  La.  Ann.  328; 
Lord  V.  Burbank,  18  Mo.  178;  Baldwin 
V.  Merrill,  8  Humph.  132;  Lewis  i\ 
Woodruff,  15  How.  Pr.  539;  Pendexter 
V.  Vernon,  9  Humph.  84;  Bigley  r. 
Toy,  08  Iowa,  087.  (In  Livingston  v. 
Radoliff,  G  Barb.  201,  it  was  held  that 
ho  might  take  part  in  money  and  part 
in  a  good  short  note.)  Herriman  v. 
Shomon,  24  Kan.  387;  30  Am.  Rep. 
201.  An  attorney  employed  to  collect 
a  note  has  no  implied  authority  to  ac- 
cept wood  in  payment  thereof:  Pitkin 
V.  Harris,  23  Mich.  017. 

»  Trumbull  v.  Nicholson,  27  HI.  149; 
West  V.  Ball,  12  Ala.  340;  Chapman  v. 
Cowies,  41  Ala.  103;  91  Am.  Dec.  508; 
Davis  V.  Leo,  20  La.  Ann.  248;  Law- 
son  V.  Bcttisou,  12  Ark.  401. 

*  Harper  v.  Harvey,  4  W.  Va.  539; 


Alspaugh  V.  Jones,  04  N.  C.  29;  Railcy 
V.  Bagley,  19  La.  Ann.  172;  Davis  tu 
Lee,  20  La.  A'ln.  248.  Uide.ss  from 
the  situation  of  the  parties  assent  to 
the  receipt  of  such  money  mr.y  bo  pre- 
sumed: Ellis  V.  Heptiustall,  8  W.  Va. 
388. 

*  Huston  V.  Mitchell,  14  Serg.  &  R. 
307;  10  Am.  Dec.  500;  Stackhouse  v. 
O'Hara,  14  Pa.  St.  88,  the  court  say- 
ing: "  The  limitations  as  to  his  author- 
ity imposed  on  him  by  the  law  relate 
generally  to  compromises,  such  as  sub- 
stituting one  thing  for  another,  as  land 
for  money,  or  to  acts  after  judgment. 
These  are  without  the  range  of  that 
professional  learning  and  skill  which 
constituted  in  fact  the  groundwork  of 
the  relation  of  counsel  aud  client." 

«  V/alkerv.  Scott,  13  Ark.  034. 

'  Maddux  v.  Bevan,  39  Md.  485; 
Smock  V.  Dade,  5  Rand.  039;  10  Am. 
De.;.  780;  Kirk  v.  Glover,  6  Stew.  &  P. 
34C. 

f'  Herriman  v.  Shomon,  24  Kan.  387; 
30  Am.  Rep.  201. 

•  Jones  V.  Ransom,  3  Ind.  327;  Jeter 
V.  Hiiviland,  24  Ga.  252;  Cook  v. 
Bloodgood,  7  Ala.  083;  Langdon  v. 
Potter,  13  Mass.  319;  Garvin  v.  Low- 
rey,  7  Smedes  &  M.  2t;  Miller  v.  E'- 
monston,  8  Blackf.  291. 

"»  Moyev.  Co«dgll,  09N.C.  93;Drain 
V.  Doggett,  41  lova,  082;  Graydon  v. 
Patterson,  12  Iowa,  250.  He  may  ac- 
cept as  payment  a  check  which  is  duly 
paid  by  a  bank  on  which  it  is  drawn: 
Harbach  v.  Colvin,  73  Iowa,  038. 

''  Clark  V.  Kingsland,  1  Smedes  &) 
M.  248. 


288 


289 


AUTHORITY   AND   POWERS    OF   ATTORNEY 


S   172 


Ho 


387; 


ney  in  specific  articles,  instead  of  money,  would  not 
be  good  payments  and  binding  on  the  prinei[)al,  yet  if 
one  of  such  payments,  so  made  to  the  attorney,  is  r(>eeived 
by  the  principal,  and  the  note  is  stiil  suirered  to  remain 
in  the  hands  of  the  attorney,  and  no  objection  is  made 
e?lher  to  the  attorney  or  to  the  debtor,  such  i)ayments 
would  go  in  discharge  of  the  note  in  the  same  way  as  if 
they  had  been  made  in  money/  lie  may  not  receive 
payment  after  the  relation  of  attorney  and  client  has 
ceased,*^  or  after  notice  by  the  client  to  the  debtor  not  to 
pay  hini.^  A  solicitor  in  chancery  has  no  authority  by 
virtue  of  his  position  to  assign  a  decree  obtained  for  his 
client  for  less  than  the  full  amount/  A  fraudulent  re- 
ceipt for  the  amount  of  a  judgment  in  favor  of  his  client 
is  not  binding  on  the  latter/  Under  a  general  authority 
to  collect  debts  by  suit,  and  to  appear  in  and  <lefend  actions, 
he  may  not  bid  for  his  principal  at  a  sheriff's  sale  of  land 
mortgaged  to  the  principal."  He  is  merely  agent  of  his 
client,  and  the  title  to  the  property  which  he  collects  is  in 
the  client,  and  not  iu  liim/ 

Illistuations. — An  order  of  condemnation  of  a  water  right 
was  rendered,  conditioned  upon  the  payment  within  a  year  of 
the  damages  found.  Held,  that  a  payment  to  the  attorney  who 
conducted  the  proceedings  did  not  bind  the  client,  the  attor- 
ney's authority  ending  with  the  termination  of  the  proceedings: 
Ted  V.  Jjartth,  08  Ind.  801.  A  person  places  a  note  in  the  hands 
of  an  attorney  for  collection,  and  takes  from  him  a  receipt  for  it 
in  his  own  name,  but  does  not  claim  it  as  his  own,  nor  any  lien 
upon  it,  and  the  note  itself  is  payable  to  a  third  pers^on,  and 
not  indorsed.  Held,  that  a  payment  by  the  attorney  of  the 
proceeds  of  the  note  to  the  payee  will  discharge  liim  from  all 
liability  to  the  person  who  placed  the  note  in  his  hands:  Perk 
V.  Wallace,  19  Ala.  219.  A  warrant  for  the  payment  of  j)ublic 
money  is  properly  issued  to  A,  or  his  attorney,  and  the  attorney 
sells  it  to  one  who  buys  it  in  good  faith.    Held,  that  such  buyer 


'Fatten  r.    Fiillerton,  27   Me.    58; 
see  Biild     a  v.  Morrill,  8  Humph.  132. 
•^  Ruckmau  v.  Alwooil,  44  111.  183. 

*  Weist  V.  Leo,  3  Yeates,  47. 

•  Rice  V.  Troup,  G2  Miss.  186. 

Vol.  I.  — 19 


*Clialfants  v.  Martin,  25  W.  Va, 
394. 

«  Fife  V.  Bolilen,  22  Fetl.  Rop.  878. 

'  Cotton  V.  Sharpstcin,  14  Wis.  2l'0;. 
80  Am.  Dec.  774. 


§173 


PRINCIPAL   AND   AGENT. 


290 


is  not  liable  to  A:  McCloshcy  v.  Suiro,  64  Cal.  485.  An  attor- 
ney recovered  judgment  on  Iub  principal's  claim  given  him  to 
collect.  Held,  that  he  could  not,  without  express  authority, 
waive  his  client's  judgment  lien  by  filing  the  claim  in  proceed- 
ings for  a  distribution  of  the  proceeds  of  a  sale  of  the  debtor's 
property  under  a  deed  of  trust:  Horsey  v.  Chew,  G5  Md.  655. 

§  173.  Implied  Powers  of  Attorneys  (Continued) — 
Process — Purchase — Release — Sell — Set-off — Sue —  Sup- 
plementary Proceedings  —  Waivers  and  Releases.  —  He 

cannot  direct  a  levy  of  goods  upon  process,^  or  accept 
service  of  a  summons  on  his  client.^  He  has  no  author- 
ity to  admit  service  of  the  original  summons  which  com- 
mences the  action.^  Ho  may  buy  in  his  client's  property 
at  a  sheriff's  sale.^  He  has  no  power, -yzXitfc  officii,  to  pur- 
chase for  his  client  at  a  judicial  sale  land  sold  under  a 
mortgage  held  by  the  client.*  An  attorney  to  collect  a 
demand  has  no  authority  to  release  a  surety  thereon  with- 
out satisfaction,*  nor  the  indorser  of  a  note.'  He  has  no 
power  to  release  or  discharge  his  client's  claim,  or  a  judg- 
ment obtained  by  him,  without  payment.^  He  cannot  sell 
or  assign  a  judgment  of  his  client,"  or  sell  notes  left  with 
him  for  collection,*"  or  other  claims,"  or  transfer  notes  left 


*  Averill  v.  Williams,  4  Denio,  295; 
47  Am.  Dec.  232;  and  indemnify  the 
officer  making  it  therefor:  Clark  v. 
Randall,  9  Wis.  135;  76  Am.  Dec.  252. 

■*  Reed  V.  Reed,  19  S.  C.  548;  Starr 
V.  Hall,  87  N.  C.  381. 

'  Masterson  v.  Le  Claire,  4  Minn. 
163;  Starr  v.  Hall,  87  N.  C.  381;  Reed 
V.  Reed,  19  S.  C.  648. 

*  FaboU  V.  Boyken,  55  Ala.  383; 
contra,  Beardsley  v.  Root,  11  Johns. 
464;  6  Am.  Dec.  386;  Averill  v.  Wil- 
liams, 4  Denio,  29.5;  47  Am.  Dec.  253. 

*  Savery  v.  Sypher,  6  Wall.  157. 

'  Givens  v.  Briscoe,  3  J.  J.  Marsh. 
629;  Savings  Inst.  v.  Chinn,  7  Bush, 
639;  StoU  v.  Sheldon,  13  Neb.  207. 

'  Varnum?>.  Bellamy,  4  McLean,  87; 
East  River  Bank  v.  Kennedy,  9  Bosw. 
643. 

*  Harrow  v.  Farrow,  7  B.  Mod.  126; 
45  Am.  Dec.  GO;  Chambers  v.  Miller, 


7  Watts,  63;  Tankersley  v.  Anderson, 
4  Desaus.  Eq.  44;  Beers  v.  ilendrick- 
son,  45  N.  Y.  665;  Mandeville  v.  Rey- 
nolds, 68  N.  Y.  528;  Carsten'i  v.  Barn- 
Btorf,  11  Abb.  Pr.,  N.  S.,  442;  Gilliland 
V.  Gasque,  6  S.  C.  406. 

»  Maxwell  r.  Owen,  7  Cold.  630; 
Baldwin  v.  Merrill,  8  Humph.  139; 
Campbell's  Appeal,  29  Pa.  St.  401 ;  72 
Am.  Dec.  641?  Rowland  v.  State,  58 
Pa.  St.  196;  Mayer  v.  Blease,  4  Rich. 
10;  Head  v.  Gorvais,  Walk.  (Miss.) 
431;  12  Am.  Dec.  577;  Fassitt  r.  Mid- 
dleton,  47  Pa.  St.  214;  86  Am.  Dec. 
5.35;  Clark  v.  Kingsland,  1  Smedes  & 
M.  256;  Wilson  v.  Wadleigh,  36  Me. 
496;  Boren  r.  McGehe6,  6  Port.  432; 
31  Am.  Dec.  695. 

"Goodfellow  V.  Landis,  36  Mo.  168. 

"  Card  V.  Walbridgo,  18  Ohio,  411; 
Penniman  v.  Patchin,  5  Vt.  346;  Row- 
land V.  State,  58  Pa.  St.  196. 


291 


AUTHORITY  AND   POWERS  OP   ATTORNEY. 


§173 


(Miss.) 

Miil- 

.Dec. 

ledes  & 

J  36  Me. 

Irt.  432; 

>.  168. 
),  411; 
,  Eow- 


with  him  for  collection/  He  cannot  set  off  a  debt  duo  to 
his  client  against  a  debt  dac  from  him  to  the  debtor.'^  He 
may  bring  a  new  suit  after  being  nonsuited,^  or  restore 
an  action  after  a  non  pros.*  He  has  power  to  institute 
supplementary  proceedings,  and  procure  the  appointment 
of  a  receiver,^  but  not  to  commence  an  action  in  the  name 
of  a  receiver  against  a  third  person  to  set  aside  a  convoy- 
anco  from  the  judgment  debtor.^  He  cannot  begin  supple- 
mentary proceedings  in  the  name  of  a  deceased  plaintiff, 
for  whom,  in  his  lifetime,  he  recovered  judgment.' 

He  may  waive  objections  to  the  form  of  a  Avrit,*  agree 
to  postpone  execution  on  his  judgment,"  waive  objections 
to  evidence,*"  waive  notices  and  give  extensions  of  time 
to  file  papers,"  waive  verification  of  papers  by  afiidavit,*' 
objections  to  interrogatories,"  informalities,  and  irregu- 
larities generally."  He  may  release,  before  judgment,  an 
attachment  of  real  estate."  He  cannot  release  a  judgment 
on  payment  of  a  less  sum  than  it  is  entered  for,*®  nor  re- 
lease sureties  upon  the  claim  of  his  client,"  nor  give  up 
his  client's  securities  without  payment,"  nor  release  the 


^  Russell  V.  Drummond,  6  Ind.  21G; 
White «.  Hildreth,  13N.  H.  104;  Child 
V.  Eureka  etc.  Works,  44  N.  H.  354; 
Terhunet).  Colton,  10  N.  J.  Eq.  21. 

»  Wiley  V.  Mahood,  10  W.  Va.  206; 
Cost  V.  Genctte,  1  Port.  212;  Child  v. 
Dwight,  1  Dev.  &  B.  Eq.  171. 

»  Scott  V.  Elmendorf,  12  Johns.  317. 

♦Reinholdtw.  Alberti,  1  Eiim.  469. 

*  Ward  V.  Roy,  69  N.  T.  96. 

«  Ward  V.  Roy,  69  N.  Y.  96. 

'  Amore  v.  Lamotte,  5  Abb.  N.  C.  146. 

8  Alton  V.  Gilmanton,  2  N.  H.  520. 

'  Union  Bank  v.  Geary,  6  Pet.  99; 
Wieland  v.  White,  109  Mass.  392. 

'*>  Alton  V.  Gilmanton,  2  N.  H.  520. 

"  Pike  V.  Emerson,  5  N.  H.  393;  22 
Am.  Dec.  468;  Bank  i'.  Geary,  5  Pet. 
99;  TaIl)ot  v.  McGee,  4  T.  B.  Mon.  377. 

'*  Heflferman  v.  Burt,  7  Iowa,  320. 

"  Roberts  v.  Harris,  32  Ga.  542. 

'*  Hanson  v.  Hoitt,  14  N.  H.  66. 

'^  Moulton  V.  Bowker,  115  Mass.  36; 
15  Am.  Rep.  72;  Benson  v.  Carr,  73 
Me.  76. 


18  Lewis  V.  Gamage,  1  Pick.  347; 
Lewis  V.  Woodruff,  15  How.  Pr.  539; 
Wilson  V.  Wadleigh,  36  Me.  496;  Har- 
row V.  Farrow,  7  B.  Mon.  126;  45  Am. 
Dec.  60;  Chambers  v.  Miller,  7  Watts, 
63;  Beers  v.  Heiulricksou,  45  N.  Y. 
665;  Kirk's  Appeal,  87  Pa.  St.  243; 
30  Am.  Rep.  357;  Carstens  v.  Barn- 
storf,  11  Abb.  Pr.,  N.  S.,  442;  Pierce 
V.  Brown,  8  Biss.  534;  Miller  v.  Lane, 
13  111.  App.  648;  Robinson  r.  Murphy, 
69  Ala.  543;  Hanirick  v.  Combs,  14 
Neb.  381;  see  Hampton  v.  Boy  Ian,  46 
Hun,  151. 

•'  Union  Bank  v.  Govan,  10  Smedes 
&  M.  333;  Givens  v.  Biiscoe,  3  J.  J. 
Marsh.  532;  Savings  Inst.  r.  Chiun,  7 
Bush,  539;  East  River  Bank  v.  Ken- 
nedy, 9  Bosw.  543;  Stoll  v.  Sheldon, 
13  Neb.  207;  nor  upon  an  undertaking 
on  appeal:  Quinn  v,  Lloyd,  36  Ho%v. 
Pr.  378. 

•■"'  Tankersly  v.  Anderson,  4  De  ^lu-?. 
Eq.  45;  Terhune  v.  Colton,  10  X.  J. 
Eq.  21. 


§1V3 


PRINCIPAL    AND   AGENT. 


292 


defendant's  property  from  the  lien  of  an  execution,*  nor 
extend  time  on  a  debt  due,"  nor  release  a  debt  due,'  nor 
discharge  an  indorser  upon  a  note  due  to  his  client,'* 
nor  accept  a  deed  for  mortgaged  land  in  satisfaction  of  a 
judgment  of  foreclosure/  nor  sell  the  evidence  of  indebt- 
edness," nor  release  a  j^arty  in  interest,^  nor  a  witness,** 
nor  a  defendant  in  custody  on  a  capias  ad  satisjaciendum}^ 
And  an  attorney  may  not  waive  any  substantial  right 
of  the  client  as  to  the  form  of  the  i)roceodings  in  the 
cause."*  An  agreement  between  counsel,  without  author- 
ity from  their  clients,  that  the  dismissal  of  an  action 
shall  bo  a  bar  to  an  action  for  malicious  prosecution,  is 
void."  But  an  agreement  by  the  attorneys  in  several  suits 
which  are  precisely  similar,  and  in  which  the  same  de- 
fense is  made,  that  they  would  abide  the  liual  judgment 
which  should  bo  rendered  in  one  of  thera,  binds  the  par- 
ties.'" He  cannot  discharge  a  trustee,**  nor  waive  a  right 
of  inquisition,"  nor  agree  to  auspeud  proceedings  upon  a 
judgment.'''  lie  has  no  implied  power  to  stipulate  for 
additional  time  for  the  justice  to  render  and  docket  his 
judgment.** 

Illustrations.  —  An  attorney  was  several  times  appealed  to 
by  his  clicMit  for  money  on  a  mortgage  note  intrusted  to  him  for 
collection,  and  in  one  letter  was  informed,  "I  am  very  much  iu 
want  of  funds,  and  you  must  sell."  Held,  that  the  attorney 
was  authorized  either  to  collect  the  amount  or  sell  the  security; 


*  Banks  V.  Evaas,  10  Siuedea  &  M. 
35;  48  Am.  Dec.  7:54;  Pliillips  v.  Dob- 
bins, oG  Ga.  G17;  Beuediot  v.  S.iiith, 
10  Paige,  115'_';  Willsou  v.  Jeniiings,  3 
Ohio  St.  528;  Dollar  Savings  Bank  v. 
Kolilt,  4  Bruwst.  lOli. 

•^  Lockhart  v.  Wyatt,  10  Ala.  231; 
44  Am.  Dec.  481. 

'^  ( Jillilan.l  V.  Gasque,  G  Rich.  40G. 

*  East  River  Bank  r.  Kenuetly,  9 
Bos%v.  043;  BnwMG  V.  Hyde,  G  Barb. 
392;  Varnum  v.  Bellamy,  4  McLean, 


8 


°  Brown  r.  Kiene,  72  Iowa,  342. 
*  H;!r'>('ck  V.  Colvin,  73  Iowa,  G38. 
» In  re  Wei  gel,  18  L;i.  Ann.  49. 


8  Marshall  v.  Nagel,  1  Bail.  308; 
Bow  no  V.  llyilo,  G  Barb.  392. 

»  Kellos'g  V.  Gilbert,  10  Johns.  223; 
6  A:n.  Dec.  335;  Treasurera  r.  Mc- 
Dowell, 1  Hill  (S.  C),  184;  26  Am. 
Dec.  IGG. 

^'' »'  >.wc  r.  Lawrence,  22  N.  J.  L.  99. 

"      arbourg  ('.  Smith,  11  Kan.  554. 

^-  uirth  ^iisdouri  R.  R.  Co.  v.  See- 
pb  IS,  3G  Mo.  150;  Ohlquest  v.  Far- 
wci.,  71  Iowa,  231. 

'•*  Quarles  v.  Porter,  12  Mo.  70, 

'*  Hadden  v.  Clarke,  2  Gran  Cas. 
107. 

'^  Pcndexterr.  Vernon,  9  Ilumpli.  84. 

^«  Flyun  V.  Hancock,  40  Hun,  3G8. 


202 


293 


AUTHORITY   AND    TOWERS   OF   ATTORNEY. 


§174 


Ward  V.  Ticals,  14  Neb.  114.     In  an  action  to  recover  money  tho 
complaint  alleges  and  the  answer  denies  that  it  was  payable 
in  gold  coin.     Tho  attorney  for  the  defendant  cannot  bind  his 
client  by  a  verbal  stipulation  made  during  the  progress  of  tho 
trial,  and  not  entered  on  the  minutes,  to  allow  the  plaintid", 
if  he  recover,  to  have  judgment  in  gold  coin:  Merrilt  v.  Wil- 
cox, 52  Cal.  2.38.     An  attorney  of  record  in  an  action,  which  liad 
])een  sent  to  a  referee  by  order  of  court,  signed  an  agreement  iu 
writing  that  the  report  of  tho  referee  should  be  final,  and  tho 
ngrcement  was  entitled  as  of  tho  term  of  tho  circuit  court  to 
which  the  report  was  to  bo  made.     Held,  that  his  client  was 
bound  by  such  agrcenjcnt:  Brooks  v.  Nciv  Durham,  55  N.  II. 
559.     An  attorney  at  law  released  a  judgment  lien  which  bo 
had  procured  in  favor  of  his  client  in  a  suit  prosecuted  by  him. 
The  client  denied  having  authorized  or  ratified   the  release. 
The  attorney's  testimony  upon  tho  point  was  clear  and  explicit, 
and  strongly   fortified  by  circumstances,  to  which  the  client 
opposed  a  bare  denial,  unaccompanied  by  explanation  of  tho 
circumstances.     Held,  that  the  authority  nmst  be  presumed, 
although  without  the  scope  of  the  attorney's  general  cuiploy- 
nient:  Fritchcy  v.  Boslcy,  5G  Md.  94.     A's  note  being  in  tho 
liiinds  of  attorneys  for  collection,  they  received  from  liim  cer- 
tain collaterals,  consisting  of  claims  on  other  parties,  to  be  col- 
lected by  them,  and  the  proceeds  applied  to  the  note;  and  they 
gave  to  A  their  receipt,  stipulating  that  he  should  not  be  sued 
on  his  note  unless  the  collaterals  could  not  be  collected,  and 
reciting  that  he  guaranteed  the  payment  of  the  collaterals. 
Suit  being  brought  against  A  on  Ids  note,  ho  pleaded  the  re- 
ceipt as  a  defense,  alleging  want  of  diligence  on  the  part  of  tho 
attorneys  in  respect  of  the  collection  of  the  collaterals.     IFrld, 
thcit  the  attorney's  receipt  could  afford  to  A  no  defense  to  tho 
action;  if  there  was  any  breach  of  their  contract  with  him,  ho 
liad  his  remedy  against  them  for  damageB:  Bradford  v.  Arnold, 
33  Tex.  412. 


J.  L.  99. 

iau.  554. 
^.o.  V.  Scu- 
it  V.  Far- 


§  174.    Extent  of  Authority  of  Attorney  as  to  Time. — 

The  contract  of  an  attorney  to  carry  on  or  defend  a  suit, 
or  to  do  any  other  business,  is  an  entire  contract  to  con- 
duct tho  suit  or  business  to  its  termination.*  The  ap- 
pointment of  a  person  as  "permanent  solicitor"  does  not 
mean  an  appointment  for  life.^     The  appointment  of  an 


'  2  Greenl.  Ev.,  sec.  142;  Bathgate    90;    Langdon    v.    Castleton,    30    Vt. 
r.  llasldn,  50  N.  Y.  633;   Mygatt  v.     285. 
Wilcox,  45  N.  Y.  30G;  6  Am.  Rep.        *  Weeks  oa  Attorneys,  sec.  188. 


§175 


PRINCIPAL  AND  AGENT. 


294 


attorney  under  an  agreement  that  ^e  is  to  receive  a  stated 
amount  per  year  for  his  services  is  a  contract  for  a  year 
at  least.*  The  authority  continues  until  judgment  or 
other  termination  of  the  suit." 


§  175.  Hatiflcation  of  Unauthorized  Acts. — As  in  other 
cases  of  agency,  the  client  may  ratify  the  unauthorized 
acts  of  the  attorney.'  Where  an  action  is  commenced  bv 
an  attorney  at  law,  without  the  knowledge  or  consent  of 
the  plaintiff,  the  plaintiff  may  afterward  ratify  the  same, 
and  thereafter  be  entitled  to  all  its  benefits.*  So  a  defect 
in  the  employment  of  an  attorney  to  bring  a  suit  for 

.  vn  may  be  cured  by  a  subsequent  ratification.*  An 
ji  a';jiorized  appearance  by  an  attorney  in  a  case  where 
there  has  been  no  personal  service  on  the  defendant  may 
be  '  ■>  rar'  '  \  by  payment  to  the  attorney  of  compensation 
for  his  services  as  to  confirm  the  jurisdiction  and  validate 
the  judgment.*  But  the  ratification  must  be  made  on 
knowledge  of  all  the  facts.^    A  ratification  of  an  unauthor- 


■  Weeks  on  Attorneys,  sec.  188. 

-  Jackson  v.  Bartlett,  8  Johns.  362; 
Lovo  f.  Hall,  3  Yerg.  408;  Kellogg  v. 
Gilbert,  10  Johns.  220;  G  Am.  Dec. 
335;  Lusk  v.  Hastings,  1  Hill,  iioG; 
Hillegass  v.  Bender,  78  Ind.  225.  The 
attorney's  functions  are  terminated  by 
the  entry  of  judgment,  though  void; 
and  the  employment  of  a  new  attorney 
to  enforce  tha  judgment,  and  his  issu- 
ing execution,  is  a  complete  substitu- 
tion, so  that  service  of  papers  for  a 
etay  is  properly  made  on  him:  Ward 
V.  Sands,  10  Abb.  N.  C.  GO.  In  Bath- 
gate V.  Haskin,  69  N.  Y.  533,  An- 
drews, J.,  said:  "The  authority  of  an 
attorney  who  ia  employed  to  prosecute 
or  defend  a  suit,  in  the  absence  of 
special  circumstances,  continues,  by 
virtue  of  his  original  retainer,  until  it 
is  finally  determined.  The  contract 
of  the  attorney  is  entire,  and  the  ser- 
vice he  is  to  render  is  essentially  single, 
although  it  may  require  distinct  steps 
and  proceedings  on  liis  part  before  the 
purpose  of  the  employment  is  fully 


accomplished.  No  right  of  action  ac- 
crues for  each  successive  service  in  the 
progress  of  the  cause,  and  the  statute 
does  not  begin  to  run  against  his  claim 
for  compensation  until  his  relation  as 
attorney  in  the  suit  has  terminated. 
The  client  may  terminate  it  at  his 
pleasure,  or  the  attorney  may  do  so 
after  reasonable  notice;  but  in  the 
absence  of  proof  to  the  contrary,  the 
presumption  is  that  it  continues  until 
the  litigation  has  ended." 

*  Agency,  Chapter  VI.,  ante;  Taylor 
V.  Sutton,  6  La.  Ann.  709;  Mason  r. 
Stewart,  G  La.  Ann.  73G;  Brooks  i\ 
Poirier,  10  La.  Ann.  512;  Narruguagus 
V.  Wentworth,  36  Me.  339;  Mayer  r. 
Foulkrod,  4  Wash.  511;  Johnson  v. 
Cunningham,  1  Ala.  249;  King?'.  Pope, 
28  Ala.  GOl;  Marshall  v.  Moore,  3G111. 
321. 

*  Dresser  v.  Wood,  15  Kan.  344. 

'*  Lisbon    v.    Helton,     51     N.     H. 
209. 
^  Ryan  v.  Doyle,  31  Iowa,  53. 
^  Williams  v.  Keed,  3  Mason,  406. 


294 


295 


AUTHORITY   AND   POWERS   OP  ATTORNEY.  §  175 


ized  agreement  is  not  proved  by  the  entry  of  such  agree- 
ment on  the  minutes  of  the  court,  in  a  cause  to  which  it 
relates,  in  the  presence  of  the  party's  attorney.* 

Illustrations.  — After  judgment  on  a  marine  pohcy  recov- 
ered in  the  name  of  E.  T.,  owner  of  a  one-eighth  interest,  W.  T., 
owner  of  the  other  seven  eighths,  settled  with  E.  T.'s  attorney! 
received  the  money  collected,  and  promised  to  pay  the  assignee 
in  bankruptcy  of  E.  T.  his  share  thereof.  Held,  that  W.  T. 
thereby  ratified  the  action  of  the  attorney,  and  that  assumpsit 
for  money  had  and  received  would  lie  upon  such  special  prom- 
ise: Voae  V.  Treat,  68  Me.  378. 

'  Eevis  V.  Wallace,  2  Heiak.  658. 


§17G 


PRINCIPAL    AND    AGENT. 


20G 


CHAPTER  XVI. 

LIABILITY  OF  ATTORNEY  TO  CLIENT. 

§  176.  Duty  of  attorney  to  client —  Dealings  between  attorney  and  client, 

§  177.  Duty  to  render  accounts  —  Mixing  money. 

§  178.  Duty  to  notify  client  of  collection  of  money. 

§  171).  Duty  to  pay  over  money. 

§  180.  Skill  required  of  attorney  in  his  profession — Liable  for  negligence. 

§  181.  Negligence  a  question  of  fact. 

§  ]82.  Liability  of  attorney  for  mistakes  of  law. 

§  183.  Mistakes  in  drawing  papers  and  pleadings. 

§  184.  Mistakes  in  prosecution  of  suit. 

§  185.  Mistakes  in  giving  advice. 

§  18G.  Measure  of  damages. 

§  187.  Attorney  must  follow  client's  instructions, 

§  188.  Liability  of  attorney  for  mistakes  or  frauds  of  agents  or  associates. 

§  189.  Liability  for  acting  without  authority. 

§  190.  Liability  for  acting  in  excess  of  authority. 

§  191.  Not  liable  as  to  matters  outside  his  profession. 

§  192.  Remedy  is  against  attorney  alone — Proceedings  not  affected. 

§  193.  Summary  jurisdiction  as  to  attorneys. 

§  194.  When  summary  jurisdiction  will  and  will  not  be  exercised. 

§  195.  For  what  acts  summary  jurisdiction  will  be  exercised. 

§  176.  Duty  of  Attorney  to  Client— Dealings  between 
Attorney  and  Client. — The  highest  degree  of  good  faith  is 
required  of  an  attorney  towards  his  client.  "The  court, 
from  general  principles  of  policy  and  equity,  will  always 
look  into  the  dealings  between  attorney  and  client,  and 
guard  the  latter  from  any  undue  consequences  resulting 
from  a  situation  in  which  he  may  be  supposed  to  stand 
unequal."  *  The  rule  applicable  to  transactions  between 
attorney  and  client  is,  that  the  attorney  who  bargains 
with  his  client  in  a  matter  of  advantage  to  himself  is 


11 
ni 


*  Starr  v.  Vauderheyden,  9  Johns. 
253;  Millar.  Mills,  2G Conn.  213;  Bibb 
V.  Smith,  1  Dana,  582;  Miles  v.  Ervin, 
1  MeCord  Ch.  524;  IG  Am.  Dec.  C23; 
Jennings  v.  McConnel,  17  111.  148; 
Gray  v.  Emmons,  7  Mich.  533;  WU- 


liams  V.  Reed,  3  Mason,  405;  Tancre?'. 
Reynolds,  35  Miim.  47G.  Tho  juris- 
diction of  charges  of  fraudulent  deal- 
ings between  attorney  and  client  is  in 
equity:  Broyles  v.  Axnold,  11  Heisk. 
484. 


I'l 


29- 


LIABILITY    OF   ATTORNEY    TO   CLIENT. 


§1T7 


1)01111(1  to  show  that  the  transaction  h  fair  and  equitable, 
and  that  the  client  was  fully  informed  of  his  riglits  and 
interests  in  the  subject-matter  of  the  transaction,  and  the 
nature  and  effect  of  the  transaction  itself,  and  was  so 
placed  as  to  bo  able  to  deal  with  the  attorney  at  arms* 
length.^  Ho  cannot  bo  allowed  to  purchase  the  subject- 
matter  of  the  suit;  the  client  may  set  aside  such  a  pur- 
chase on  discovering  it.*  Nor  can  he  purchase  from  the 
client  or  take  gifts  from  him.' 

§  177.    Duty  to  Render  Accounts  — Mixing  Money.  — 

It  is  the  duty  of  an  attorney  to  render  correct  accounts  to 
his  client,'*  and  he  is  liable  for  any  loss  ho  may  sustain 
from  not  paying  over  his  client's  money,  but  mixing  it 


>  Kislitig  V.  Shaw,  33  Cal.  423;  91 
Am.  Dn .  C44;  Bingham  v.  Salent,  15 
Or.  'JOS;  .T  Am.  St.  Rep.  152. 

'  Smith  V.  Brothcrline,  62  Pa.  St. 
401;  Brothcrson  v.  Consalus,  26  How. 
Pr.  117.  A  purchase  is  void  which  is 
(it  tin  interest  in  property  adverse  to  a 
client  for  whom  ho  is  then  acting:  Cun- 
ningham??. Jones,  37  Kan.  477;  1  Am. 
St.  llcp.  257.  In  Valentino  w.  Stewart, 
1,')  Cal.  .387,  the  court  say:  "Tlie  true 
rule  u,  that  an  attorney  when  acting  for 
his  client  is  bound  to  the  most  scrupu- 
lous faith,  to  vberrimajides.  His  own 
iatercits,  for  wise  reasons,  are  not  al- 
l;)we  I  to  bo  brought  in  collision  with 
the  interests  of  his  client.  There  can 
1)0  uo  antagonism  between  these  par- 
ties ai  to  the  matters  of  this  delicate 
n^;c:icy;  the  attorney  is  simply  the 
ro'j)rescntativ'e  of  his  client, — not  his 
rival  or  competitor,  —  acting  for  the 
principal,  not  for  himself.  Very  little 
kDowleJge  of  human  nature  is  re- 
quired to  convince  us  that  if  the  law 
allowed  the  attorney  to  deal  with  the 
piiucipal  as  he  n)ight  with  a  stranger, 
theso  responsible  trusts,  upon  which 
the  interests  of  society  so  much  de- 
pend, would  be  turned  into  means  of 
the  grossest  fraud  and  oppression. 
The  law  has,  therefore,  prescribed 
s'aict  rules  cf  restraint  upon  the  ac- 
tion of  the  attorney,  and  will  never 
permit  him  to  take  advantage  of  his 
position  to  speculate  upon  tlio  inter- 


ests which  are  intrusted  to  him.  Evca 
in  the  case  of  a  purchase  of  the  sub- 
ject of  the  suit  by  the  attorney,  the 
client  may  set  it  aside  at  hi  j  pleasure, 
unless  the  attorney  show  by  clear  and 
conclusive  proof  that  no  advantage 
was  taken,  that  everything  was  ex- 
plained to  the  client,  and  that  the 
price  was  fair  and  reasonaljlo.  But  no 
case  has  come  to  our  knowledge  wlicro 
an  attorney  has  been  i)ermitted,  after 
once  acting  as  such  in  the  prosecution 
of  a  suit,  and  having  opportunities  for 
knowing  the  fact-s  of  his  client's  case, 
to  go  over  an<l  render  assistancj  to  the 
adverse  side,  and  enforce  in  a  court  of 
equity  the  contract  based  o:i  such  acta 
or  the  agreement  to  do  them." 

*  Weeks  on  Attorneys,  sees.  27.3, 281. 
An  attorney  at  law  is  bound  to  ob- 
serve the  utmost  good  faith  towards  his 
client  on  purchasing  property  from  him, 
and  to  draught  all  papers  pertaining 
to  the  transaction,  with  uuc'.i  care  and 
skill  that  they  shall  express  the  real 
understanding  of  th-j  parties:  I'ayne  v. 
Avery,  21  Mich.  524.  To  sustain  a 
gift  from  a  client  to  his  attorney,  the 
burden  is  upon  the  latter  to  show,  not 
only  that  it  is  voluntary,  but  also  that 
it  is  made  with  full  knowledife  of  all 
material  facts  known  to  him,  and  with- 
out undue  influence:  Whipple  v.  Bar- 
ton, 03  N.  H.  G13. 

*  Weeks  on  Attorneys,  sees  202, 
282;  Scott  v.  Wickliflfe,  1  B.  ]\Iou.  353. 


§§  178, 179 


PRINCIPAL  AND  AGENT. 


298 


with  his  own.*  If  important  papers,  upon  which  the 
client's  liberty  depends,  arc  intrusted  to  an  attorney,  ho 
shoukl  not  only  return  them  when  the  relation  of  attor- 
ney and  client  ceases,  but  should  not  willfully  do  any- 
thing by  which  another  can  gain  information  concerning 
such  papers,  to  be  used  to  the  client's  injury.  If  the 
client  discharges  the  attorney  without  paying  him,  and 
employs  another,  that  does  not  alter  the  case,''  Persons 
depositing  notes  with  attorneys  for  collection  have  a  right 
to  demand  and  have  an  accounting,  to  know  the  condi- 
tion of  the  claims,  and  to  receive  the  amounts  collected, 
subject  only  to  just  exceptions.* 

Illustrations.  —  A  complaint  alleged  that  the  plaintiff,  to- 
gether with  another  party,  had  placed  in  the  hands  of  the  de- 
fendant, for  collection,  a  largo  amount  of  claims;  that  these 
claims  were  all  collectible,  but  were  unaccounted  for  by  the 
defendant,  who  had  refused  to  render  any  account  thereof  to 
the  plaintiff  upon  his  demand.  Held,  that  the  plaintiff  could 
not  recover  of  the  attorney  the  value  of  the  notes,  or  the  notes 
themselves,  but  that  he  was  entitled  to  an  accounting,  and  to 
receive  any  money  that  had  been  collected:  Bougher  v.  Scohci/, 
23  Ind.  583.  A  woman  employed  an  attorney  to  collect  the 
interest  on  a  third  mortgage  for  $8,000.  The  mortgagor  failed. 
The  woman  sold  the  mortgage  to  the  attorney  for  $075,  and  on 
her  expressing  dissatisfaction  afterwards,  he  gave  her  $900 
more,  she  first  having  unsuccessfully  tried,  with  his  consent, 
to  find  another  purchaser.  He  afterwards  realized  $2,325  on 
the  mortgage.  Held,  that  he  should  be  required  to  account  to 
her  for  this  amount:  Dunn  v.  Dunn,  42  N.  J.  Eq.  431. 

§  178.    Duty  to  Notify  Client  of  Collection  of  Money.  — 

It  is  the  duty  of  the  attorney  to  immediately  notify  the 
client  when  money  has  been  collected  by  him,  and  await 
the  client's  instructions.* 


§  179.    Duty  to  Pay  over  Money.  —  Likewise  it  is  the 
attorney's  duty  to  at  once  pay  over  to  the  client  money 

^  Robinson  v.  Ward,  I  Ryan  &  M.        '  Bougher  v.  Scobey,  23  Ind.  583. 
274.  ♦  Weeks    on    Attorneys,   sec.    263; 

■''  la  re  Uabn,  11  Abb.  N.  O:  423.         Denton  v.  Embury,  10  Ark.  223. 


298 


299 


LIABILITY    OF   ATTORNEY   TO   CLIENT. 


§  179 


is  the 
money 


received  for  liira.*  If"  ho  has  notiricd  the  client  of  tlio 
receipt  of  the  money,  tlio  latter  has  no  cause  of  action 
against  him  for  the  sum,  until  after  a  demand  and  re- 
fusal.'*  Declarations  of  the  attorney  that  ho  intends  to 
retain  money  collected  by  him,  to  indemnify  himself  for 
a  fraud  committed  on  him  by  tho  plaintiff,  do  not  dis- 
pense with  tho  necessity  of  a  demand,  unless  made  to  tho 
j)laintiff 's  agent,  or  brought  to  his  knowledge  before  suit 
commenced."  But  an  engagement  to  pay  it  over,  when 
collected,  to  a  thir  party,  and  a  failure  to  do  so,  dis- 
penses with  demand.'*  An  attorney  who  has  collected 
money  is  not  liable  to  tho  nominal  claimant,  if  tho  claim 
were  handed  by  him  to  the  actual  client,  and  tho  attorney 
has  paid  it  over  to  him  without  notice.*^  Tho  promise  of 
an  attorney  at  law,  who  has  received  a  debt  for  collection, 


'  Weeks  oil  Attorney,  sees.  204,  308. 

'■•  Mardi.s  v.  Shacklofonl,  4  Ala.  4'J.']; 
Jctt  V.  IlcinpsteaJ,  25  Ark.  4i)2; 
lL.cthbun  r.  In/^als,  7  Woiid.  31:0; 
Taylor  v.  Bates,  5  Cow.  370;  Cuininin3 
r.  McLain,  2  Ark.  402;  Deiitoa  v. 
Embury,  10  Ark.  228;  Black  v.  Hcrsch, 
18liid.  K42;  81  Am.  Ucc.  302;  BcarUa- 
li-y  V.  Boyd,  37  Me.  180;  Satturlea  v. 
Frazer,  2  Sand.  141;  Walradt  r.  May- 
nard,  3  Barb.  584;  Vosa  t'.  Bachop,  6 
Kan.  59;  Roberts  v.  Arinstronj?,  1 
Bush,  203;  8'J  Am.  Dec.  024;  Krause 
V.  Dorrance,  10  Pa.  St.  402;  51  Am. 
Dec.  490,  the  court  saying:  "  An  attor- 
ney is  not  liable  to  suit  for  money  col- 
luctcd  for  another,  till  demand  or 
direction  to  remit.  Aa  ia  Baid  in  one 
of  tho  caaoa,  he  ia  not  considered  in 
default  until  ho  receivea  ordera  from 
his  principal.  This  principle  seems  to 
be  well  settled  in  several  states,  in- 
cluding New  York,  Virginia,  Alabama, 
and  Arkansas,  aa  may  bo  seen  from 
the  following  cases:  Taylor  v.  Bates,  5 
Cow.  370;  Ex  parte  Ferguson,  G  Cow. 
590;  Rathbun  v.  Ingals,  7  Wend. 
S2J;  Taylor  v.  Armstead,  3  Call,  200; 
Cunnnins  v.  McLain,  2  Ark.  402;  and 
Mardis  v.  Shackloford,  4  Ala.  493.  In 
Maine  it  has  been  ruled  by  tho  same 
judge  ia  both  ways:  Staples  v.  Staples, 
4  Greenl.  532;  and  Cofiin  v.  Cofnn,  7 
Greeul.   298.     This  ia  a  caje  of  the 


first  impression  in  this  state,  but  wo 
foci  disposed  to  follow  tho  current  of 
decisions,  for  wo  agree  that  for  a  client 
to  sue  his  attorney  for  money  col- 
lected, without  notice,  would  bo  very 
harsh,  if  not  reprehensible,  conduct; 
and  for  this  reason  it  is  that  tliis  is 
the  first  time  tho  point  has  arisen  in 
this  state,  for  no  counsel  would  bo  so 
unconscientious  to  a  brother  as  to  suo 
him  without  demand.  It  is,  porhaps, 
but  an  act  of  justice  to  the  attorney  to 
state,  that,  although  not  proved,  yet 
he  alleges  notice  was  given  before  the 
commencement  of  the  suit.  The  point 
is  not  of  much  practical  importance, 
as  the  case  will  seldom  arise,  and 
never  unless  there  are  some  improper 
feelings  to  gatify.  But  altho-u^h  the 
general  rule  be  aa  stated,  it  is  not 
without  exception,  for  circumstances 
may  exist  which  will  dispense  with 
tho  necessity  of  a  demp:  1;  aa,  when 
the  attorney  has  been  j^-i  itj  of  fraud 
or  malpractice,  or  of  culpable  negli- 
gence in  not  giving  notice  of  tho  re- 
ceipt of  the  money  in  a  reasonablo 
time;  or  when  ho  puts  in  a  ehain  pica 
for  delay;  or  when  ho  exhibits  a  mani- 
fest dosire  to  ballle  the  plaiatiif,  and 
withhold  from  him  bis  jujt  demand." 
»  Rathbun  v.  lu'^alls  7  Wcad.  ;]-a. 

*  Mardis  v.  ShackLfotd,  4  Al:i.  403. 

*  Penny  v.  Caldwoll,  I  Ead.  SIj. 


§170 


PRINCIPAL  AND  AGRNT. 


300 


to  pay  tlio  nmount  of  his  debt  upon  his  uUimato  failure 
to  collect  it,  if  supported  by  a  suflicient  consideration,  is 
valid  and  binding;  but  the  mere  eonfidenco  in  the  advico 
of  the  attorney,  or  acquiescence  in  the  course  he  wished 
to  pursue  in  the  matter,  would  not  be  sufficient  '^sup- 
port an  action  upon  the  promise;  but  if  the  client  aid 
agree  not  to  withdraw  the  business  from  the  hands  of  tho 
attorney,  or  consent,  on  the  faith  of  such  promise,  to  waive 
a  proceeding  which  otherwise  ho  would  have  taken,  and 
by  reason  of  which  his  debt  would  have  been  secured,  it 
would  be  otherwise.*  An  attorney  is  liable  as  garnishee 
of  his  principal,  after  the  money  is  collected,  though  it 
has  not  been  demanded.'  Where  an  attorney  deposits 
his  client's  moneys  in  a  solvent  bank  in  his  own  name  in 
a  separate  account,  but  with  no  indication  of  the  trust,  ho 
is  liable  for  loss  by  tho  subsequent  insolvency  of  the 
bank,  notwithstanding  he  was  prevented  from  trai  emit- 
ting tho  moneys  by  garnishment  proceedings  nst 
him.' 

Illustrations. — An  attorney,  in  whose  hands  a  note  was 
placed  for  collection,  received  part  payment  thereof,  after 
action  commenced,  and  nevertheless  took  judgment  for  tho 
whole  amount  of  tho  note,  on  default  of  the  promisor.  Ilchl, 
that  the  latter  might  recover  of  the  attorney  the  money  fo 
paid,  though  tho  attorney  had  paid  it  over  to  tho  creditor: 
Fowler  V.  Shearer,  7  Mass.  14.  An  attorney  collected  money 
for  tho  defendant,  and  remitted  the  amount  by  the  draft  of  one 
bank  on  another,  payable  to  tho  attorney's  order,  and  indorsed 
by  him.  The  defendant  received  the  money,  and  directed  tho 
attorney  "  to  send  the  balance  in  the  same  way."  The  attor- 
ney sent  another  sum  in  the  same  manner.  The  draft  was  re- 
ceived by  tho  defendant,  but  before  it  could  be  collected  tho 
drawer  failed,  and  it  was  not  paid.  Held,  that  the  attorney 
was  not  liable  as  indorser:  Kimmell  v.  Bittner,  62  Pa.  St.  203. 
An  attorney,  having  collected  a  claim,  deducted  his  fees,  and 
deposited  the  balance  in  a  bank,  which  was  then  solvent  and 
in  good  standing,  to  the  credit,  not  of  his  private  account,  but 

^  Morrill  v.  Graham,  27  Tex.  646.  »  Naltner  v.  Dolan,  108  Ind.  500j  58 

*  Staples    V.    Staples,   4    Me.    633;    Am.  Rep.  61. 
Thayer  v.  Sherman,  12  Masa.  441. 


301 


LIARIUTY   OF   ATTORNEY   TO    CLIENT. 


§180 


of  an  nccount  called  tho  collection  account,  to  Iho  credit  of 
whicli  ho  was  in  tlio  habit  of  drpopitinj?  all  inoncys  ('ojlc'c'tcd 
for  cliciits.  Tho  name  of  tho  client  for  whoso  honcfil  tho  do- 
jiosit  was  nmdo  was  ontorod  in  tho  hank-book  Opposite  tho 
entry  of  tho  deposit.  Tho  client  neglocteil  to  call  for  his  money 
for  homo  yours,  and  until  after  tho  biink  had  become  insolvent. 
Jfrld.  that  tho  attorney  was  not  liable  for  tho  money  so  dc- 
j)osited  and  lost:  PhUjcon  v.  Williams,  21  Gratt.  251. 

g  180.  Skill  Required  of  Attorney  in  his  Profession  — 
Liable  for  Negligence.-  ..n  attorney  is  responsible  to  his 
client  for  tho  want  of  ordinary  skill  and  care,  and  reason- 
able diligence,  in  tho  management  of  his  affairs.'  The 
want  of  ordinary  care  and  skill,  it  is  said,  is  gross  negli- 
gence,^ and  thereibro  it  is  licld  that  an  attorney  is  liablo 
only  for  gross  ignorance  or  gross  negligence  in  the  perform- 
ance of  liis  professional  duties.'  Tlio  authorities  seem  to 
agree  that  where  a  client  has  suffen  1  damage  through  tho 
gross  negligence  or  gross  ignorance  of  his  attorney,  ho  lias 
a  right  of  action  against  him  for  the  damages  sustained.* 

poncral,  that  an  attorney  is  liaMo  for 
tho  conycquences  of  ignoranco  or  nou- 
objcrvanc'o  of  the  rules  of  jiractico  of 
thia  court;  for  want  of  care  in  tho 
preparation  of  the  cause  for  trial,  or 
of  atteniliinco  thereon  with  his  wit- 
nesses; and  for  tlio  niismanagonicnt  of 
so  much  of  tho  conduct  of  a  cau-se  as  is 
usually  and  ordinarily  allotted  to  his 
department  of  tlio  profession.  But,  on 
tho  other  iiand,  ho  is  not  aiisweralilo  for 
error  in  judgment,  upon  points  of  new 
occurrence,  or  of  nice  and  doubtful  con- 
struction, or  of  such  as  arc  usually  in- 
trustetl  to  men  in  tho  higlier  branch  of 
the  profession  of  the  law." 

^  Weeks  on  Attorneys,  sec.  285; 
Pennington  v.  Yell,  11  Ark.  212;  52 
Am.  Dec.  2G2. 

=1  Pennington  r.  Yell,  11  Ark.  212; 
52  Am.  Dec.  202;  Evans  r.  Watrous, 
2  Port.  205. 

*  Hopping  V.  Quin,  12  Wend.  517; 
Estate  of  A.  B-,  1  Tuck.  247;  Hatch 
V.  Fogerty,  10  Abb.  Pr.,  N.  S.,  147; 
Eggleston  v.  Boardman,  37  Mich.  14; 
MorrilH'.  Graham,  27  Tex.  047;  Sevier 
V.  Holliday,  2  Ark.  512;  Palmer  i\ 
Ashley,  3  Ark.  75;  Wilson  v.  Russ,  20 
Me.  421;  Evans  v.  Watrous,  2  Port. 


'  Montriou  v.  Jefforys,  2  Car.  &  P. 
113;  Wilson  v.  Russ,  20  Me.  421; 
Weimer  v.  Sloane,  0  McLean,  259;  Ex 
parte  Giberson,  4  Cranch  C.  C.  503; 
Cox  i\  Sullivan,  7  Ga.  144;  CO  Am. 
Dec.  380;  O'Barr  v.  Alexander,  .17  C.a. 
1 !».");  Holwes  V.  Peck.  1  R.  I.  242; 
Wilcoy  f .  Plummer,  4  Pet.  173;  Wynn 
V.  Wilson,  Hemp.  098;  Bowman  i'. 
Tulhnan,  27  How.  Pr.  212;  Gambert 
r.  Hart,  44  Cal.  542;  Gallaher  v. 
Thompson,  Wright,  400;  Stevens  v. 
Walker,  55  HI.  151;  Watson  v.  Muir- 
head,  57  Pa.  St.  101;  98  Am.  Dec.  21.3. 
In  Godefroy  v.  Dalton,  0  Bing.  407,  4 
Moore  &  P.  149,  Tindal,  C.  J.,  ex- 
plained the  rule  of  an  attorney's  lia- 
bility with  much  clearness:  "It  would 
bo  extremely  ditticult  to  define  the  ex- 
act limit  by  which  the  skill  and  dili- 
gence which  an  attorney  undertakes 
to  furnish  in  the  conduct  of  a  cause  is 
bounded;  or  to  trace  precisely  the 
dividing  line  between  that  reasonable 
skill  and  diligence  which  appears  to 
satisfy  his  undertaking,  and  that 
o)vi*«a  negligentia,  or  IcUa  culpa,  men- 
tioned in  some  of  the  case.s,  for  which 
he  is  undoubtedly  responsible.  The 
cases,  however,  appear  to  establish,  in 


§180 


PRINCIPAL   AND   AGENT. 


302 


The  undertaking  implied  by  the  law,  from  a  person's  en- 
gaging ill  the  business  of  searching  the  public  records, 
examining  titles  to  real  estate,  and  making  abstracts 
thereof,  for  compensation,  is,  that  he  possesses  the  requi- 
site knowledge  and  skill,  and  will  use  due  and  ordinary- 
care  in  the  performance  of  the  duty.  For  a  failure  in 
either  of  these  respects,  resulting  in  damages,  the  party 
injured  is  entitled  to  recover.*  An  attorney  employed  to 
examine  a  land  title  cannot  set  up,  in  defense  to  an  ac- 
tion for  damages  for  his  negligence  in  overlooking  a  lien 
on  such  lands,  that  such  lien  was  erroneous  or  of  doubtful 
validity .'^  An  attorney  employed  to  record  a  mortgage, 
but  who  neglects  to  do  so  until  after  other  subsequent  en- 
cumbrances have  been  recorded,  is  liable  immediately  to 
the  mortgagee  for  all  the  damages  which  are  likely  to  be 
sustained  by  his  default.'  If  the  attorney  of  a  judgment 
defendant  receives  money  to  pay  the  judgment,  and  pays 
it  over  to  the  clerk  of  the  court,  he  is  not  liable  for  the 
insolvency  of  the  clerk;*  that  the  plaintiff  continued  to 
employ  him  after  knowing  of  such  negligent  conduct  is 
relevant  on  the  question  of  damages.^  A  contract  by  an 
attorney  to  save  his  client  harmless  from  all  responsibility 
in  a  suit  pending  against  him,  or  to  refund  his  fee,  con- 


205;  O'Barr  v.  Alexander,  37  Ga.  195; 
Caverley  v.  McOwen,  123  Ma«3.  574; 
Glesson  v.  Clark,  9  Cow.  58;  Wilson 
V.  Coffin,  2  Cush.  316;  Hastings  v. 
Halleck,  13  Cal.  203;  Nisbet  v.  Law- 
son,  1  Ga.  275;  Cox  v.  Sullivan,  7  Ga. 
144;  50  Am.  Dee.  386;  Holmes  v. 
Peck,  1  R.  I.  242;  Suydam  v.  Vance, 
2  McLean,  99;  Reilly  v.  Kavanaugh,  29 
Ind.  435;  Mardis  v.  Shackleford,  4  Ala. 
493;  Walkerv.  Scott,  13  Ark.  644;  Ste- 
vens V.  Walker,  55  111.  151;  Chase  v. 
Heaney,  70  111.  268.  In  Bowman  v. 
Tallmann,  27  How.  Pr.  274,  it  is  said: 
"There  is  no  implied  agreement  in 
the  relation  of  counsel  and  client,  or 
in  the  employment  of  the  former  by 
the  latter,  that  the  former  will  guar- 
antee the  success  of  his  proceedings  in 
a  suit,  or  the  soundness  of  his  opinions, 
or  that  they  will  be  ultimately  sus- 


tained by  a  court  of  last  resort 

He  only  undertakes  to  avoi<l  errors 
which  no  member  of  his  profession  of 
ordinary  prudence,  diligence,  and  skill 

would  commit It  is  not  enough 

that  doubts  may  be  raised  of  the 
sound uess  of  his  opinion  or  correct- 
ness of  his  course,  unless  they  are 
accompanied  by  the  absence  of  all 
reasonable  doubts  of  the  propriety  of 
an  opposite  course  or  opinion  in  the 
mind  of  every  member  of  his  profes- 
sion of  ordinary  skill,  sagacity,  and 
prudence,  causeil  by  a  decisiveness  of 
reason  and  authority  in  its  favor." 

1  Chase  r.  Heaney,  70  111.  265;  Ran- 
kin V.  Schaeffer,  4  Mo.  App.  108. 

»  Gilman  v.  Hovey,  26  Alo.  280. 

*  Miller  v.  Wilson,  24  Pa.  St.  114. 

*  Hillegass  v.  Bender,  78  Ind.  225. 
"  Derricksoa  v.  Cady,  7  Fa.  St.  27. 


302 


303 


LIABILITY   OP   ATTORNEY   TO   CLIENT.       g§  181,  182 


ceding  it  to  be  valid,  extends  only  to  such  liabilities  as  the 
law  would  recognize  or  enforce;  and  if  the  client  suffers 
a  judgment  to  be  rendered  against  him  in  favor  of  another 
attorney  whom  he  never  had  employed,  for  professional 
services  in  the  same  suit,  he  cannot  resort  to  his  contract 
of  indemnity.*  In  England,  while  attorneys  are  respon- 
sible to  their  clients  for  negligence,  counsel  or  barristers 
are  not.  In  the  United  States  this  distinction  does  not 
exist.'^  The  negligence  of  the  client  does  not  affect  the 
liability  of  the  attorney.' 

Illustrations. — Plaintiff  handed  to  certain  attorneys  claims 
against  a  bankrupt,  "to  file  against  the  estate,  and  to  obtain 
any  dividend  that  may  be  allowed  on  the  same."  Ilehl,  that 
this  did  not  show  a  special  contract  to  resist  the  bankrupt's  dis- 
charge, and  that  the  attorneys  were  entitled  to  use  their  dis- 
cretion in  withdrawing  such  resistence:  Bennett  v.  Phillips,  57 
Iowa,  174.  A  person  having  title  papers  to  land  placed  in  his 
hands  as  agent  and  attorney,  with  authority  to  effect  a  sale  of 
the  land,  intrusted  the  papers  to  a  third  person  for  examination, 
and  with  a  view  of  making  a  sale  to  him.  The  party  so  in- 
trusted with  the  papers,  being  charged  with  some  crime,  ab- 
sconded and  took  the  papers  with  him.  Held,  that  this  act  of 
the  agent,  which  resulted  in  a  loss  of  the  papers,  was  not  negli- 
gence on  his  part  so  as  to  impose  any  liability  on  him  therefor: 
Stanberry  v.  Moore,  56  111.  472. 


114. 
225. 
fit.  27. 


§  181.  Negligence  a  Question  of  Fact. — Wliether  the 
conduct  of  the  attorney  in  a  particular  case  is  or  is  not 
gross  negligence,  is  a  question  to  be  determined  in  each 
case  by  the  jury  on  the  evidence.*  In  California,  how- 
ever, the  facts  being  ascertained,  the  question  of  negli- 
gence is  one  of  law  for  the  court.' 

§  182.  Liability  of  Attorney  for  Mistakes  of  Law. — An 
attorney  is  not  liable  for  a  mistake  in  a  point  of  law  which 


*  Lindsey  v.  Jones,  23  Ala.  835. 


nington  v.  Yell,  11  Ark.  212;  r>2  Am. 
Doc.  262;  Dearlwrn  v.   Dearborn,    1.5 


'  Weeks  on  Attorneys,  sec.  289, 

*  Cox  V.  Sullivan,  7  Ga.  144;  50  Am.     Mass.  315;  Walpolev.  Carlisle,  32  Ind. 
Dec.  386.  416. 

•  Walker  v.  Goodman,  21  Ala.  647;        »  Gambert  v.  Hart,  44  Cal.  542. 
Evans  v.  Watrous,  2  Port.  205;  Pen- 


§182 


PRINCIPAL  AND   AGENT. 


304 


is  ill  doubt,  or  for  a  wrong  construction  of  a  doubtful 
statute.'  So,  as  observed  in  the  supreme  court  of  the 
United  States,  an  attorney  cannot  be  charged  with  negli- 
gence when  he  accepts,  as  a  correct  exposition  of  the  law, 
a  solemn  decision  of  the  supreme  court  of  the  state.'^  An 
error  of  judgment  upon  a  doubtful  question  of  the  con- 
struction of  a  statute  is  not  evidence  of  i  want  of  skill  or 
of  negligence.''  Where  a  father,  whose  minor  son  has 
received  injuries  through  the  negligence  of  a  third  party, 
employs  counsel  to  sue  him  for  damages,  no  legal  obliga- 
tion is,  in  the  absence  of  an  express  understanding,  im- 
posed on  said  counsel  to  bring  suit  in  the  name  of  the 
father  as  well  as  in  that  of  the  son.  Particularly  so, 
where  the  right  of  recovery  is  uncertain,  and  where  the 
father,  after  the  suit  in  the  son's  name  is  brought,  makes 
no  complaint  of  the  omission  to  sue  in  his  name  also.^ 
An  attorney  employed  to  draw  a  building  contract  is  not 
delinquent  in  the  performance  of  his  duty  if  he  does  not 
file  the  contract  so  as  to  prevent  liens  from  attaching, 
especially  if  he  is  an  attorney  of  another  state  than  that 
where  the  building  is  to  be  erected.*  And  a  conveyancer 
is  not  liable  for  passing  a  title  with  an  encumbrance 
when  in  his  opinion  the  encumbrance  was  not  legally  a 
lien,  though  it  turns  out  otherwise.*'    An  attorney  is  liable 


1  Morrill  v.  Graham,  27  Tex.  64G; 
Crosbie  v.  Murphy,  8  I.  R.  C.  L.  301 ; 
Elkingtoii  V.  Holland,  $)  Meea.  &  W. 
658;  Buhner  v.  Gilman,  4  Man.  &  G. 
108. 

»  Marsh  v.  Whitmore,  21  Wall.  178; 
Hastings  v.  Halleck,  13  Cal.  203. 

*  Caverly  v.  McOwen,  123  Mass. 
574;  Buhner  i'.  Gilman,  4  Man.  &  G. 
108. 

*  Youngman  v.  Miller,  98  Pa.  St. 
196. 

»  Fenaillo  v.  Coudert,  44  N.  J.  L. 
286. 

*  Watson  V.  Muirhead,  57  Pa.  St. 
161;  ?,8  Am.  Dec.  213.  In  this  case  it 
was  said:  "  The  business  of  a  convey- 
ancer is  one  of  great  importance  and 
responsibility.     It    requires    aa   ac- 


quaintance with  the  general  principles 
of  the  law  of  real  property,  and  a  larfjo 
amount  of  practical  knowledge,  which 
can  only  be  derived  from  experience. 
In  England,  it  has  been  pursued  by 
lawyers  of  the  greatest  eminence.  As 
our  titles  become  more  complex  with 
the  increase  of  wealth,  and  the  de- 
sires which  always  accompany  it  to 
continue  it  in  our  name  and  family  as 
long  as  the  law  will  permit,  it  will 
become  more  and  more  necessary  that 
gentlemen  prepared  by  a  course  of 
liberal  education  and  previous  study 
should  devote  themselves  to  it.  There 
have  been  and  still  arc  such  among  ud. 
The  rule  of  liability  for  errors  of  judg- 
ment as  applied  to  them  ought  to  l)o 
the  same  as  in  the  case  of  gentlemen 


S04 


305 


LIABILITY   OF   ATTOHNEY   TO    CLIENT. 


§1S3 


for  mistakes  of  well-known  principles  and  rules  of  law;' 
as,  that  a  note  is  not  due  until  the  expiration  of  the  three 
days  of  grace,  and  cannot  be  sued  on  before  that.'  So 
the  disregard  of  a  plain  statutory  provision  is  negligence 
for  which  the  attorney  is  liable.' 


principles 
fill  a  larf,'o 
;c,  which 
Iperieuce. 
Irsued  hy 
tiice.     As 
)lex  witli 
the  de- 
my it  to 
[family  as 
it  will 
bary  that 
lourso  of 
|us  study 
There 
long  us. 
1  of  judg- 
Iht  to  he 
lutkmea 


§  183.    Mistakes  in  Drawing  Papers  and  Pleadings.  — 

He  is  liable  for  mistakes  negligently  made  in  drawing 
papers  and  pleadings;*  xis,  for  suing  for  twelve  dollars  in- 
stead of  twelve  hundred.'  But  ho  cannot  be  held  liable 
for  his  mistake  in  misdescribing  land  on  which  he  was 
employed  to  enforce  his  client's  lien,  if,  notwithstand- 
ing, it  does  not   appear   that   his   client   has   sustained 


damage.* 

in  the  practice  of  law  or  medicine. 
It  is  not  a  mere  art,  but  £>.  science. 
'That  part  of  the  profession,'  said 
Lord  Mansfield,  '  whicli  is  carried  on 
hy  attorneys  is  lilieral  and  reputable, 
as  well  as  useful  to  the  public,  when 
they  conduct  themselves  with  honor 
and  integrity;  and  they  ought  to  be 
protected  when  they  act  to  the  best  of 
their  skill  and  knowledge.  But  every 
?nau  is  liable  to  error;  and  I  should  bo 
very  sorry  that  it  should  bo  takeii  for 
granted  that  an  attoriiey  is  answer- 
able for  every  error  or  mistake 

A  counsel  may  mistake  as  well  as  an 
attorney.  Yet  no  one  will  say  tliat  a 
eounsel  wlio  has  been  mistaken  shall 

hj  charged Not  only  counsel, 

hut  judges,  may  diflfer,  or  doubt,  or 
take  time  to  consider.  Therefore  an 
attorney  ought  not  to  bo  liable  i  i  case 
oi  a  reasonable  doubt ':  Pitt  v.  Y;'.ldci, 
4  Burr.  2i)o0.  The  rub  declared  by 
Lord  Man-ilield  has  been  followed  i;i 
all  the  sub/icquent  'jases.  '  Xo  attor- 
ney,' said  Abhof i,,  C.  J.,  'is  bound  to 
kaow  .'ill  the  law;  God  forbid  it  that 
should  be  imagined  that  an  attorney, 
or  a  counsel,  or  oven  a  judge,  is  bound 
to  know  all  the  law;  or  that  an  attor- 
ney is  to  lo.^c  his  fair  recompense  on 
account  of  an  error,  being  such  an 
error  as  a  cautious  man  might  fall 
into':  Montriou  v.  Jeffcrys,  2  Car.  k 
P.  113;  and  see  Godefroy  v.  Dalton,  C 
Vol,  L— 20 


Bing.  4C0;  Kemp  v.  Burt,  4  Barn.  & 
Adol.  4-:4;  Gilbert  v.  Williams,  8 
Mass.  51;  5  Am.  Dec.  77." 

'  Goodman  v.  Walker,  30  Ala.  4S2; 
03  Am.  Dec.  1.34;  Morrill  v.  Graham, 
27  'lex.  046. 

'^  Hopping  V.  Qnin,  12  Wend.  CIS. 
In  Goodman  r.  Walker,  s7ip,-i.  Stone, 
.J.,  said:  "I  lay  down  the  rule,  the:i, 
for  the  determination  of  this  case  ai 
follows:  If  the  law  governing  the 
bringing  of  this  suit  was  wlII  and 
clearly  define  1,  botli  in  tlio  text-book  j 
and  in  our  own  decisions,  and  if  the 
rule  had  existed  and  been  publishel 
long  enough  to  justify  the  belief  that 
it  was  k'.iown  to  the  profession,  then 
a  disregard  of  such  rule  by  an  attorney 
at  1  iw  render!  him  accountal)le  for  tho 
losse.j  caused  by  such  negligence  oi* 
waiit  of  skill:  negligence,  it  knowing 
the  rule  ho  disregarded  it;  want  of 
skill,  if  he  wai  ignorant  of  the  rulo."' 

^  L'averley  r.  McOwcn,  l'J3  Mass. 
575;  Estate  of  A.  B..  1  Tuck.  23U. 

*  Varnuin  r.  Martin,  15  Pick.  440; 
Rootes  I'.  Stone,  2  Ljigli,  050;  Roilly 
V.  Kavanaugh,  20  Ind.  435;  GL'liani 
•I'.  Sparks,  28  Tex.  425;  Fitch  r.  Scott, 
3  ilow.  (Miss.)  314;  34  Am.  Dec.  80. 
See  Watson  r.  Muirhead,  57  Pa.  St. 
161,  98  Am.  Dec.  213,  as  to  convey- 
ance rs. 

''  Varnum  v.  Martin,  15  Pick.  440. 

*  Joy  V.  Morgan,  35  Minn.  184. 


§184 


PRINCIPAL  AND   AGENT. 


30G 


Illustrations.  —  An  attorney,  who  was  also  a  notary  public, 
was  liold  liable  for  negleet  in  not  recording  a  mortgage  which 
ho  had  drawn  for  his  client,  and  ngreeil  to  deliver  to  the  record- 
ing oIFicer:  Stott  v.  Harrison,  73  Ind.  17. 

§  184.  Mistakes  in  Prosecution  of  Suit. — It  is  ncgli. 
genco  in  an  attorney  to  bring  an  action  too  soon/  or  to 
neglect  to  bring  it  until  too  late  to  recover/  or  to  bring  it 
in  a  wrong  county/  or  in  a  court  which  has  not  juris- 
diction of  the  suit/  or  to  improperly  dismiss  a  suit."  Ho 
is  liable  for  neglect  in  prosecuting  a  motion  for  a  new 
trial,  whereby  it  is  not  finally  awarded  to  his  client."  It 
is  the  duty  of  the  attorney  employed  to  collect  a  debt  to 
sue  out  all  the  necessary  process  to  enforce  the  claim,  and 
for  a  failure  to  do  so  he  is  liable  to  the  client.^     Thus  he 


'  Hopping  V.  Quin,  12  Wend.  518. 

^  Smudes  V.  Elmendorf,  3  Johns. 
185;  Oldham  v.  Sparks,  28  Tex.  425; 
Walsh  I'.  Shumway,  05  111.  471;  Ste- 
vens V.  Walkor,  55  111.  151.  To  sup- 
port an  action  against  an  attorney  for 
the  amonnt  of  bills  left  with  him  for 
collection,  where  nothing  has  been 
collected  on  them,  it  is  necessary  to 
show  culpable  negligence  in  collecting: 
Palmer  v.  Ashley,  3  Ark.  75. 

^  Kemp  V.  Burt,  4  Barn.  &  Adol. 
424. 

*  Williams  v.  Gibbs,  5  Ad.  &  E.  208. 

^  Evans  v.  Watrous,  2  Port.  205; 
Coopwood  r.  Baldwin,  25  Miss.  129; 
Walpole  V.  Carlisle,  32  Ind.  415. 

«  Drais  v.  Hogan,  50  Cal.  121. 

'  Crooker  ?•.  Hutchinson,  2  D.  Chip. 
117;  McWiUiamsv.  Hopkins,  4 Rawle, 
382;  Fitch  v.  Scott,  3  How.  (.Miss.) 
31 1;  34  Am.  Dec.  80;  Hogg  v.  Martin, 
Riley,  150;  Wright  v.  Ligon,  Harp. 
Eq.  137;  Stevens  v.  Walker,  55  111. 
151;  Smallwood  v.  Norton,  20  Me.  83; 
37  Am.  Dec.  39;  Cox  v.  Sullivan,  7 
Ga.  144;  50  Am.  Dec.  .380.  In  Pen- 
nington V.  Yell,  11  Ark.  212,  52 
Am.  Dec.  202,  a  leading  case  on  the 
liability  of  tlie  attorney,  the  court 
say:  "As  authority  and  duty  in  the 
relation  of  client  and  attorney  are 
correlative  terms,  in  the  same  sense 
that  right  and  obligation  are  so,  in 
a  general  sense,  it  results  from  the 


law  as  it  now  stands,  that  when  an 
attorney  undertakes  the  collection  of 
a  debt,  it  becomes  his  duty  to  sue  out 
all  process,  both  mesne  and  final,  ne- 
cessary to  effect  that  object;  and  con- 
sequently, that  he  must  not  only  sue 
out  the  first  proce&s  of  execution,  but 
all  such  that  may  become  noccosary. 
This  undoubtedly  is  the  true  general 
doctrine  on  this  subject,  qualihcd, 
however,  as  will  be  presently  seen,  by 
a  pervading  principle  that  fairly  grows 
out  of  tlie  peculiar  character  of  the 
attorney's  functions.  But  although  it 
is  his  duty  thus  to  pursue  his  client's 
cause  through  all  its  stages,  he  is  not 
imperiously  bound  to  institute  new 
collateral  suits,  without  special  in- 
structions to  do  so;  as,  actions  against 
the  sheriff  or  clerk  for  the  failure  of 
their  duty  in  the  issuance  or  service  of 
process.  Ho  should  pursue  bail,  how- 
ever, and  those  who  may  have  become 
bound  with  the  defendant,  either  be- 
fore or  after  judgment,  in  the  progress 
of  the  suit.  Nor  is  he  bound  to  at- 
tend in  person  to  the  levy  of  an  exe- 
cution, or  to  search  out  for  property 
out  of  which  to  make  the  debt,  this  is 
the  business  of  the  sheriff.  Nor  is  he 
liable  for  any  of  the  shortcomings  of 
that  officer.  But  in  reference  to  all 
these  professional  duties,  the  courts 
have  recognized  a  principle  to  which 
We  have  already  alluded,  that  docs 


306 


307 


LIABILITY   OF  ATTORNEY   TO   CLIENT. 


§184 


an  exe- 
)roperty 

this  is 
or  is  he 
iiings  of 
e  to  all 

courts 
o  which 
at  docs 


is  liable  for  a  failure  to  seasonably  sue  out  a  scire  facias 
where  the  execution  has  been  returned  non  est  inventus,'^ 
for  not  delivering  an  execution  to  the  officer  within  thirty 
days  after  judgment,  if  an  attachment  is  lost  thereby.^ 
He  is  not  liable  for  the  loss  of  papers  stolen  from  him 
without  negligence  on  his  part.'  Ho  is  not  guilty  of  neg- 
ligence in  forbearing  to  bring  a  suit  where  the  parties 
had  agreed  to  leave  one  of  the  matters  in  dispute  to  arbi- 
txation,  the  decision  of  which  would  render  an  action 
unnecessary;*  nor  in  failing  to  pursue  the  extraordinary 
remedy  of  attachment,  the  owner  of  the  claim  having 
neither  made  affidavit  nor  given  bond;®  nor  for  omitting 
to  defend  a  suit,  if  he  be  not  instructed  in  the  defense;" 
nor  is  he  liable  for  a  failure  to  file  a  note  which  he  has 
received  for  collection  by  suit;  as,  a  claim  against  tho 
estate  of  the  maker  upon  the  death  and  declaration  of 
the  insolvency  of  the  estate  of  the  latter,  when  such  facts 
occurred  after  he  received  the  note,  and  without  his 
knowledge.^  Where  an  attornev  is  directed  to  collect  a 
note  containing  no  waiver  of  the  appraisement  laws,  and 
obtains  a  judgment  with  such  waiver,  the  client  cannot 
complain,  although  the  debtor's  property  sold  for  much 


not  by  any  means  move  the  line 
between  reasonable  diligence  and 
crasHa  neglii/entin,  and  thus  in  fact 
place  the  attorney  farther  from  re- 
sponsibility to  his  client;  but  so  far 
aa  its  operation  is  in  any  sort  to  his 
protection,  it  is  so  only  by  its  influ- 
ence upon  the  determination  of  the 
question  of  fact,  whether  or  not  the 
act  or  omission  complained  of  did 
really  amount  to  that  degree  of  crassi- 
tude for  which  the  law  holds  him 
liable.  This  principle  is,  that  the  at- 
torney will  always  be  justified  in  ceas- 
ing to  proceed  with  his  client'n  cause 
(unless  specially  instructed  to  go  on) 
whenever  he  shall  be  bomi  fide  in- 
fluenced to  this  course  by  a  prudent 
regard  for  the  interest  of  his  client: 
Crookerw.  Hutchinson,  2D.  Chip.  117; 
2  Greeid.  Ev.,  2d  ed.,  sec.  145,  p.  140. 
This  principle  would  seem  to  grow  di- 


rectly out  of  the  peculiar  character  of 
the  functions  of  an  attorney  at  law, 
and  to  be  founded  on  sound  public 
policy;  for  in  the  nature  of  tilings 
these  duties  cannot  in  general  be  per- 
formed in  a  manner  to  subserve  tho 
true  interest  of  the  client,  if  limitei 
to  that  strict  litie  of  routine  conduct 
which  is  chalked  out  by  the  law  as 
the  pathway  for  ordinary  agents,  and 
it  is  therefore  inevitable  that  ia  t!io 
discharge  of  these  duties  UToy  must 
be  intrusted  with  a  large  and  liberal 
share  of  discretion. " 

'  Dearborn  v.  Dearborn,  15  Mass. 
316. 

'*  Phillips  V.  Bridge,  11  Mass.  246. 

»  Hill  V.  Barney,  18  N.  H.  607. 

*  Hogg  V.  Martin,  Riley,  1 56. 

*  Foulks  V.  Falls,  91  Ind.  315. 
»  Benton  v.  Craig,  2  Mo.  198. 

'  Stubbs  r.  Beene,  37  Ala.  627. 


§§  185,  186 


PRINCIPAL   AND  AGENT. 


808 


less  than  its  value,  and  the  whole  amount  of  the  judg- 
ment  was  not  realized.* 

Illustrations.  — A  demand  ngainrt  persons  known  to  be  in- 
Eolvont  was  left  with  an  attorney,  with  instructions  to  do  the 
best  he  could  with  it.  He  received  the  notes  of  third  persons 
for  the  debt,  but  in  consequences  of  the  fraud  of  the  debtors, 
such  notes  were  not  collected.  Held,  that  the  attorney  was  not 
rcsj)onbiblo  for  the  loss,  and  a  judgment  obtained  against  him 
at  law  was  restrained  by  injunction:  Wright  v.  Ligon,  1  Harp. 
Eq.  IGG.  An  attorney  employed  to  prosecute  a  suit  for  the 
recovery  of  valuable  land,  when  a  jury  had  returned  a  verdict 
in  his  favor,  took  the  same,  and  by  his  negligence  and  unskill- 
fulncps  altered  the  verdict  so  as  to  include  only  a  worthless 
piece  of  the  property  sought  to  be  recovered;  and  at  his  request 
the  jury  accepted  the  same  as  their  verdict,  to  the  plaintiff's 
damage.  Held,  that  the  attorney  is  liable:  Skillen  v.  Wallace, 
3G  Ind.  319.  An  attorney  is  employed  to  conduct  a  case 
in  the  district  court,  and  a  judgment  is  rendered  against  his 
client,  and  he  is  entitled  to  a  new  trial  and  obtains  one,  but 
conducts  the  proceedings  in  obtaining  the  new  trial  so  care- 
lessly and  negligently  that  the  order  granting  the  same  is 
reversed  in  the  supreme  court:  Held,  that  he  ib  liable  to  the 
client  for  the  loss  sustained  thereby,  and  his  liability  is  not 
destroyed  by  the  fact  that  his  client  employed  other  counsel  in 
the  supreme  court:  Drais  v.  Ilogan,  50  Cal.  121. 

§  185.  Mistakes  in  Giving  Advice. — The  attorney  is 
liable  where  ho  gives  to  the  client  plainly  erroneous 
advice,  from  which  the  client,  by  following,  is  damaged." 

§  186.  Measure  of  Damages. — The  client  must  have 
suffered  an  injury,  or  ho  cannot  maintain  an  action  even 
for  nominal  damages.^  "Two  things  arc  to  bo  siiown  in 
order  to  subject  an  attorney  to  an  action:  1.  Gross  or 
unreasonable  negligence  or  ignorance;  and  2.  A  conse- 
quent loss  to  his  client."''  The  measure  of  damages  is 
the  actual  loss  sustained,'*  and  not  nci^essarily  the  amount 


*  Nickless  r.  Pearson,  81  lud.  427. 

■•^  Gihon  V.  Albert,  7  Paige,  278. 

^  Gray.son  v.  Wilkcrson,  13  Sliss. 
2GS;  Suydam  v.  Vance,  2  JNIcLeau,  90; 
Hartcr  v.  Morris,  18  Ohio  St.  492; 
Aruolil  r.  Robercsou,  3  Daly,  298; 
Bruce  V.  Baxter,  7  Lea,  477. 


♦  Fitch  V.  Scott,  3  How.  (Miss.)  314; 
.S4  Am.  Dec.  83. 

»  Pcnningtoa  r.  Yell,  11  Ark.  212; 
52  Am.  Dec.  2G2;  Stevens  v.  Walker, 
55111.  151;  Rootcs  I'.  Stone,  2  Leit,'h, 
050;  Crocker  r.  Pntchinson,  2  D.  Chip. 
117;  Klsbefc  v.  Lawson,  1  Ga.  275;  Cox 


309 


LIABILITY  OP  ATTOHNEY  TO   CLIENT. 


§187 


liave 
even 
n  in 

IS  or 

onse- 

;cs  is 

ount 


of  the  claim  which  was  not  recovered,  through  the  negli- 
gence of  the  attorney.*  The  client  must  show  that  ho 
had  a  valid  claim.''  An  attorney  is  liable  to  his  client 
onl}'^  for  the  proximate  results  of  neglect  in  making  col- 
lections. If,  after  the  client  took  the  business  from  the 
hands  of  the  attorney,  loss  resulted  from  further  delay  of 
the  client,  or  of  another  attorney  into  whose  hands  the 
collections  were  given,  the  first  attorney  cannot  be  held 
responsible  for  such  loss.'  An  attorney,  liable  for  a  debt 
lost  by  his  negligence,  is  not  liable  for  the  loss  of  the  evi- 
dence of  the  debt;  and  in  a  suit  against  him  for  such  loss, 
he  may  show  that  the  plaintiff  had  another  remedy,  which 
he  had  successfully  pursued.*  The  amount  of  damages  is 
a  question  for  the  jury.* 

Illustrations.  —  A  places  certain  demands  in  the  hands  of 
an  attorney,  who  agrees  to  collect  the  amount,  and  pay  over 
the  proceeds  to  creditors  of  A,  such  creditors  being  no  party 
to  the  agreement.  Held,  that  A  may  maintain  an  action  against 
the  attorney  for  a  failure  to  collect  and  pay  over  the  amount 
of  the  debts:  Mardis  v.  ShacMcford,  6  Ala.  433. 

§  187.    Attorney  must  Follow  Client's  Instructions. — 

The  attorney  must  follow  the  instructions  of  his  client. 
"Whenever  an  attorney  disobeys  the  lawful  instructions 
of  his  client,  and  a  loss  ensues,  for  that  loss  the  attorney 
is  responsible.""     As  to  the  general  conduct  of  the  suit, 

r.  Sullivan,  7  Ga.  144;  50  Am.  Dec. 
3SG;  Manila  V.  Shacklcford,  4  Ala.  403; 
Ecclca  V.  Stephenson,  3  Bibb,  517;  Ar- 
nold V.  Robertson,  3  Daly,  298;  Suy- 
dam  i>.  Vance,  2  McLean,  99;  Grayson  v. 
Wilkinson,  5  Sinedea  &  M.  2C8;  Lang- 
made  V.  Glenn,  57  Ga.  528.  In  Wil- 
cox V.  Plummer,  4  Pet.  172,  it  is  said: 
"When  the  attorney  was  chargeable 
with  ne<;ligence  or  unskillfulncss,  his 
contract  was  violated,  and  the  action 
might  have  been  sustained  imme- 
diately. Perhaps,  in  that  event,  no 
more  than  nominal  damages  may  be 
proved,  and  no  more  recovered;  but,  on 
the  other  hand,  it  is  perfectly  clear 
tliat  the  proof  of  actual  damage  may 
extend  to  facts  that  occui,  and  grow 


out  of  the  injury,  even  up  to  the  day 
of  the  verdict. " 

'  Eccles  i:  Stephenson,  3  Bibb,  517; 
Crookeri'.  Hutchinson,  2D.  Chip.  117; 
Cox  V.  Sullivan,  7  Ga.  144,  50  Am. 
Dec.  386. 

^  Spiller  V.  Davidson,  4  La.  Ann. 
171;  Pennington  V.  Yell,  11  Ark.  212; 
52  Am.  Dec.  2(32. 

3  Read  v.  Patterson,  1 1  Lea,  430. 

*  Huntington  v.  Rumnill,  3  Day, 
390. 

6  Golefroy  v.  Jay,  5  Moore  &  P.  284; 
Crookerv.  Hutchinson,  2D.  Chip.  117; 
Eccles  V.  Stephenson,  3  Bibb,  517. 

^  Gilbert  f.  Williams,  8  Mass.  51;  5 
Am.  Doc.  77;  Nave  v.  Baird,  12  Ind. 
318;  Wilojx  v.  Plummer,  4  Pet.  172; 


§18S 


PRINCIPAL   AND   AGENT. 


310 


the  attorney  acts  according  to  his  judgment  and  discre- 
tion. In  these  mutters  the  client  has  no  right  to  control 
him;  he  may  do  what  he  thinks  is  proper,  even  though 
against  the  wishes  of  the  client/ 

Illustrations. — The  holder  of  a  note  places  it  in  the  hands 
of  an  attorney,  and  instructs  him  to  bring  suit  on  it.  The 
attorney,  honestly  believing  that  it  Avould  be  better  not  to  sue 
then,  omits  to  do  so,  and  the  money  is  lost  by  the  maker's  sub- 
sequent insolvency.  The  attorney  is  liable  to  an  action  by  the 
client:  Cox  v.  Livingston,  2  Watts  &  S.  103;  37  Am.  Dec.  486. 

§  188.  Liability  of  Attorney  for  Mistakes  or  Frauds  of 
Agents  or  Associates. — An  attorney  is  liable  for  the  negli- 
gence or  fraud  of  another  attorney  whom  he  employs  as 
his  agent.'^  So  each  partner  in  a  firm  of  attorneys  is  lia- 
ble for  the  want  of  skill  or  negligence  of  the  others.*  For 
like  reasons,  a  mercantile  collecting  agency  receiving  a 
note  "for  collection"  is  liable  for  the  negligence  of  attor- 
neys or  agents  employed  by  them  in  other  parts  of  the 
country.*     An  attorney  who  has  collected  money  for  his 


Cox  V.  Livingston,  2  Watts  &  S.  103; 
37  Am.  Dec.  480;  Armstrong  v.  Craig, 
18  Barb.  387. 

'  Anonymous,  1  Wend.  108;  Read 
V.  French,  28  N.  Y.  292. 

^  Weeks  on  Attorney,  seo.  288;  Rid- 
dle V.  Poorman,  3  Penr.  &  W.  224; 
Poolo  V.  Gist,  4  McCord,  259;  Walker 
V.  Stevens,  79  111.  193;  Smallwood  v. 
Norton,  20  Me.  83;  37  Am.  Dec.  39; 
Pollard  V.  Rowland,  2  Blackf.  22; 
Grayson  v.  Wilkinson,  5  Siiiedes  &  M. 
2o8;  Birkbeck  v.  Staflord,  14  Abb,  Pr. 
£85;  Cummins  v.  Heald,  24  Kan.  600; 
3o  Am.  Rep.  264. 

^  Livinsgton  v.  Cox,  6  Pa.  St.  360; 
Dwight  V.  Simon,  4  La.  Ann.  490; 
Poole  V.  Gist,  4  McCord,  259;  Wilkin- 
Bon  i\  Griswold,  12  Smedes  &  M.  669. 

*  Bradstreet  v.  Everson,  72  Pa.  St. 
124,  13  Am.  Rep.  665,  Agnew,  J.,  say- 
ing: "It  is  argued,  notwithstanding 
the  express  receipt  'for  collection, 
that  tlie  defendants  did  not  under- 
take for  themselves  to  collect,  but 
only  to  remit  to  a  proper  and  respon- 
sLble  attorney,  and  made  themselves 
liable  only  for  diligeaco  in  correspond- 


ence, and  giving  the  necessary  infor- 
mation to  the  jjlaintiffs;  or  in  briefer 
terms,  that  the  attorney  in  Memphis 
was  not  their  agent  for  the  collocLion, 
but  that  of  the  plaintiffs  only.  Tiie 
current  of  decision,  however,  i.3  other- 
wise as  to  attorneys  at  law  sending 
claims  to  correspondents  for  collection, 
and  the  reasons  for  applying  tho  same 
rule  to  collection  agencies  are  even 
stronger.  They  have  their  selected 
agents  in  every  part  of  the  country. 
From  the  nature  of  such  ramiiied  in- 
stitutions, we  must  conclude  that  the 
public  impression  will  be  that  the 
agency  invited  ou.slomers  on  the  very 
ground  of  its  facilities  for  making 
distant  coUectior,  s.  It  must  be  pre- 
sumed from  its  business  connections 
at  remote  points,  and  its  knowledge 
of  the  agents  chosen,  the  agjncy  in- 
tends to  undertake  the  performance  of 
the  service  which  the  individual  cus- 
tomer is  u'  able  to  perform  for  him- 
self. There  is  good  reason,  therefore, 
to  hold  tha'  such  an  agency  is  liable 
for  coUectio  is  made  by  its  own  agents 
when  it  ud  lertakes  the  coUcctioa  by 


311 


LIABILITY   OF   ATTORNEY   TO   CLIENT.      §§  ISO,  l90 


client  will,  if  he  deliver  it  to  a  third  person  to  carry 
to  his  client,  without  authority  or  directions  from  the 
client  so  to  do,  bo  liable  to  his  client  for  the  sum  thus 
collected  if  the  same  be  stolen  from  such  third  person 
while  on  his  way  with  the  money,  even  though  such  per- 
son were  trustworthy,  and  took  the  same  care  of  the  money 
that  he  did  of  his  own/ 

Illustrations. — An  attorney,  directed  by  a  mortgagee  of  cer- 
tain liorses  and  harnesses  to  take  possession  of  them  under  the 
mortgage,  went  with  an  officer  to  the  stable  where  they  were, 
and  took  possession  of  them.  The  f-table  wiis  then  leased  from 
the  mortgagor,  and  a  custodian  selected  by  the  mortgagee  was 
placed  in  cliarge  of  the  property.  Held,  that  the  attorney  was 
not  liable  for  the  custodian's  neglect  in  permitting  the  property 
to  be  afterwards  seized  under  an  execution:  Gaines  v.  Becker,  7 
111.  App.  315. 

§  189.  Liability  for  Acting  without  Authority.-  If  an 
attorney  commence  or  defend  an  action  or  suit  without 
authority,  ho  is  liable  to  the  principal  for  damages.^  An 
action  for  money  had  and  received  will  lie  against  an  at- 
torney who,  having  a  debt  to  collect,  receives  in  payment 
debts  of  himself  or  of  others,  without  authority  from  his 
principal.* 


c  even 


je  pre- 
ectiona 
ivleilge 
icy  in- 
:icc  of 
I  cua- 
•  him- 
refore, 
liable 
agents 
ioa  by 


§  190.    Liability  for  Acting  in  Excess  cf  Authority.  — 

So  the  attorney  is  liable  to  his  client  for  damages  arising 


tlic  express  terms  of  the  receipt.  If 
it  does  not  so  intend,  it  has  it  in  its 
power  to  limit  respon«iibility  by  the 
terms  of  the  receipt.  An  example  cf 
this  limited  liability  is  found  in  the 
case  of  Bullitt  v.  13aird,  decided  at 
rhdadelphia  in  1S70,  the  only  case  in 
this  state  upon  the  subject  of  such 
agencies.  There  tlie  receipt  read,  '  For 
collection  accordinpj  to  our  direction, 
and  proceeds,  wlien  received  by  us, 
to  be  paid  over  to  King  and  Baird.' 
Across  the  face  of  the  receipt  was 
printed  these  words:  'N.  B.  The 
owner  of  tiie  within  mentioned  tak- 
ing; all  the  risks  of  the  mail,  of  losses 
by  failure  of  agenta  to  remit,  and  also 


of  losses  liy  reason  of  insurrection  or 
war.'  The  limitation  of  the  liability  of 
Bullitt  and  I'airtliorn  by  Mr.  lJiill;tt, 
himself  a  good  lawyer,  ii  evidence  of 
hij  belief  that  a  frrcatcr  liability  would 
arise  v/ithout  the  restriction." 

'  Graydon  v.  Wilkinsoii,  13  Miss. 
208. 

^  Weeks  on  Attorneys,  sec.  T.O.'y, 
Cyi)hort  v.  McClune,  '21  Pa.  .St.  !!).■); 
O'Hara  v.  Brophy,  2\  How.  I'r.  37!); 
Piggott  V.  Addicks,  3  (>.  Ctrcene.  4'27; 
50  Am.  Dec.  547;  Marvel  v.  Man- 
ouvrior,  14  La.  Ann.  3;  74  Am.  Dec. 
424;  Dorsey  v.  Kyle,  30  Md.  512;  96 
Am.  L^ec.  U17. 

^  IIoux  0.  Russell,  10  Mo.  246. 


§§  101,  102 


PRINCIPAL   AND   AGENT. 


312 


to  the  latter  through  his  acting  in  oxceds  of  his  authority.' 
An  attorney  entering  sutisfaction  of  a  judgment  without 
full  payment  is  personally  liable  to  his  client  for  the  un- 
paid balance.' 

Illustratioxs. —  Attorneys  collected  and  transmitted  to  their 
clients  funds  in  depreciated  bank  paper,  which  tiie  clients  re- 
fused to  receive,  and  sent  back  with  an  order  to  return  to  them, 
and  a  request  to  make  up  the  difference.  The  attorneys  declined 
to  do  anything  about  it.  Held,  that  the  clients  had  a  right  to 
sell  the  paper  and  recover  the  deficiency  from  the  attorne3's: 
West  V.  Ball,  12  Ala.  240. 

§  191.  Not  Liable  as  to  Matters  outside  his  Profession. 
— An  attorney  is  not  liable  for  not  acting  as  to  matters 
not  implied  in  the  business  of  an  attorney,  or  not  within 
the  scope  of  the  profession;  as,  for  example,  demanding 
payment  of  u  note  and  giving  notice  to  the  indorscr.* 

§  192.  Remedy  is  ag^ainst  Attorney  Alone — Proceed- 
ings not  Affected. — The  remedy  of  the  client  is  against 


*  Weeks  on  Attorneys,  sec.  305. 

-  People  V.  Cole,  8-1  III.  .3--'7. 

»  Odlin  V.  Stetson,  17  Me.  244;  35 
Am.  Dec.  248;  Hughes  v.  Boyce,  2 
La.  Ann.  803.  In  Udlin  v.  Stetson,  17 
I^le.  244,  35  Am.  Dec.  248,  the  court 
said:  "When  a  person  oflFera  his  ser- 
vices to  the  public  in  any  business, 
trade,  or  profession,  there  is  an  implied 
engagement  with  those  who  employ 
him  that  he  will  perform  the  business 
intrusted  to  him  faithfully,  diligently, 
and  skillfully.  And  if  he  fails  to  do 
so,  he  is  answerable  for  the  damages 
suffered  by  reason  of  such  neglect. 
This  engagement  is  limited,  however, 
by  tlio  nature  of  the  business,  and 
often  a? !'  Ly  its  being  carried  on  only 
in  a  particular  place.  Thus  an  insur- 
ance or  ship  broker  resident  in  a  cer- 
tain city  would  not  be  expected  to 
efifect  insurance  or  obtain  a  freight 
in  a  distaTit  city,  unless  such  were 
proved  to  be  his  usual  course  of  busi- 
ness, without  a  special  undertaking 
to  do  it.  So  a  notary  cannot  be 
expected  to  perform  the  duties  of 
an  attorney,  or  aa  attorney  those  of 


a  notary,  without  some  special  en- 
gagement, uidess  there  be  proof  of 
a  combination  of  these  employments, 
or  of  a  course  of  business  authorizing 
those  employing  him  to  expect  that  he 
will  do  so.  The  case  finds  that  tlie 
defendants  were  not  notaries;  and  it 
does  not  appear  that  they  had  so  con- 
ducted their  business  as  to  authorize 
any  one  to  expect  tbein  to  act  in  any 
other  character  or  manner  than  is  usual 
for  attorneys.  The  court  must  under- 
stand from  the  law,  and  from  the  cus- 
tomary course  of  business-  aj  exhibited 
in  cases  coming  before  them,  that 
negotiable  paper  is  placed  in  the 
hands  of  a  notary  or  special  agent 
to  have  the  necessary  pro.ientmeiit 
made  and  notices  given.  Cases  may 
and  do  occur,  where  an  attorney 
acts  also  as  a  notary,  and  where  also 
an  attorney  is  called  upon  for  advice 
respecting  the  manner  of  performing 
these  duties;  and  he  may  in  such 
and  probably  in  other  cases  under- 
take to  have  them  properly  done, 
and  in  such  casea  he  will  be  rcspon* 
Bible." 


312 


313 


LIABILITY   OF   ATTORNEY   TO   CLIENT. 


§193 


en- 


luler- 

IU3- 

iLiitcd 
that 
tho 

agent 

tmcnt 
may 

oriiey 
aUo 

iilvice 

rmiug 
such 
uder- 

done, 
spoa* 


the  attorney  alone.  His  nogligenco  or  ignorance,  whereby 
the  client  fails  in  his  suit,  cannot,  as  a  rule,  be  made  a 
ground  for  setting  aside  the  judgment  or  decree.*  In 
Now  York  it  has  been  held  tiiat  a  judgment  obtained  by 
default  through  the  neglect  of  tho  defendant's  attorney 
will  be  set  aside,  where  it  appears  that  tho  attorney  is 
insolvent,  and  tho  client  otherwise  would  bo  remediless.'' 

§  193.    Summary  Jurisdiction  as  to  Attorneys. — As 

oflicers  of  tho  court,  attorneys  are  peculiarly  subject  to 
its  jurisdiction.  Tho  tribunals  in  which  they  practice 
exercise  a  summary  authority  over  them,  whenever  it  is 
discovered  that  they  have  been  guilty  of  bad  faith  or 
want  of  honesty  in  their  dealings  with  either  court  or 
client.  This  summary  jurisdiction  extends  not  merely 
to  cases  in  which  tho  attorney  is  actually  employed,  but 
"whenever  the  employment  is  so  connected  with  their 
professional  character  as  to  afford  a  presumption  that 
their  character  formed  tho  ground  of  their  employment.' 
This  summary  jurisdiction  consists  in  compelling  tho 
attorney  to  do  what  he  should  do,  or  in  suspending  him 
for  a  time  from  the  exercise  of  his  profession,  or  in  strik- 
ing his  name  from  the  roll  of  attorneys,  and  annulling 
his  license  to  practice.*  The  motion  against  attorneys 
given  by  statute  is  a  substitute  for  the  more  tedious 
remedy  by  action  of  debt  or  assumpsit,  and  the  attorney, 

'  People    V.    Hains,    23    Cal.    128;  suit  cannot  jilead  the  neglect  of  Iiia 

Qiiiiiu    V.    Wetherbee,   41    Cal.    2-17;  counsel  as  an  excuse  for  his  own  iie^'li- 

l3il)l)lor.  Truluck,  12  Fla.  185;  Burton  gence,  where  ho  13  capiihlj  of  acting 

V.  Wiley,  2o  Vt.  430;  Farmers'  Co.  v.  in  tho  matter  for  himself  and  by  him- 

Walworth  Bank.  23  Wis.  249;  Burton  self:    Boing  r.    Raleigli    and    Clastoa 

V.  Hyuson,  14  Ark.  32;  Austin  v.  Nel-  R.  R.  Co.,  88  N.  C.  G2. 

son,  11  Mo.   192;  Kerby  v.  Chadwell,  ^  Meacha-.a  v.  Dudley,  G  Wc:id.  514; 

10  Mo.  392;  Gehrke  v.  Jodd,  59  Mo.  Elston  ?•.  Schilling,  7  Kobt.  74;  Sharp 

522;  Biebingor  t\  Taylor,  04  Mo.  03;  v.  jSIayor,  31  Barb.  578;  and  see  Griel 

SpaukUug  V.  Thompson,  12  Ind.  477;  v.  Vernon,  05  N.  C.  70. 

74  Am.  Dec.  221;  Merritt  v.  Putnam,  '  Weeks  on  Attorneys,  sec.  77;  Starr 

7  Minn.   403;  Babcock  v.  Brown,  25  v.  Vandorheyden,  9  Johns.  253;  C  Am. 

Vt.  550;  00  Am.   Dec.   290;  Jones  v.  Dec.  275;   Anderson  ?'.  Bosworth,  15 

Loech,  40  Iowa,  180;  Matthis  v.  Cam-  R.  I-  443;  2  A:n.  St.  Rep.  910. 

eron,  02  Mo.  504;  Niagara  Ins.  Co.  v.  *  As  to  the  two  latter  methods,  see 

Kodecker,  47  Iowa,  102.    A  party  to  a  ante,  Chapter  XIII. 


§194 


PRINCIPAL  AND  AGENT. 


814 


wlicn  proceeded  against  under  the  statute,  may  insist 
upon  a  set-off,  or  any  otlior  defense  which  it  would  bo 
competent  for  him  to  make  to  an  action,  if  that  form  of 
remedy  had  been  adopted.* 

§  194.  When  Summary  Jurisdiction  will  and  will  not 
be  Exercised.  —  The  summary  jurisdiction  will  not,  how- 
over,  be  exercised  where  ho  is  not  an  attorney  of  tliut 
court,''  or  the  cause  did  not  arise  in  whole  or  in  part  out 
of  a  case  before  that  court,"  or  was  not  connected  with  his 
official  employment,'*  nor  where  the  client  has  obtained  a 
judgment  for  his  money  against  the  attorney,  and  has 
thus  changed  their  relation  to  that  of  debtor  and  cred- 
itor.*^ In  a  proceeding  by  motion  against  an  attorney 
for  refusing  to  pay  over  the  client's  money  when  de- 
manded, ho  is  only  chargeable  with  the  amounts  actually 
collected, —  not  with  a  deficit  in  the  recovery  of  a  judg- 
ment, arising  from  malfeasance  or  non-feasance.®  Tho 
Kentucky  act,  giving  a  summary  remedy  against  attor- 
neys who  fail  to  pay  over  money  collected  for  their  cli- 
ents, applies  only  to  attorneys  of  the  state,  and  to  money 
collected  by  them  officially,  not  to  attorneys  of  the  fed- 
eral courts,  nor  to  collections  made  under  their  process." 
Summary  proceedings  cannot  be  had  to  compel  an  attor- 
ney to  pay  over  money  received  by  him,  on  a  bond  and 
mortgage,  as  a  land  agent,  not  as  an  attorney.®  The  stat- 
ute of  Mississippi  gives  the  remedy,  by  motion,  against 
attorneys,  only  when  money  has  actually  been  collected 
by  them,  and  they  have  refused  to  pay  it  over  {  ^  cs 
not  lie  where  they  have  taken  notes,  etc      -^     atisfactioii 


*  Jones  i\  Miller,  1  Swan,  151. 

^  In  re  Philips,  3  Jur.  479;  In  re 
Lord,  'J  Scott,  1:J1. 

*  Tliompson  v.  Gordon,  15  Mees.  & 
W.  GIO. 

*  Alexander  v.  Anderdon,  6  Beav. 
405. 

»  Windsor  r.  Brown,  15  R.  I.   182; 
2  Am.  St.  Rep.  892.     Summary  juris- 


diction will  J  applied  when     jo 

money  was  n  oceived  i'l  a  profes- 
sional capacity,  i  i  whc  it  is  with- 
held in  good  faith:  In  re  Kennedy, 
120  Pa.  St.  497. 

«  Croft  V.  Hicks.  20  Tex.  383. 

''  Tiiomas  v.  Roberts,  5  Dana, 
189. 

8IureDakin,  4Hill,  42.- 


315 


LIABILITY  OF   ATTORNEY   TO   CLIENT. 


195 


of  an  execution.'  A  sumuuiry  application  to  compel  an 
attorney  to  pay  over  money  received  in  his  professional 
capacity  is  only  entertained  on  motion  of  the  client,  and 
is  not  extended  to  assignees  of  clients.*  One  who  has 
bt'on  an  attorney  is  liable  for  conduct  during  that  time, 
though  he  has  since  ceased  to  bo  an  attorney;^  but  the 
court  will  not  generally  interfere  where  the  misconduct 
took  jjlaco  before  the  attorney  was  admitted.' 


§  195.  For  What  Acts  Summary  Jurisdiction  will  be 
Exercised.  —  The  court  will  summarily  compel  an  attor- 
ney to  perform  his  undertaking  to  pay  money .^^  and  his 
obligation  to  pay  over  money  collected  for  his  client,"  or 
an  excessive  fee  which  ho  has  retained  for  his  services.'^ 
An  attorney  who  has  received  money  in  payment  of  costs 
awarded  to  his  client  by  an  erroneous  order  which  has 
been  reversed  may  bo  ordered  to  restore  it."  Where 
an  attorney  in  an  action  is  in  contempt   for   the  vio- 

'  Banks  r.  Cage,  2  Miss.  293. 

-  Ht!33  V.  Josepli,  7  RoI)t.  (509. 

^  Scott  V.  Van  Alstyno,  9  Johns. 
210. 

*  In  re  Pago,  1  Bing.  100;  Anony- 
innus,  2  Barn.  &  Adol.  7oO. 

^  III  re  Ililliard,  2  Uowl.  &  L.  919; 
Weeks  on  Attorney,  see.  78;  Hatlia- 
way  V.  Brady,  20  C'al.  581;  Dunn  v. 
H;uinL'r.son,  7  How.  (Miss.)  570;  In  ro 
Bluakley,  5  I'aige,  311;  lu  ro  Silvcr- 
niil,  45  Hun,  575. 

'■People  V.  Smith,  3  Caines,  222; 
Saxtonr.  Wyckoff,  0  Paige,  182;  In  re 
Bluakley,  5  Paige,  311;  Foster  r. 
Townshcnd,  08  N.  Y.  203;  Kuhno  v. 
Tiiulvy,  23  Hun,  282;  In  ro  Steinert, 
21  Hun,  243;  People  v.  Wilson,  5 
Jolms.  .308;  Bowling  Green  Savings 
Bank  v.  Todd,  52  N.  Y.  489;  In  re 
H ,  87  N.  Y.  521;  People  v.  Smith, 

1  Cole.  &  0.  Cas.  497;  Bohanan  v. 
PottTson,  9  Wend.  503;  Hesat'.  Joseph, 

7  Pkoht.  000;  Hynman  v.  Washington, 

2  McCord,  493;  Merritt  v.  Lambert, 
10  Paige,  352;  WilmerJings  i\  Fowler, 
14  Abb.  Pr.,  N.  S.,  249;  Grant's  Case, 

8  Alib.  Pr.  357;  Ex  parte  Statts,  4  Cow. 
76;  In  re  Mertian,  29  Hun,  459.    ' '  The 


summary  jurisdiction  exercised  by  the 
courts  for  the  purpose  of  compelling 
attorneys  to  perform  their  duty  to 
clieutii  is  not  cidy  just  in  i^scU,  hut  it 
exerts  a  wliolesome  iutluence  upon  the 
whole  body  of  tlie  legal  profession. 
If  tlio  client  were  driven  to  tlio  dila- 
tory and  sometimes  inefficient  remedy 
h}'  action,  wlien  the  attorney  im- 
properly neglects  to  pay  over  money, 
a  few  unworthy  mend)ers  of  tho 
bar  v'f>;dU  bring  odium  ii])oii  all  t':e 
rcot."  In  re  Dakhi,  4  Hill,  42.  But 
tho  ground  for  tliis  summary  proceed- 
ing is  happily  stated  by  Pcekliam,  J., 
in  Bowlin;.;  Green  Saviiigj  Bank  r. 
Todd,  52  N.  Y.  48'J,  thus:  "The  law 
ii  not  guilty  of  the  absurdity  of  hold- 
ing that  after  a  client  has  spent  years 
in  collecting  through  his  attorney  a 
lawful  demand,  he  shall  b  ■  put  to 
spending  as  many  more  to  collect  it 
from  the  attorney,  and  if  that  attor- 
ney should  not  pay,  then  try  the  same 
track  again." 

'  Burns  v.  Allen,  15  R.  I.  .32;  2 
Am.  St.  Rep.  844. 

^  Forstman  v.  Schultiug,  108  N.  Y. 
110. 


§195 


PRINCIPAL  AND  AGENT. 


316 


Lition  of  an  injunction  therein,  or  for  any  act  incon- 
sistent with  his  relation  to  the  court,  and  suitors  have 
sustained  damage,  the  remedy  is  by  summary  proceed- 
ings, not  by  action.^  He  will  bo  summarily  ordered  to 
pay  over  money  collected,  although  when  the  suit  result- 
ing in  the  collection  was  brought,  ho  had  a  partner,  the 
partnership  having  been  dissolved  before  the  collection 
was  made.  And  it  makes  no  difference  that  there  were 
unsettled  matters  between  the  attorney  and  his  partner, 
and  that  it  is  possible  that  the  partner  may  have  been 
instrumental  in  inducing  the  client  to  make  the  demand.'^ 
This  summary  jurisdiction,  however,  will  only  be  exer- 
cised where  the  monev  has  come  into  the  hands  of  the 

4/ 

attorney  in  his  professional  capacity,'  and  us  an  attorney 
of  the  court  in  which  the  application  is  made/  Money 
borrowed  by  one  from  a  client  who  had  sought  his  advice 
as  to  investing  it,  he  delivering  to  her  mortgages  to  secure 


1  Fosters.  Townshend,  68 N.  Y.  203. 

•^  Jeffries  r.  Laurie,  23  Fed.  Rep.  786. 

"  I:i  re  Dakiu,  4  Hill,  42;  Grant's 
Ca:;e,  8  Abb.  Pr.  357;  In  ro  Haskin, 
18  Hun,  42;  Wil!nerdinf;{3  v.  Fowler, 
55  N.  Y.  041;  lu  re  Husson,  26  Hun, 
130;  81)  N.  Y.  618. 

*  Ex  parte  Ketcbam,  4  Hill,  565, 
where  it  ij  saiil:  "The  power  to  deter- 
mine that  dispute  on  motion  belongs,  I 
think,  exclusively  to  the'superior  court, 
as  an  attorney  of  which  K.  was  acting. 
It  was  in  consequence  of  hi"*  ^'stainer 
a3  an  attorney  of  that  courr,  oiid  the 
confidence  reposed  in  him  us  such  by 
Humbert,  or  his  agent,  that  he  was 
enabled  to  obtain  the  money.  It 
makes  no  difference  that  he  is  also  an 
attorney  licensed  by  this  court.  The 
imputed  default  did  not  arise  in  the 
course  of  his  practice  here,  or  as  a 
consequence  of  his  license  here.  We 
cannot  see  that  such  license  furnished 
any  reason  for  the  retainer,  beyond 
that  of  the  superior  court.  1  admit 
there  may  be  cases  where  an  attorney 
of  this  and  other  courts,  receiving 
money  under  an  agency  having  no 
particular  reference  to  a  suit  here, 
might  be  attached  by  this  court  for 
aou-paymeut,  ou  the  principle  that  he 


was  retained  in  respect  to  his  profes- 
sional character.  That  would  leave 
room  for  inferring  that  had  he  not 
been  an  attorney  of  this  court,  ho 
would  not  have  been  so  retained.  But 
such  an  inference  is  excluded  where 
the  retainer  was  in  a  suit  already 
brought,  and  pending  in  another  court. 
It  is  impossible,  then,  to  say  that  be  is 
in  default  as  an  attori.cy  of  this  court, 
which  I  take  it  we  must  see  before  ve 
have  authority  to  punish  him  by  at- 
tachmeut.  Wo  might  about  as  well 
attempt  to  punish  a  man  for  profci- 
sional  misbcliavior  in  conducting  a 
su't  or  defence  in  the  court  of  a  neigh- 
boring state  as  to  interfere  o:i  this  mo- 
tion. Suppose  the  attorney  o  f  a  cou  nty 
court  be  guilty  of  the  plainest  miscon- 
duct, —  the  mutilation  of  a  record,  for 
instance,  — no  one  would  suppoae  tl^afc 
we  could  issue  process  of  contempt 
because  he  happened  at  the  same  time 
to  be  an  attorney  of  this  court.  To 
warrant  a  rule  .against  a  person,  the  dis- 
obedience to  which  would  be  a  con- 
tempt, he  must  not  only  bo  a  party  or 
officer  of  the  court,  but  ho  must  bo  so 
in  respect  to  the  particular  wrong 
which  be  is  ordered  by  the  rule  to  re- 
pair." 


316 


317 


LIABILITY    OF   ATTORNEY    TO   CLIENT. 


§105 


its  repayment,  one  of  which  ho  afterwards  induced  her  to 
surrender  and  satisfy  to  enable  liim  to  sell  the  property, 
he  stating  that  he  would  replace  it  by  another  just  as 
good,  which  he  failed  to  do,  is  not  received  by  him  in  his 
professional  character.'  Where  an  attorney,  under  order 
of  court,  has  paid  into  court  all  the  money  collected  to 
which  his  client  is  entitled,  the  court  has  no  further  juris- 
diction to  summarily  compel  him  to  pay  a  further  sum 
for  other  persons  claiming  a  share  in  the  fees  retained  by 
him.^  But  it  is  not  necessary  that  the  attorney  should 
have  received  the  money  in  any  suit  or  legal  proceeding, 
or  that  he  should  have  been  employed  or  instrutijid  to  com- 
mence legal  proceedings.  It  is  enough  that  the  money 
was  received  in  his  character  of  attorney;  as,  for  exam- 
ple, where  a  demand  is  left  with  him  to  collect  or  obtain 
better  security,  but  without  any  directions  to  sue.'  The 
mode  is  by  attachment  usually,  and  it  is  no  defense  that  the 
attorney  retains  the  money  in  good  faith.*  But  payment 
of  money  collected  by  an  attorney  will  not  be  enforced 
by  order  and  attachment,  where  it  appears  to  have  been 
withheld  under  a  bona  fide  claim  for  compensation.  Such 
a  case  must  go  to  a  jury.^  The  power  of  a  court  to  com- 
pel, by  summary  motion,  an  attorney  to  pay  over  money 
collected  extends  to  ordering  a  reference  to  determine 
the  amount  duo  to  the  attorney,  or  any  counterclaim  he 
may  interpose  for  his  services.  He  is  not  entitled  to  a 
jury  trial  of  that  question."  The  responsibility  for  the 
insertion  of  irrelevant  and  scandalous  matter  in  plead- 
ings rests  with  the  attorney  preparing  the  same,  and  the 
costs  of  a  motion  to  have  such  matter  stricken  out  should 
be  charged  to  him.'     A  demand,  however,  must  precede 


'  In  ro  Husaon,  26  Hun,  1.30. 

2  Baldwin  v.  Foss,  10  Nob.  80. 

'  In  re  Dakin,  4  Hill,  42;  Ex  parte 
Statt8,  i  Cow.  76;  Grant's  Case,  8 
Abb.  Pr.  357. 

'Bowling  Greea  Savings  Bank  v. 


Todil,   52  N.   Y.   489;   Balsbaugh  v. 
Frazer,  19  Pa.  St.  99. 

»  In  ro  Karve.-,  It  Phila  287. 

'  In  ro  Fincke,  (>  Daly,  111. 

'  McVcy  V.  CftiiLrell,  8  Hun,  522. 


§195 


PRINCIPAL  AND  AGENT. 


318 


the  motion  for  attachment.*  And  the  court  will  summa- 
rily compel  him  to  keep  his  promises  and  undertakings  as 
attorney;^  as,  for  instance,  his  undertaking  as  attorney  to 
enter  appearance,'  or  refer  to  arbitration.*  Bringing  an 
action  without  authority  will  make  the  attorney  liable, 
and  the  court  will  order  him  to  pay  the  costs.*^ 


'  Cottrell  V.  Finlayson,  4  How.  Pr. 
242;  Ex  parte  Ferguson,  6  Cow.  596; 
Taylor  v.  Bates,  5  Cow.  376;  Rath- 
bun  V.  Ingals,  7  Wend.  320. 

'  Strike's  Case,  1  Bland,  57;  In  re 
Gee,  10  Jur.  694. 

>  Anonymous,  1  Chit.  129;  2  Chit, 


36;  Mould  v.  Roberts,  4  Dowl.  &  R. 
719. 

*  Ex  parte  Hughes,  5  Barn.  &  Aid. 
482. 

*  Hubbart  v.  Phillips,  2  Dowl.  &  L. 
707;  Bay  ley  V.  Buckland,  5  Dowl.  &  U 
115. 


,|V- 


^ceiviD; 


318 


319 


LIABILITY   OF   CLIENT  TO   ATTORNEY. 


§196 


mmma- 
:ings  as 
)rney  to 
;ing  ail 
'  liable, 

owl.  &  R. 

•n.  &  Aid. 

)owl.  &  L. 
)owl.  &  T* 


CHAPTER  XVII. 

LIABILITY  OF  CLIENT  TO  ATTORNEY. 

§  196.  Attorney  and  counsel  may  sue  for  sen'ices. 

§  197.  Contract  implied  to  pay  for  attorney's  services. 

§  198.  How  basis  of  compensation  is  arrived  at. 

§  199.  What  compensation  allowed  where  no  express  contract. 

§  200.  Attorney  may  deduct  fees  from  client's  funds. 

§  201.  Compensation  out  of  fund  in  court. 

§  2J2.  Retainer  must  bo  proved. 

§  203.  And  that  services  were  rendered. 

§  201.  In  appellate  courts. 

§  205.  Attorney  cannot  recover  compensation,  when, 

g  206,  Attorney  may  make  special  contract  for  compensation. 

§  207.  Special  contracts  for  compensation  sustained. 

§  20S.  Special  contracts  for  compensation  not  sustained. 

§  209.  Special  contract  for  co..tpletc  service  —  Completion  of  service  inter- 
rupted. 

§  210.  Special  contract  for  complete  service  —  By  withdrawal  from  case. 

§  211.  Special  contract  for  complete  service  —  By  dismissal  of  or  from  case. 

§  196.  Attorney  and  Counsel  may  Sue  for  Services.  — 
In  England,  while  an  attorney 'mh  bring  an  action  for 
the  value  of  his  services,  a  barvistc  or  counsel  cannot.^ 
This  distinction  was  at  an  oarly  lay  recognized  in 
Pennsylvania,*  but  was  subsequent'/  rejected;*  and  has 
likewise  obtained  in  New  Jersey.*  With  this  exception, 
however,  it  is  now  imiversally  held  in  the  United  States 
that  counsel  as  well  as  attorneys  may  recover  compen- 
sation for  their  services.^    Even  in  those  jurisdictions 

'  Weeks  on  Attorneys,  sec.  333. 

'  Mooney  v.  Lloyd,  5  Serg.  &  R. 
411. 

'Foster  v.  Jack,  4  Watts,  334; 
Balsbaugh  v,  Frazer,  19  Pa.  St.  95; 
Lynch  v.  Commonwealth,  16  Serg.  & 
R.  368;  16  Am.  Dec.  582. 

*  Seeley  v.  Crane,  15  N.  J.  L.  35; 
Shaver  v.  Norris,  3  N.  J.  L.  663;  Van 
Attat).  McKinney,  16N.  J.  L.  235;  Hop- 
per V.  Ludlum,  41  N.  J.  L.  182.  Counsel 


an  agreement  has  been  made  to  pay  a 
specific  sum  for  services  as  counsel: 
Zabriskio  v.  Woodruif,  48  N.  J.  L.  010. 
"  Balsbaugh  v.  Frazer,  19  Pa.  St.  95; 
Smitn  V.  Davis,  45  N.  H.  50(3;  Nichols 
V.  Scott,  12  Vt.  47;  Miller  v.  Beal,  26 
Ind.  2.34;  Webb  v.  Browning,  14  Mo. 
^'lli'  re  ^^^^  ''•  Monges,  1  Harr.  (Del.) 
1  '  ,.^  i  ^kett  V.  Sears,  15  Mich.  241; 
Wylie  V.  Coxe,  15  How.  410;  Baird  v. 

Ratcliflf,  10 Tex.  81;  Carters.  Bennett, 

ices  can  be  recovered  by  actioa  where    6  Fla.  214;  Duncan  v.  Breithaupt,  1 


196 


PRINCIPAL   AND   AGENT. 


320 


O 


where  a  counsel  cannot  collect  his  fees  by  process  of  law 
an  action  will  lie  on  a  bill  of  exchange  or  note  given  in 


C( 

h 


McCortI,  149;  Rust  i\  Larue,  4  Litt. 
411:  Vihu  r.  Dowacr,  21  Vt.  419;  Cakl- 
well  V.  .Shepherd,  C  T.  B.  Mon.  389; 
Ncwnau  V.  Wasliiugton,  Mart.  &  Y. 
79;  Mcrritt  r.  Lambert,  10  Paijjo,  352; 
\Vallisi».  Loubat,  2  Denio,  GOT;  Wilson 
V.  Burr,  25  Wciiil.  S8(i;  Stcvcas  v. 
Adams,  23  Wend.  57;  Buckland  «'.  Con- 
way, IG  Mass.  37G;  Thurston  v.  Perci- 
val,  1  Pick.  415;  Brigham  v.  Foster,  7 
Allen,  419.  Adams  v.  Stevens,  2G 
Wend.  451,  contains  a  full  history  of 
the  law  on  this  subject  from  the  earliest 
time.  "  The  question,"  said  the  court, 
"is,  whether  by  the  laws  of  tliii  state  a 
counselor  who  i  j  employed  to  argue  a 
caUoB  for  his  client,  under  an  agree- 
ment to  pay  him  a  greater  compensa- 
tion for  his  services  than  the  nominal 
counsel  fee  mentioned  in  the  statute, 
can  sustain  an  action  to  recover  that 
compensation.  Blackstone  lays  it 
down  as  the  established  law  of  Eng- 
land, that  a  counselor  cannot  sustain 
a  suit  for  his  fees;  and  ho  cite.i  for 
this  purpoic  t!ie  case  of  Moor  v.  Row, 

1  Rop.  in  Ch.  38,  in  the  time  of  Lord 
Coventry,  1G29,  where  a  demurrer  was 
allowed  to  a  bill  brought  by  a  counselor 
against  a  solicitor  for  counsel  fees, 
which  the  latter  had  agreed  to  ac- 
count for  periodically.  He  also  refers 
to  the  decree  of  the  Emperor  Clau- 
dius, mentioned  by  Tacitus,  limiting 
the  amount  of  gratuity  which  t!.c  ad- 
vocate should  be  permitted  to  receive. 
It  has  also  more  recently  been  decided 
in  England,  that  the  practice  of  pl.ysic 
is  a  mere  honorary  employment;  and 
that  the  medical  practitioner  cannot 
by  suit  recover  a  compensation  for  his 
services,  but  must  be  content  to  take 
such  compensation  only  as  is  vclun- 
tarily  offered:  Ohorley  v.  Bolcot,  4 
Term  Rep.  317;  Lispecombct'.  Holmes, 

2  Camp.  N.  P.  441.  I  am  not  aware  of 
any  case  in  wliich  it  has  been  definitely 
decided,  even  in  England,  that  a  lar- 
rister  cannot  recover  upon  an  express 
contract  to  pay  him  a  specific  snm  for 
his  services  as  counsel;  but  in  the 
case  of  Turner  v.  Phillips,  1  Peake, 
123,  in  which  Lord  Kenyon  expressed 
the  opinion  that  money  paid  to  a  bar- 
rister for  his  services  could  not  be  re- 


covered back,  ho  mentioned  it  as  the 
general  opinion  of  the  profession,  that 
the  fees  of  barristers  and  physicians 
were  as  a  present  from  the  client  or 
patient,  and  not  a  payment  or  com- 
pensation for  services.  It  was  upon 
this  principle,  I  presume,  that  he  de- 
cided the  case  of  Fell  v.  Brown,  1 
PcaUe,  9G,  where  he  held  that  an  ac- 
tion would  not  lie  agains';  a  barrister 
for  gross  negligence  in  conducting  the 
cause  of  his  client.  This  rule  of  con- 
sidering the  services  of  barristers  and 
physicians  as  gratuitous  merely,  and 
as  not  entitling  them  to  any  L'gal 
claim  to  compensation,  is  supposed  to 
have  been  derived  from  the  civil  law. 
But,  as  I  understand  that  law,  the 
advocate  might  recover  upon  an  ex- 
press i)romisc  to  pay  his  honorary  foe, 
although  there  was  no  implied  prom- 
ise arising  merely  from  the  relation  of 
advocate  and  client.  Among  the  early 
institutions  of  Rome,  when  the  rela- 
tion of  patron  and  client  existed  be- 
tween the  patrician  and  the  plebeian, 
the   i)atron,   who    had    accc])tcd    the 

Eromise  of  fidelity  from  the  client,  was 
ound  to  render  hirn  advice  and  aj- 
sistance,  an  1  to  sustain  him  in  his 
litigations,  without  any  other  fee  or 
reward  than  that  which  the  client  wiis 
bound  to  render  him  at  all  timo^,  i.i 
vir,;ue  of  his  general  relation  of  client 
Th3  relation  which  existed  between 
then  was  sunilar  to  that  of  parent  and 
child,  or  rather  that  of  master  and 
slave.  But  in  the  progress  of  society, 
when  the  relations  of  patron  and  client 
toward  each  other  hail  totally  changed, 
—  when  the  business  of  advocating 
causes  in  the  courts  had  become  a 
profession,  and  before  the  credit  sys- 
tem pervaded  all  the  relations  of  life,  — 
the  client  paid  his  advocate  a  fee  i:i 
advance  for  his  services,  which  was 
called  a  gratuity  or  present.  As  this 
was  a  n.ero  honorary  recompense, 
the  client  was  under  no  legal  obliga- 
tion to  pay  it.  But  the  result  neces- 
sarily was,  that  if  the  usual  present 
was  not  given,  the  advocate  did  not 
.consider  himself  bound  in  honor  to 
undertake  the  advocation  of  the  cause 
before  the  courts.    Afterward,  Marcus 


for 
tui 
to 


320 


001 


LIABILITY   OF    CLIENT   TO    ATTORNEY. 


100 


consideration  of  his  eerviccs.^     In  Indiana  it  has  been 
held  that  a  statute  requiring  attorneys  to  prosecute  or 


Icomc  ii 

Uifc  sys- 

lifc,- 

fee  i.i 

Ich  was 

IAs  this 

ipcnso, 

I  obliga- 

nccea- 

ircsciit 

iicl  not 

l)ucr  to 

|c  cause 

larcus 


1/ 

f 


Cincius  Alinientus,  tho  tribune  of  the 

tiuople,  procured  tho  passage  of  the 
aw  known  as  the  Cincian  law,  pro- 
liibiting  tho  patron  or  advocate  from 
receiving  any  money  or  other  present 
for  any  cause;  and  annulling  all  gra- 
tuities or  presents  made  by  the  client 
to  the  patron  or  advocate.     But  as  no 
penalty  was  prescribed  for  the  breach 
of  this  law,  it  of  course  became  a  dead 
ktti.T.     Tiie  Emperor  Augustus  after- 
wards   re-enacted    the    Cincian    law, 
and  prescribed  penalties  for  its  breach. 
But  towards  the  end  of  his  reign  the 
advocates  were   again   authorized   to 
receive   fees   or    presents   from   their 
clients.     Tlie   Emperor   Tiberius   also 
])crniittad  them  to  receive  such  forced 
gratuities.     This  led  to  the  abuse  re- 
ferred to  by  Tacitus,  and  induced  the 
senate  to  assist  upon  the  enforcement, 
or   rather   tho    re-enactment,    of    the 
Cincian  law,  or  rather  the  law  limit- 
ing tho  amount  of  tho  fees  of  advocates, 
us  referred  to  by  Blackstonc:  3  Bla. 
Com.  '2'J,  note.  12.    Nero  revoked  tho 
liw   of  Claudius;    which   was  subse- 
([ueutly   re-enacted   by  the   Emperor 
Trajan,   with    the   additional    rejtric- 
tion    tliat    the    advocate    should    not 
1)0   permitted    to   receive    his    fee    or 
grat  lity    until    the    cause    was     de- 
cided: 1  Dupin,  aiu3  39.    The  younger 
riiny    mentions    a  law   not    referred 
to  by  Dupin,   which    authorized   tho 
advocate,  after  tho  pleadings  in  the 
cau:-e  had  been  made  and  the  juilg- 
munt  had  been  given,  to  receive  the 
foe  which  miglit  be  voluntarily  offered 
by  tho  client,  either  i;i   money  or  a 
pi-omise  to  pay :  See  Merlin,  art.  Ho:io- 
raircs.     ErsUino,  in  his  Institutes   of 
t'.ie  Law  of  Scotland,  understands  the 
law  in  the  Digest  De  EMraonlinariii 
Co'iultioiiilnis  as  authorizing  a  suit  for 
the  fee  of  a  physician  or  advocate, 
without  a  previous  agreement  for  a 
specified  sum:  2  Ersk.  Inst.,  by  Mac- 
Allen,  (595.    Whatever  may  have  been 
tho  case  in  Ronio  itself,  it  is  settled  by 
the  law  of  Scotland,  where  the  civil 
law  prevails,  that  an  action  may  bo 
sustained  on  a  promise  to  compensate 


an  advocate  or  a  physician  for  his  ser- 
vices: See  Stair,  Inst.,  by  Brodie,  b. 


I.,  tit.    12,  art.  5,  and  n.   b. 


Bell. 


Law  Diet.,  tit.   Fees;  Ersk.   Inst.,  b. 
III.,  tit.  3,  art.  32;  McKcnzie  v.  Burn- 
tisland,   Mor.   Die.    of  Decis.    11-121. 
But  in  relation  to  the  focj  of  phy.^i- 
cians.  the  legal  presumption  there  i;?, 
that  they  were  settled  at  the  time,  ex- 
cept the  fees  for  attending  tho  patient 
in    his    last    sickness;    or   where    an 
agreement  for  a  cretlit  is  proved;  ur 
where,    by  the   custom   of   tlie   place 
where  tlio  services  are  performed,  tho 
services  of  the  pliysician  nvo  not  paid 
for  until  tho  termination  of  the  sick- 
ness of  the  patient:  Johnson  r.  Bell, 
Mor.  Die.  of  Decis.   IMIS;  Hamilton 
V.  (lib.son,  and  Flint  f.  Alexander,  Mor. 
Die.  of  Decis.  11422.     It  appears  aloo 
to  be  the  law  of  France,  tliat  the  ad- 
vocate niay  recover  for  his  fees  by  suit. 
iSireif  Ikciicl  Ocncr-le  de  Loin,  to;ii.  22, 
pt.  2,  !>.    141.     But  it  ajjpears  to  be 
considered  diohonorable  by  the  Pari- 
sian be.;' +<)  bring  suits  for  counsel  fees; 
and  tho.ic  who  should  attempt  to  do  it 
would  bo  immediately  stricken  from 
the  roll  of  advocates:  1  Dui)in,  aiue. 
Prof.  D'Avocat,  110,  G'J8.     Whatever 
may  bo  the  practice  of  other  countries, 
L'lwevcr,  the  principle  nev^r  has  Ijeen 
adopted  in  this  state  that  tlic  i)rofes- 
sions    of    physicians    and    counselors 
are  merely  honorary,  and  that  they 
are  not  of  right  entitled  to  demand 
and   receive  a  fair  compcn.;ation  for 
their  Lorvices;  especially  where  there 
is  a.i  agreem(!nt  to  pay  them  a  lixed 
compensation,  or  Kuch  a  reaionablo  re- 
muneration for  their  services  as  tho.e 
services  shall  be  deemed  to  be  wortli. 
The  distinctions  of  piatron  and  client, 
which  formed  one  of  tho  fundanieiital 
laws  of  ancient  Kome,  ceased  in  this 
state   when     slavery    was    abolished; 
and  it  is  wholly  incouyistent  with  all 
our  ideas  of  equality  to  suppose  that 
the  business  or  profession  by  which 
any  one  earns  the  daily  bread  of  him- 
self or  of  his  family  is  so  mueli  more 
honorable  than  tlie  business  of  other 
membora  of  tho  community  as  to  pre- 


VoL.  L  — 21 


»  Mowat  V.  Brown,  19  Fed.  Rep.  87. 


§197 


PRINCIPAL  AND  AGENT. 


322 


defend  certain  eases  without  fee  in  effect  imposes  a  tax 
to  that  extent  upon  such  class,  and  is  in  violation  of  the 
constitutional  provision  for  an  equal  rate  of  assessment 
and  taxation  upon  all  citizens.*  A  person  performing 
services  as  attorney  may  recover  their  value,  even  though 
he  has  not  been  admitted  to  practice;  provided  there  ex- 
ists no  prohibitory  statute  or  rule  of  court  on  the  subjoct.- 
So  an  attorney  may  recover  for  services,  though  not  hav- 
ing a  license  required  by  law;'  But  where  a  statute  enacts, 
for  the  purpose  of  securing  a  more  effectual  compliance 
with  its  requirements  in  respect  to  the  licensing  of  cer- 
tain occupations,  that  no  one  shall  e  igage  in  or  carry  on 
any  such  occupation  until  he  shall  have  obtained  a  license 
as  provided  by  the  statute,  it  is  an  express  prohibition  with- 
out more  particular  words.  Hence  a  lawyer  who  has  not 
obtained  a  license,  as  was  required  by  the  internal  revenue 
act  of  Congress,  could  not  recover  for  professional  services 
rendered  while  the  act  was  in  force;  and  a  contract  made  by 
him  to  render  such  services  was  absolutely  void.^  Where 
an  attorney  at  law  brought  a  suit  in  his  own  name  as 
principal  and  owner,  it  was  held  that  he  could  not  re- 
cover counsel  fees  as  the  agont  of  another.  He  cannot, 
in  the  same  proceeding,  claim  to  be  the  owner  and  the 
agent  of  the  owner  of  the  same  thing.^  An  attorney 
individually  engaged  outside  the  county  to  which  the 
business  of  the  firm  of  which  he  was  a  member  was  con- 
fined may  sue  alone  for  his  services." 

§  197.    Contract  Implied  to  Pay  for  Attorney's  Services. 
— The  attorney  or  counsel,  then,  is  entitled  to  compensa- 


vent  him  from  recovering  a  fair  com- 
pensation for  his  services  on  that  ac- 
count. I  have  no  doubt,  therefore,  that 
by  the  law  of  this  state,  as  it  has  always 
existed  from  the  time  of  its  first  settle- 
ment, the  lawyer  as  well  as  the  physi- 
cian was  entitled  to  recover  a  compen- 
sation for  his  services;  and  that  such 
services  were  never  considered  here  as 
gratuitous  and  honorary  merely." 


»  Webb  V.  Baird,  G  Ind.  13;  Blythe 
V.  State,  4  Ind.  525. 

■■'  Harland  v.  Lilienthal,  53  N.  Y. 
438;  Ames  v.  Gilman,  10  Met. 
239. 

*  Yates  V.  Roberts  on,  80  Va.  475. 

*  Hall  V.  Bishop,  3  Daly,  109. 

*  Baler  v.  McAllisver,  19  La.  Anu. 
21. 

«  Moshieru.  Frost,  110  III.  206. 


323 


LIABILITY   CF  CLIENT  TO  ATTORNEY. 


§197 


tioii  for  all  services  rendered  to  the  client  in  good  faith 
and  in  a  proper  manner.*     He  may  recover  from  those 
who  employ  him  whatever  sum  his  services  are  reason- 
ably worth,  and  the  performance  of  such  services  at  the 
instance  or  with  the  consent  of  the  person  about  whose 
business  they  were  rendered   implies  a  promise  to  pay 
for  them  quantum  meruit}    An  attorney  at  law,  guardian 
of  minors,  can  lawfully  charge  his  wards  for  professional 
services  in  conducting  litigation  for  their  benefit.^     An 
attorney  who  is  also  a  public  administrator  is  not  allowed, 
in  addition  to  his  compensation  of  office,  fees  as  attorney 
in  the  administration  of  the  estates.*     Where  neither  the 
duties  nor  the  compensation  of  a  city  solicitor  are  pre- 
scribed, it  is   his  duty,  unless  otherwise   instructed,  to 
perform  such  services  as  the  interests  of  the  city  may 
require,  and  he  may  recover  therefor  what  they  are  rea- 
sonably worth.^     The   attorney   is   not   necessarily   pre- 
vented from  recovering  his  fees   because  the  litigation 
was  unsuccessful,  the  non-success  not  being  the  result  of 
his  neglect  or  ignorance."    An  attorney's  right  of  com- 
pensation is  not  lost  because  his  services  may  have  been 
of  no  benefit  to  his  client,  if  they  have  been  faithfully 
and   intelligently  rendered.'    Where   parties  take  upon 
themselves  the  defense  of  a  suit,  after  notifying  the  real 
defendant  of  the  pendency  of  the  action,  they  must  pay 
their  attorneys'  fees.*     If  the  rate  of  compensation   is 
fixed  by  statute,  the  law  implies  a  promise  to  pay  at  least 
that  rate,  and  the  burden  of  proving  that  the  attorney 
agreed  to  do  the  work  for  less  rests  on  the  client."     If 
one  attorney  renders  services  for  another,  there  is  an  im- 


'  Hallett  V.  Oakes,  1  Cush.  296. 

'  Balsbaugh  v.  Frazer,  19  Pa.  St.  99; 
III  re  Paschal,  10  Wall.  483;  Stow  v. 
Hamlin,  1 1  How.  Pr.  452. 

^  Mumma's  Account,  5  Pa.  L.  J. 
424. 

*  Loaeue  v.  Brennan,  86  Tenn.  634. 

'  Kiunie  v.  Waverly,  42  Iowa,  486. 

°  Biackett  v.  Sears,  15  Mich.  244. 


'  Bills  V.  Polk,  4  Lea,  494. 

*  Gainea  v.  Poor,  3  Met  503;  79  Am. 
Dec.  659. 

•  Brady  v.  Mayor,  1  Sand.  669.  In 
New  York,  in  the  absence  of  an  agree- 
ment, the  taxable  costs  are  not  neces- 
sarily the  measure  of  the  attorney's 
compensation:  Starin  v.  Mayor,  106 
N.  Y.  82. 


§198 


PRINCIPAL  AND  AGENT. 


324 


plied  right  to  compensation,  although  such  services  arc 
sometimes  rendered  gratuitously  from  courtesy.*  It  is 
fraud  upon  counsel  for  a  client  to  settle  a  suit  without  his 
knowledge,  to  withhold  fees,  and  then  set  up  the  statute 
of  limitations.^  A  custom  for  attorneys  to  charge  a  client 
with  a  term  fee  at  each  term,  excepting  at  the  term  at 
which  the  case  is  argued,  when  an  arguing  fee  is  taxed 
instead,  and  in  addition  thereto,  when  the  defendant  pre- 
vails, to  charge  the  client  with  the  taxable  costs,  exclusive 
of  witnesses'  fees  and  money  advanced  by  the  client,  is 
reasonable  and  valid.'*  So  retainers  are  chargeable  by 
custom,  without  a  special  contract;*  and  attorneys  may, 
by  custom,  become  responsible  for  a  sheriff's  fees  in  the 
stead  of  the  client.^ 

Illustrations. — The  local  attorney  of  a  railroad  company, 
in  good  faith  and  vmdcr  circumstances  which  seemed  to  estab- 
lish his  authority,  appeared  for  his  company  in  a  suit  brought 
against  it.  Held,  that  he  was  entitled  to  compensation,  though 
ho  acted  without  authority:  Boyd  v.  Railroad  Co.,  84  Mo.  015. 
The  plaintiff",  who  was  an  attorney  at  law,  was  employed  to 
accomplish  the  sale  of  an  undivided  estate,  and  for  that  pur- 
pose instituted  proceedings,  which  were  subsequently  judicially 
declared  to  he  invalid.  IMd,  that  he  might  nevorthclcss  re- 
cover compensation  for  his  services  if  it  did  not  appear  that  he 
■was  incompetent  or  negligent:  Bowman  v.  Tallman,  2  Ilobt.  SS5. 


§  198.    How  Basis  of  Compensation  is  Arrived  at. — 

On  a  quantum  meruit  for  services  as  attorney,  the  profes- 
sional standing  of  the  attorney  is  to  be  taken  into  con- 
sideration, and  the  amount  of  his  professional  business,'^ 


'  Graydon  v.  Stokes,  24  S.  C.  483. 

*  Liclity  V.  Hugus,  55  Pa.  St.  434. 

^  Boiltish  V.  Fox,  23  Hie.  90;  39  Am. 
Dec.  Gil;  Codman  v.  Armstrong,  28 
Me.  91. 

*  Eggleaton  v.  Boardman,  37  Mich. 
14. 

*  Doughty  V.  Page,  48  Iowa,  483. 

6  Phelps  V.  Hunt,  40  Conn.  97.  In 
Lomhard  v.  Bayar.l,  1  Wall.  Jr.  207, 
the  court  said:  "The  law  could  not 
well  lit  a  standard  which  would,  be 


just  in  all  cases,  nor  can  the  court- 
The  services  of  men  of  skill  and  cx- 

Eerience  in  their  profes-sions  are  not  to 
o  rated  like  those  of  day-laborers. 
It  is  a  question  of  great  delicacy  lor 
the  court  to  hn  called  upon  to  judge 
what  is  a  proper  compensation  tor 
them.  The  facts  of  the  case,  from 
their  character,  cainiot  be  sullicieiitly 
brought,  or  very  sutficiently  discu.ssiil, 
before  the  court,  nor  the  compensation 
tested  by  any  certain  rule;  and  tbis 


324 


325 


LIABILITY   OF   CLIENT  TO   ATTORNEY. 


§198 


and  the  nature  and  importance  of  the  controversy  in 
A\  hich  the  services  were  rendered.*  In  fixing  the  amount 
of  a  reasonable  fee,  regard  should  be  had  to  what  is  cus- 
tomary for  such  legal  services.  The  inquiry  should  bo, 
not  what  the  attorney  thinks  is  reasonable,  but  what  is 
the  usual  charge.^  In  short,  the  reasonable  compensation 
recoverable  by  an  attorney  for  his  services  in  a  cause  is 
determined,  not  merely  by  the  length  of  time  engrossed, 
but  by  all  the  circumstances,  including  the  professional 
skill  and  standing  of  the  attorney,  his  experience,  tho 
nature  and  character  of  the  question  raised,  and  tho 
result  attained.'  No  regular  measure  of  value  can  bo 
iixed  for  the  services  of  counsel  in  trying  a  difficult 
case,  or  investigating  intricate  questions  of  law.'*  Coun- 
sel should  be  allowed  for  their  services  what  those  ser- 
vices could  have  been  obtained  for  by  a  contract  made  in 
advance.^     In  a  New  York  case  it  is  said  that  it  is  proper 


last  point  must  generally  bo  submitted 
to  the  candor  and  judgment  of  the 
nieinl)er3  of  a  profession  eminent 
among  all  others  for  honor  and  in- 
tegrity  Every   gentleman    of 

thi;  har  well  knows  that  there  cannot 
bo  any  one  rule  of  charges  in  the 
nature  of  a  horizontal  tariff  for  all 
causoa.  Often  where  the  parties  are 
poor  and  the  matters  in  contest  small, 
counsel  receive  but  very  inadequate 
coniiiensation  for  their  exertion  of 
mind  and  body;  and  for  myself,  I 
know  that  some  of  the  most  severe 
labors  of  my  professional  life  liavo 
been  the  I'jast  well  paid.  In  other 
casos,  where  the  parties  are  wealthy, 
and  the  sum  in  controversy  lar^'o,  they 
will  receive  a  tenfold  greater  compen- 
sation for  a  tithe  of  the  same  labor.  In 
s(  me  cases  the  whole  sum  in  dispute 
would  be  poor  compensation;  in  oth- 
ers, five  per  cent  of  it  will  be  very 
liberal.  Hence  in  all  cases  profes- 
sional compensation  is  gauged,  not  so 
much  by  the  amount  of  the  labor  as 
by  the  amount  in  controversy,  the 
ability  of  the  party,  and  the  result  of 
the  effort. " 

'  Weeks    on    Attorneys,    sec.    338; 
Garfield  v.  Kirk,  65  Barb.  404;  Vilaa 


V.  Downer,  21  Vt.  419;  Duncan  v. 
Breithaupt,  1  McCord,  149;  Darl)y 
V.  Knapp,  2  Mo.  Api>.  4SG;  Campbell 
V.  Goddard,  17  111.  App.  38.).  In  esti- 
mating the  value  of  an  attorney's  ser- 
vices in  soliciting  a  pardon  (jf  a  fiiiritivo 
from  justice,  in  order  to  obtain  him  aj 
a  witness,  the  amount  of  the  claim  i:i 
the  case  in  which  he  was  wislied  to 
testify  is  proper  for  tho  coni^ideratiou 
of  the  jury:  Kentucky  Bank  v.  Combs, 
7  Pa.  St.  543.  When  the  muaiu  of  a 
succession  are  limited,  the  foes  of 
counsel  will  be  reduced  in  a  corre- 
sponding degree:  Successioii  of  Virgin, 
18  La.  Ann.  42. 

'^  Weeks  on  Attorney.i,  sec.  .343,  cit- 
ing Reynolils  v.  McMillan,  03  111.  40; 
Webb  V.  Browning,  14  Mo.  3r)4;  (iarr 
V.  Mairet,  1  Hilt.  498;  Smith  v.  \)a.\u, 
45  N.  H.  50G;  Thompson  v.  Boyle,  85 
Pa.  St.  477. 

^  Eggleston  v.  Boardman,  37  Mich.  14. 

*  People  V.  Bond  Street  Savings 
Bank,  10  Abb.  N.  C.  15. 

*  Middleton?).  Bankers' etc.  Tel.  Co., 
32  Fed.  Rep.  524.  In  Colorado  attor- 
neys* fees  are  not  taxable;  they  are  a 
matter  of  contract  between  attorney 
and  client:  Fillmore  v.  Wells,  10  Col. 
228. 


§108 


PRINCIPAL   AND   AGENT. 


32G 


to  consider  the  amount,  the  questions  of  law,  the  hibor  nn<l 
responsibility,  and  the  interests  (or  the  relative  importance 
to  the  client  of  success  or  failure)  involved,  the  result  of  tlio 
service,  and  the  learning,  tact,  integrity,  and  assiduity  of 
the  counsel.'  Two  considerations,  it  is  said  in  Louisiana, 
determine  the  judgment  of  the  court  in  fixing  a  lawyer's 
compensation;  namely,  the  amount  and  character  of  the 
work  done,  and  the  debtor's  ability  to  i)ay.''  The  jury 
may  take  into  consideration  the  amount  the  defendant 
had  settled  for  with  other  persons  charged  in  the  same 
indictment,  and  for  whom  the  same  services  were  ren- 
dered.^ The  amount  an  attorney  receives  in  a  case  for 
his  services  is  no  criterion  of  the  value  of  the  services  of 
another  attorney  in  the  same  case,  in  the  absence  of  any 
showing  that  the  services  were  similar,  the  skill  eciual 
and  the  time  spent  the  same.''  Where  attorneys  are  em- 
ployed to  leave  the  state  in  which  they  reside  to  render 
professional  services  in  another  state,  their  compensa- 
tion will  be  governed  by  the  value  of  the  services  in  the 
state  in  Avhich  they  reside,  rather  than  in  the  state  where 
they  were  performed.®  An'  attorney  who  conducts  a  suit 
for  A  is  entitled  to  reasonable  compensation,  without  re- 
gard to  what  he  received  from  B  for  conducting  a  suit 
depending  on  a  similar  state  of  facts,  B's  suit  having  been 
stayed  by  agreement,  to  await  the  determination  of  A's 
suit,  which  was  finally  determined  in  A's  favor."  An 
attorney  cannot  rightfully  claim  half  the  amount  recov- 
ered, because  the  debt  was  desperate;  he  should  prove  his 
services,  and  may  recover  the  usual  compensation  there- 
for.^ Where  there  was  neither  intricacy  nor  litigation 
in  the  administration  of  a  succession  valued  at  ten  thou- 
sand dollars,  the  debts  of  which,  principally  for  medical 

'  People   V.    Bond   Street    Savings  14  Kan.    159;  Ottawa  University  v. 

Bank,  10  Abb.  N.  C.  15.  Welsh,  14  Kan.  104. 

^  Breaux  v.  Francke,  30  La.  Ann.,        *  Stanberry  v.  Dickerson,  35  Iowa, 

part  1,  336.  493. 

3  Cunning  v.  Kemp,  22  Wis.  609.  «  Bruce  v.  Dickey,  IIG  111.  527. 

*  Ott  iwa  University  v.  Farkinaoa,        '  Christy  v.  Douglas,  Wright,  485. 


32G 


327 


LIABILITY   OF   CLIENT   TO   ATTORNRY. 


§108 


services  and  funeral  expenses,  tlitl  not  exceed  one  thousand 
dollars,  two  hundred  dollars  was  considered  a  fair  allow- 
ance to  the  attorney  who  settled  the  succession/  Twonty- 
fjvo  dollars  is  not  an  unreasonable  attorney's  fee  for 
foreclosing  a  mortgage  for  eleven  thousand  dollars.''  A 
foe  of  seven  hundred  dollars  for  the  services  of  counsel  in 
maintaining  a  will  wdiich  controlled  the  disposition  of  an 
estate  of  sixteen  thousand  dollars  is  not  excessive.' 

The  value  of  the  services  may  bo  shown  by  the  opinions 
of  other  lawyers  testifying  as  experts."*  The  question  as  to 
the  value  of  services  by  an  attorney  is  not  one  of  science 
or  skill  for  the  testimony  of  experts.  Any  one  who  knows 
what  the  customary  and  usual  charges  of  lawyers  are  can 
testify;  but  it  is  proper  to  exclude  testimony  as  to  the 
value  of  such  services,  when  it  is  not  shown  that  the  wit- 
ness has  any  knowledge  as  to  the  usual  amount  charged 
for  attorney's  fees.''  In  a  suit  against  a  railroad  for  pro- 
fessional fees,  proof  that  the  services  of  a  good  attorney  at 
the  place  where  plaintiff  was  were  reasonably  worth  so 
much  per  month  is  improper.  The  attention  of  the  wit- 
ness should  be  called  to  the  particular  services  rendered, 
and  his  opinion  predicated  thereon.'  On  an  issue  between 
attorney  and  client,  as  to  the  value  of  the  former's  services 
in  a  suit  in  wdiich  the  latter  was  plaintiff,  and  which  was 
settled  without  a  trial,  the  opinion  of  the  counsel  of  the 
defendant  in  such  suit  that  the  jdaintiff  therein  had  no 
case  is  competent  evidence.'  In  Louisiana  the  supreme 
court  will  not  be  implicitly  governed,  in  regard  to  ques- 
tions relating  to  the  value  of  professional  services  rendered 


'  Uzee  ?'.  Biron,  6  La.  Ann.  5G5. 

'^  llitclicock  V.  Merrick,  15  Wis.  522. 

^  lloth'a  Succedsion,  3.3  La.  Ann. 
540.  As  to  what  is  a  fair  compensa- 
tion for  the  services  of  an  attorney  in 
defending  persons  indicted  for  larceny, 
see  Fraatz  v.  Garrison,  83  111.  CO. 

*  Harland  v.  Lilienthal,  53  N.  Y. 
4118;  Garfield  v.  Kirk,  65  Barb.  404; 
Brewer  V.  Cook,  11  La.  Ann.  637;  Vilas 
V.  Downer,  21  Vt.  419;  CuUoui  v.  Mock, 


21  La.  Ann.  687;  Barker  r.  Company, 
3  Thomp.  &  C.  ?>'2S;  Rose  v.  .Spies,  44 
Mo.  20;  Bodfish  v.  Fox,  23  Me.  'JO;  .39 
Am.  Dec.  611.  And  the  nport  of  a 
referee  founded  on  snch  testiisioiiy  will 
not  be  disturbed:  Fillmore  r.  Wells,  10 
Col.  228;  3  Am.  St.  Rep.  567. 

^  McNiel  V.  Davidson,  37  Ind.  336. 

*  Southgate  v.  Atlantic  and  Pacific 
R.  K.  Co.,  61  Mo.  89. 

'  Aldrich  v.  Brown,  103  Maso.  527. 


§  108 


PRINCIPAL    AND   AGENT. 


328 


their  clients  by  nttoriicys  at  law,  by  the  opinions  of  legnl 
men  taken  in  evidence,  but  will  bo  guided  by  a  conscien- 
tious critinuito  of  the  value  of  the  services  performed,  and 
will,  of  itself,  fix  tbo  amount  without  reference  to  the 
opinions  of  witnesses,'  But  in  determining  the  money 
value  of  the  services  of  an  attorney  in  settling  up  the 
ad'airsof  a  succession,  the  court,  in  the  absence  of  sufhcient 
other  evidence,  will  bo  guided  l)y  the  opinion  of  the  local 
bar  to  whi(di  he  belongs,''  In  Illinois  it  is  said,  that,  in 
llxing  an  attorney's  fees,  the  chancellor  should  exercise  his 
<nvn  judgment  as  to  what  is  the  usual  charge,  and  not  bo 
wholly  governed  by  the  opinions  of  attorneys.' 

Illustuations,  —  A  charge  of  two  hundred  dollars  per  year 
held,  under  the  circujnstances  of  the  case,  a  moderate  comp.'u- 
sation  fur  eorviees  rendered  by  an  attorney  as  agent  for  a  cor- 
poration foreleven  years, indep<!ndentof  his  feesand  connnissioiis 
as  attorney  or  counsel,  in  suits  brought  by  or  against  the  com- 
pany, or  in  which  they  were  interested,  and  his  traveling 
expenses  and  other  disbursements:  Farmers^  Loan  etc.  Co.  v, 
Mann,  4  Robt.  35G.  Ten  per  cent  of  a  sum  obtained  for  the 
corporation,  from  the  assets  of  a  bank,  by  his  services,  whereby 
an  allowance  to  a  rival  creditor  thereof  of  seventy-six  thousand 
dollars  had  been  reduced  to  less  than  three  tenths  of  the  amount 
reported,  held  not  an  unreasonable  compensation  thereibr, 
aside  from  said  two  hundred  dollars  per  year:  Farmers^  Loan 
etc.  Co.  v,  Mann,  4  Robt.  356.  In  assessing  damages  on  dis- 
solution of  an  injunction,  proof  that  the  services  of  the  defend- 
ant's counsel  were  reasonably  worth  two  thousand  five  liundrcd 
dollars,  held  to  be  insuflieient  for  a  recovery  thereof,  without 
showing  how  much  they  had  become  liable  to  pay  their  counsel, 
and  what  were  the  customary  fees  in  such  cases:  Rees  v.  rdlzer, 
1  111,  App,  315,  In  a  proceeding  for  partition,  an  attorney's  fee 
of  five  hundred  dollars,  held  to  be  unreasonable,  testiniony 
of  lawyers  to  the  contrary  notwithstanding:  Dorscy  v.  Corn,  2 
111.  App.  533.  Plaintiff,  an  attorney,  sued  to  recover  compen- 
sation for  services  in  a  matter  involving  upward  of  a  million 
dollars.  Held,  that  it  was  error  to  instruct  the  jury  that  the 
magnitude  of  the  controversy  and  the  great  value  of  the  prop- 
erty should  not  be  considered  in  determining  what  compensation 
plaintifT  was  entitled  to  recover:  Smith  v.  Chicago  and  North- 
wesfern  R^y  Co.,  60  Iowa,  515. 

Corn,     2    111.     App. 


I  Ran<lolphr.Carroll,27  La. Ann. 467. 
'^  Jackson 'd  Succession,  30  La.  Ann,, 
part  1,  4U3. 


'  Dorsey 
533. 


V. 


32S 


329 


LIADILITY   or   CLIENT   TO   ATTORNEY. 


199 


§  190.  V/hat  Compensation  Allowed  where  No  Express 
Contract. — AHolieitor  is  cnlillcd  to  charge  for  iiUcndaiu'o, 
if  ho  actually  attends  tho  hearing,  though  ho  does  not  liear 
Iho  whole  argument  or  take  any  part  in  it.'  The  fact  that 
other  counsel  wore  engaged  will  not  deprive  hiui  of  his 
fee.  IJut  where  several  suits  arc  to  depend  on  tho  argu- 
ment in  one,  tho  charges  must  not  bo  multii)lied  at  tho 
full  rate."  Counsel  who  have  prepared  for  liearing  aro 
not  deprived  of  tho  right  to  a  full  counsel  fee  by  tho  fact 
merely  that  tho  case  was  disposed  of  on  grounds  not 
raised  in  tho  argument.'"'  An  attorney  retained  in  a  case 
is  entitled  to  a  reasonable  retaining  fee  without  any  spe- 
cial contract  therefor.'*  A  demand  on  tho  client  f(n'  a 
certain  sum  as  his  compensation  docs  not,  if  refused,  re- 
strict tho  attorney  from  recovering  only  that  sum.'''  Tho 
attorney  is  not  called  on  to  look  to  the  collection  of  tho 
demand  for  his  foe,  nor  to  wait  for  it  until  it  bo  collected." 
lie  is  entitled  to  his  retaining  fee  in  advance.^  It  is  not 
usual  to  charge  more  than  one  retaining  fee  in  tho  same 
case,  and  if  ho  charges  more  than  one,  he  will  not  bo 
allowed  to  recover  such  extra  charge  in  a  suit  for  hi.«j  ser- 
vices.'* Tho  right  to  an  appearance  fee  depends  upon  a 
contract,  either  express  or  implied,  with  tho  party  against 
whom  it  is  charged."  In  tho  absence  of  a  special  agree- 
ment, or  of  proof  that  the  client  employed  tho  attorney, 
with  knowledge  of  and  implied  assent  to  tho  bar  rules,  a 
client  is  not  necessarily  bound  to  pay  for  tho  services  of 
an  attorney  or  counselor  according  to  rates  which  may 
have  been  prescribed  for  such  services  by  the  general 
regulations  of  an  association  of  the  bar,  but  is  liable  only 
for  a  quantum  meruit.     Regulations  adopted  by  members 


App. 


'  Wendell  V.  Lewis,  8  Paige,  613. 

-  Brackett  v.  Scars,  15  Mich.  244. 

"  Bates  V.  Desenberg,  47  Mich. 
643. 

*  AlJrich  V.  Brown,  103  Mass.  527. 
But  see  McLieUau  v.  Hayford,  72  Me. 
410. 


»  Miller  v.  Beal,  26  Ind.  234. 
«  Nichols  r.  Scott,  12  Vt.  47. 
'  CaviUaud  v.  Yale,  .3  Cal.  108. 

*  Schuell  V.  Schleriiitzauer,  82    111. 
439. 

*  Neighbors    v,   Maulaby,   41    Md, 
478. 


m 


§100 


PRINCIPAL  AND  AGENT. 


330 


of  the  bar  can  operate  only  as  between  those  who  assent 
to  them.  As  between  attor:?ey  and  client,  the  right  to 
recover  for  services  must  be  determined  by  the  general 
law,  and  not  by  rules  of  the  bar.*  Ai  attorney  who  acts 
as  broker  for  his  client,  in  negotiating  the  sale  or  pledge 
of  personal  property,  is  entitled  to  be  paid  as  such;  but 
ho  cannot  also  charge  a  counsel  fee  for  conversations  willi 
his  employer  in  relation  to  the  same  transaction,  unless 
by  express  contract,'*  An  attorney  who  is  employed  by 
an  assignee  for  the  benefit  of  creditors,  as  the  assignee's 
general  adviser,  cannot  charge  retainers  in  suits  that  ho 
is  compelled  to  try.*  An  attorney  for  an  executor  cannot, 
under  a  general  retainer,  charge  his  client  for  answering 
the  inquiries  of  creditors  respecting  their  claims.*  An 
attorney  at  law,  under  a  charge  of  commission  on  money 
collected,  may  recover  a  fair  compensation  for  cervices 
rendered,  not  included  in  his  specific  charges,  although 
tlic  client  personally  makes  the  collection;  and  the  time 
of  making  such  charge  is  immaterial.^  If  .i  solicitor  Jias 
neglected  to  furnish  his  client  with  a  statement  of  liis 
extra  expenses  in  the  suit  beyond  the  amount  recovered 
of  the  adverse  party,  tlie  amount  so  recovered  will  be 
presumed  to  be  all  ho  has  any  right  to  claim.®  As  be- 
tween attorney  a\id  client,  costs  are  to  be  taxed  according 
to  the  fee  bill  in  existence  when  the  respective  services 
were  rendered."  An  attorney  representing  a  junior  exe- 
cution on  wliich  nothing  is  realized  from  the  fun<l  levied 
on  is  not  eiratled  to  fees  from  it.^  Five  thoutjand  dollars 
may  be  a  fair  and  reasonable  fee  :or  services  rendered  l)y 
an  attorney  to  an  assignee  in  bankruptcy,  which,  after 
protracted  litigation,  resulted  in  saving  thirty  thousand 
dolUirs  for  the  estate." 


I  Boylan  v.  iJoIfc,  •!:.  Miss^  277. 
•^  Walker  v.  American  Nat.  Bank, 
49  N.  Y.  C59. 

'•>  In  re  Schaller.  10  Dalv.  f)?. 

♦  In  re  Kuapp,  S  Abh.  N.  C.  308. 

»  Pierce  v.  Parker,  \'2\  Mass.  4U3. 


«  Matter  of  Bleakley,  5  Paige,  311. 

'  Brooklyn  Bank  v.  Willougliby,  1 
Sand.  GCi). 

"  Mitchell  V.  Atkins,  71  Ga.  080. 

»  In  re  Treadwell,  23  Fed.  Rep.  442; 
1)  Saw.  29. 


til 


_^a^ 


331 


LIABILITY   OP  CLIENT   TO   ATTORNEY. 


200 


T'Li-USTUATiONS.  —  Three  members  of  the  bar  entered  their 
appearance  for  a  defendant,  having  been  employed  generally 
to  appear,  and  no  warrant  of  attorney  was  given  to  either. 
Hdd,  that  the  attorney's  fee  was  to  be  equally  divided 
between  them:  Hurst  v.  Dunicll,  1  Wash.  438.  Through  the 
advice  of  the  counsel  of  the  receiver  of  an  insolvent  corpo- 
ration, whose  assets  were  uncertain,  twenty  suits  were  begun, 
in  eleven  of  which  compensation  was  claimed,  and  the  services 
were  instrumental  in  saving  over  $115,000.  Held,  that  the 
fact  that  the  trust  was  successfully  administered  might  be  con- 
sidered, and  a  charge  of  $22,G4G  was  not  necessarily  excessive: 
People  V.  Bond  Street  Savinijs  Banlc,  10  Abb.  N.  C.  15.  It  was 
the  duty  of  an  attorney  employed  by  a  corporation  engaged  in 
loaning  nioney,  in  Oregon,  to  give  it  counsel  generally  (whcre- 
for  no  compiMisation  was  expressly  provided),  and  to  examine 
titles,  wherefor  he  was  permitted  to  charge  borrowers'  specific 
fees,  and  for  some  years  he  rendered  no  bill.  Held,  that  he  was 
entitled  to  recover  for  his  services  as  c  unselor  merely  a,  rea- 
sonable annual  retainer:  Hughes  v.  Dundee  Mortrjarje  and  Trust 
Investment  Co.,  21  Fed.  Rep.  1G9.  A  local  attorney  defended 
one  hundred  and  sixty-four  infringement  suits  in  the  New 
England  circuits  against  dentists,  whose  defense  was  in  charge 
of  the  corporation  employing  the  attorney.  The  suits  were  dis- 
})osed  of  in  defendants'  favor,  after  the  disposition  of  a  test  case. 
The  attorney  charged  his  client,  the  corporation,  six  thousand 
dollars,  and  collect''!  costs  amounting  to  four  thousand  six 
hundred  dollars,  w  h  h«  credited  on  the  six  thousand  dol- 
lars. Held,  a  reasonable  charge:  Celluloid  Mfg.  Co.  v.  Chand- 
ler, 27  Fed.  Rep.  9. 

§  200.    Attorney  may  Deduct  Fees  from  Client's  Funds. 

— An  attorney  who  has  money  i;  his  hands  whieli  ho 
has  recovered  for  his  client  may  deduct  his  fees  from  the 
amount,  and  payment  of  the  balance  will  discharge  him.' 


'  Union  Mut.  Life  Ins.  Co.  v.  Bu- 
chanan, 100  Ind.  G3.  In  Balsbaugh  v. 
Frazer,  01  Pa.  St.  99,  tho  rule  is  stated 
finis:  "If  the  client  is  dissatisfied  with 
ti'o  sum  retained,  ho  may  either  bring 
suit  against  the  attorney,  or  take  a  rule 
U|ion  him.  In  the  latter  case  the  court 
^■ill  compel  immediate  justice,  or  in- 
Hict  summary  punishment  on  the  at- 
torney, if  the  sunj  retained  be  such  as 
to  show  a  fraudulent  intent.  But  if 
the  answer  to  the  rule  convinces  the 
court  that  it  was  held  back  in  good 
faith,  and  believed  not  to  be  more 


than  an  honest  compensation,  the  rule 
will  bo  dismissed,  and  the  client  re- 
mitted to  a  jury  trial.  If,  upon  tho 
trial,  the  jury  linds  that  the  attorney 
claimed  no  larger  fee  than  he  was 
justly  entitled  to,  and  in  otlicr  re- 
spects behaved  faitlifuliy  and  well 
about  his  client's  l)Usiness,  he  should 
be  allowed  his  demand  and  a  verdict 
rendered  in  Iiis  favor,  if  he  has  p:ud 
the  balance;  or  a  verdict  against  him 
only  for  the  balance,  if  he  has  not  pnid 
it;  or  a  certificate,  as  in  this  case,  for 
what  may  still  be  coming  to  him.    But 


§201 


PRINCIPAL   AND   AGENT. 


332 


Thf'  fact  that  a  client  has  sued  his  attorney  for  money 
collected  on  a  debt  due  to  him  does  not  prevent  the  attor- 
ney from  retaining  from  said  money  his  fees  for  collec- 
tion.^ r>ut  tlie  attorney  cannot  retain  his  fees  out  of 
money  loft  him  by  the  client  as  a  special  deposit  for  a 
special  purpose.'' 

Illustrations.  —  An  attorney  receives  one  hundred  and  fifty 
dollars  from  a  thief  for  services  to  be  rendered,  and  after  having 
rendered  services  to  tho  value  of  ninety  dollars  is  notified  by 
the  person  from  whom  the  n:oney  was  stolen  that  it  belongs  t. 
him.  The  attorney  cannot  hold  the  remaining  sixty  dol'  irs  lor 
services  rendered  after  the  notice:  Wheeler  v.  Kiiig,  o5  Ilun, 
101. 


§  201.  CoTDpensation  out  of  Fund  in  Court. — Where 
the  compensation  of  an  attorney  for  professional  services 
in  securing  a  fund  in  the  hands  of  a  receiver  for  distribu- 
tion is,  by  the  rules  governing  courts  of  equity,  a  propc  i 
charge  upon  the  fund,  application  for  such  compensation 
out  of  the  fund  should  bo  made  in  the  action  in  which 
the  receiver  was  appointed.'  The  Illinois  statute  which 
permits  the  apportionment  of  solicitors'  fees  among  those 
interested  in  the  settlement  of  an  estate  in  the  jorobate 
court  applies  only  to  amicable  proceedings,  not  to  suits 
Avlierc  parties  employ  counsel  to  protect  their  special 
adverse  interests.''  A  counsel  is  not  entitled  to  commis- 
sions on  a  fund  raised  and  brought  into  court,  if  his 
client's  claim  is  postponed  to  older  liens.^  The  counsel 
of  certain  creditors  who  unsuccessfully  seek  relief  on  be- 


if  ko  has  not  acted  in  good  faith;  if  he 
has  attoinptod  to  defraud  his  client,  or 
connived  at  the  fraud  of  otliers;  if 
he  has  i-eccived  money  without  giving 
notice  to  the  client  within  a  reason- 
able time;  if  lie  has  refused  or  ne- 
glected to  pay  it  promptly  upon  de- 
mand; if  ho  has  denied  that  he  had  it 
when  questioned  by  one  entitled  to 
know;  or  if  he  has  fraudulently 
claimed  the  riglit  to  retain  out  of  it 
a  larger  fee  than  the  jury  find  to  be 
just,  —  ho  forfeits  all  claim  to  any  com- 


pensation whatever,  and  the  verdict 
should  be  in  favor  of  the  client  for  all 
the  money  collected,  allowing  no  de- 
ductions for  anything  but  actual  pay- 
ments. A  i)artN  must  not  be  put  to 
two  suits  to  recover  the  same  debt. " 

1  Foster  v.   Jackson,    8   Baxt.   433. 

'  Anderson  i\  Bosworth,  15  II.  I. 
443;  2  Am.  St.  Rep.  910. 

»  Oldj  V.  Tucker,  35  Ohio  St.  3S1. 

*  Cowdrey  v.  Hitchcock,  103  111. 
2C2. 

*  Waters  i'.  Green  ways,  17  Ga.  592. 


S33 


LIABILITY   OF   CLIENT   TO   ATTORNEY. 


§  202 


f 


half  of  themso^ves  and  of  all  other  creditors  against  the 
officers  of  an  insolvent  corporation  cannot  charge  their 
compensation  against  a  fund  belonging  to  the  corpora- 
tion.    They  must  look  to  the  creditors  employing  them.* 

Illustrations.  —  Under  the  Mississippi  code,  providing  that 
"in  all  cases  of  the  partition  or  sale  of  property  for  division  of 
proceeds  the  courts  may  allow  a  reasonable  solicitor's  fee  to  the 
solicitor  of  the  complainant,"  held,  that  a  solicitor  of  a  de- 
fendant and  cross-complainant  was  not  entitled  to  a  fee,  thongh 
the  cross-l)ill  asked  for  partition:  Potts  v.  Gray,  GO  Miss.  57. 
An  agn.'ement  that  an  attorney  should  bo  compensated  out  of 
the  fund  recovered,  held  to  create  an  equitable  lien,  having 
priority  over  that  of  an  attachment  issued  under  a  judgment 
recovered  against  the  client:  Williams  v.  Ingersoll,  23  llun,  284. 
The  trustee  of  an  idiot,  for  whom  a  charge  of  two  thousand  dol- 
lars was  made  upon  land  for  her  support,  obtained  a  decree  for 
the  sale  of  the  land,  and  the  setting  apart  of  two  thousand  dol- 
lars of  the  proceeds,  the  interest  of  wbicli  was  to  be  appropriated 
to  the  support  of  the  idiot.  Held,  that  two  liundred  dollard 
should  bo  allowed  out  of  the  two  thousand  dollars,  as  a  fee  for 
the  trustee's  attorney:  Nivimons  v.  Stciunrt,  13  8.  C.  445.  Plain- 
liff,  being  employed  as  solicitor  for  a  certain  sum  to  look  after 
defendant's  interest  in  an  estate,  instituted  proceedings  in  clian- 
cery,  which  resulted  in  the  settlement  of  the  estate,  and  nf.'ces- 
sarily  involved  the  interests  of  other  persons.  The  court  made 
an  allowance  out  of  the  estate  to  the  different  solicitors  cm- 
ployed.  Jlcld,  that  the  whole  amount  thus  received  by  plaintiflF 
should  be  credited  unon  his  contract  with  defendant:  Shrcve  v. 
Freeman,  44  N.  J.  L.^TS. 


§  202.  Retainer  must  bo  Proved  — In  order  *o  recover, 
the  attorney  must  first  proAO  a  retuiner  by  the  defendant.' 
It  is  not  enough  that  services  ware  performeJ  in  man- 
aging a  cause,  and  that  they  were  beneficial  to  tiie  party.' 


'  Humeu.  Commercial  Bank,  13  Lea 
49G. 

'^  Wetks  on  Attorneys,  sees.  33(5, 
338. 

^  Turner  v.  Myers,  23  Towa,  391 ; 
Webl)  V.  Bi'owning,  14  Mo.  354;  Chi- 
cago etc.  R.  R.  Co.  V.  Larned,  20  111. 
218;  Campbell  v.  Kincaid,  3  Mon.  68; 
Roselius  i\  Delacliaise,  ,'>  La.  Ann. 
481;  52  Am.  Doc.  .VJT;  Cooley  r.  Ce- 
cile,  8  La.  Ann.  51 ;  Michon  v.  Gravier, 


n  La.  Ann.  59G;  Smitli  r.  Lyfonl,  24 
Me.  147;  liurijhart  ?•.  (laniiier,  3  1Iarl). 
C4;  Jones  v.  Woods,  7(>  Pa.  S..  408; 
"NVailes  r.  Brown,  '21  La.  Ann.  411. 
In  Turner  v.  Myeis,  23  Iowa,  ."91,  a 
son  brought  a  replevin  suit  in  his  own 
riglit  for  a  horse,  executing  a  hon<l 
upon  wliicli  !ii.-i  mother  w;i-i  surety. 
The  case  wa.s  appealed  to  tlie  district 
court,  antl  an  attorney  was  there  em- 
ployed by  the  sou   to  assist  in   the 


§202 


PRINCIPAL   AND   AGENT. 


334 


But  the  retainer  need  not  be  in  writing,  or  by  an  express 
parol  contract;  it  may  be  established  by  circumstances;' 
as,  for  example,  by  the  party  accepting  the  services  on 
the  understanding  that  he  was  to  pay  for  them,^  or  by 
his  recognition  of  the  attorney  as  his  attorney.'  "  In  the 
absence  of  an  express  retainer,  an  attorney  may  prove 
that  the  person  sought  to  be  charged  conferred  with  him 
in  regard  to  the  suit;  executed  his  directions  in  connec- 
tion therewith;  makes  affidavit  to  the  truth  of  the  answer 
which  the  attorney  has  drawn;  was  present  at  the  trial 
which  the  attorney  was  managing  in  the  client's  behalf 
without  making  any  objection;  intrusts  to  the  attorney 
papers  necessary  to  the  successful  prosecution  of  the  suit; 
or  that  the  client  acknowledged  or  in  some  manner  recog- 
nized the  attorney  in  the  presence  of  third  persons;  — 
all  these  things  are  evidences  of  a  retainer,  and  will  be 
strer.gthencd  bv  the  fact  that  the  attorney  was  acknowl- 


trial.  Judgment  being  there  rendered 
against  tlio  plaiiit-fif  and  his  mother  as 
surety  on  the  be  u\,  he  employed  tlie 
attorney  to  commence  a  suit  in  equity 
in  his  own  and  liis  mother's  name  to 
restrain  the  collection  of  the  judgment, 
in  which  plaintiiJs  foiled;  whereupon 
they  appealed  to  the  supreme  court. 
It  appeared  that  tlie  attorney  had 
never  seen  the  mother;  that  slie 
never  personally  retiuested  him  to 
perform  any  services  fcr  her;  '"ut 
that  she  k,  ow  of  the  procee<lings. 
The  attorney  sought  to  charge  her 
■with  the  payment  of  his  fees,  which 
the  court  disallowed,  saying:  "  When 
it  appears  that  an  attorney  commenced 
a  suit  in  tlie  lame  of  the  principal  and. 

surety, without  being  requested 

bj'  such  surety  to  perform  any  services 
for  her,  the  single  fact  that  she  knew 
of  hia  proceedings  will  not  make  her 
liable  for  his  services The  ex- 
press contract  with  the  S''  .  and  his 
primary  liability,  in  the  absence  of 
other  proof justify  the  conclu- 
sion that  the  son,  and  not  the  mother, 
was  t!ie  one  to  whom  the  attorney  was 

to  look  for  his  pay It  was  the 

attorney's  duty  to  prove  his  retainer 


by  the  person  sought  to  be  charged. 
Thia  he  might  do  by  showing  that 
the  defendant  called  upon  him  in  re- 
gard to  the  business;  that  she  exe- 
cuted his  directions  in  connectio:i 
therewith;  that  she  was  present  at 
the  trial  while  he  was  mana^inf;  it 
on  her  behalf;  or  that  she  spoke  of 
or  recognized  him  in  some  manner  as 
iier  attorney  ":  Hubbard  v.  Camper- 
donn  Mills,  25  S.  C.  400;  Ex  parte 
Lynch,  25  S.  C.  193;  SafJord  v.  Vt. 
etc.  R.  R.  Co.,  CO  Vt.  185. 

^  Graves  v.  Lock\vood,  30  Conn.  276; 
Hood  V.  Ware,  34  Ga.  328;  Fore  v. 
Chandler,  24  Tex.  146;  Perry  v.  Lord, 
111  Mass.  004.  Where  an  attorney 
is  called  on  for  legal  advice  and  gives 
a  professional  opinion,  the  relation  of 
attorney  and  client  so  exists  as  to  ren- 
der the  attorney  liable  for  negligence: 
Rj'a    i\  Long,  35  Minn.  394. 

^  Savings  Bank  v.  Benton,  2  Met. 
(Ky.  )240;  Bogardus  v.  Livingston,  7 
Abb.  Pr.  423. 

*  Hotchkiss  V.  Le  Roy,  b  .Johns.  142; 
Goodall  V.  Bedel,  2D  N.  IL  205;  Foro 
V.  Chandler,  24  Tex.  140;  Cooper  r. 
Hamilton,  52  111.  110;  Yergevr.  Aiken, 
7  Baxt.  639. 


335 


LIABILITY   OF   CLIENT   TO   ATTORNEY. 


§  202 


edged  as  such  by  the  counsel  of  the  opposite  side.  If 
an  attorney  having  in  his  hands  papers  necessary  to  bo 
used  in  the  defense  of  a  suit  enter  upon  that  defense  in 
the  presence  of  the  party  for  whom  he  appears,  and  re- 
tains the  papers  without  objections,  such  facts  are  evi- 
dence of  a  retainer  and  promise  to  pay  for  his  services, 
as  well  upon  the  particular  occasion  of  the  first  appear- 
ance as  afterwards,"^  A  parol  employment  by  the  board 
of  county  commissioners,  at  a  legal  session,  of  an  attorney 
to  defend  a  suit  brought  against  the  county  is  valid,  and 
such  attorney,  having  rendered  the  service  involved  in 
his  employment,  may  recover  compensation  therefor.^ 
Whore  a  party,  by  his  acts,  induces  an  attorney  to  sup- 
pose that  his  services  are  desired,  and  avails  himself  of 
them  without  objection,  the  law  implies  a  promise  on  liis 
part  to  pay  the  attorney  what  such  services  are  reasonably 
worth.''  A  party  to  a  suit  in  which  the  employment  of 
senior  counsel  is  necessary  is  liable  for  the  reasonable 
value  of  the  services  of  a  counselor  at  law  who  acts  as 
senior  counsel  at  the  trial,  in  his  presence,  in  consultation 
with  him,  and  without  objection  from  him,  under  a  re- 
tainer for  that  purpose  by  the  attorney  of  record,  although 
there  was  a  secret  agreement  between  him  and  the  attor- 
ney of  record  that  such  services  should  be  paid  for  by  tho 
latter.*  The  presence  of  a  prosecutor,  while  an  attorney 
was  engaged  in  rendering  professional  service  on  the  part 
of  the  government  in  a  'criminal  proceeding,  raises  no 
presumption  that  the  prosecutor  promised  to  pay  him  for 
such  service.®  One  who  has  emnloved  a  lawver  who  after- 
wards takes  a  partner,  who  assists  in  the  case,  does  not 
become  liable  to  the  firm  for  the  fee  agreed  to  be  paid  to 
the  one  contracted  with  before  the  partnership,  by  simply 
consulting  with  such  partner  about  the  case,  and  to  that 


*  Weeks  on  Attorneys,  sees.  339, 
citing  Goodall  v.  Bedell,  20  N.  H.  203. 

'^  McCabe  v.  Commissioners  of  Foun- 
tain County.  40  Ind.  380. 


»  Ector  V.  Wiggins,  30  Tex.  55. 

*  Brigham     v.     Foster,     7     All«n, 


419. 


0  Millett  V.  Hayford,  I  Wis.  401. 


202 


PRINCIPAL   AND   AGENT. 


83G 


ss: 


extent  recognizing  him  as  his  attorney.*  Evidence  that 
one  who  had  a  claim  which  he  intended  to  prosecute  at 
law  sent  for  an  attorney  and  employed  him  to  assist  him 
as  counsel  through  the  whole  case,  and  that  the  attorney 
agreed  so  to  do,  and  gave  him  advice  several  times,  will 
warrant  a  finding  for  the  attorney  in  an  action  by  him  for 
a  retainer.^  If  an  assignee  of  a  chose  in  action,  that  is  in 
suit,  accepts  from  the  defendant  a  specific  sum  in  lieu  of 
damages  and  costs  jc  becomes  liable  to  the  attorney  who 
prosecuted  the  suit  for  the  taxable  costs.*  When  a  bill  is 
filed  by  a  debtor  as  trustee  for  his  children  to  enjoin 
judgment  creditors,  some  of  whom  have  levied  and  others 
are  about  to  levy  upon  his  property,  and  a  fund  is  brought 
into  court  for  equitable  distribution,  counsel  for  the 
trustees  who  filed  the  bill  are  not  entitled  to  fees  to  be 
l)aid  out  of  the  general  fund  raised.  The  interest  to  rep- 
resent which  such  counsel  were  employed  is  antagonistic 
to  the  general  creditors,  whose  judgments  have  been  en- 
joined.* A  retainer  by  a  wife  to  obtain  a  divorce  will  not 
be  presumed  to  have  been  at  her  husband's  request,  so  as 
to  render  him  liable  to  pay  the  attorney.^ 

Illustrations. —  In  an  action  against  A  and  his  sureties, 
B  and  t.',  an  attorney  was  employed  by  A.  Held,  that  the  fact 
that  li  and  C  knew  that  he  was  representing  the  whole  case, 
and  the  services  were  for  their  benefit  and  accepted  by  them, 
does  not  require  that  they,  in  order  to  avoid  liability  to  pay  for 
the  services,  should  have  notified  the  attorney  that  they  would 
not  be  liable:  Simvis  v.  Floyd,  65  Ga.  719.  It  was  attempted 
by  one  rejjrescnting  himself  as  agent  for  a  ship-owner,  and  by 
the  consul  of  the  nution  to  whieh  she  belonged,  to  remove  the 
master  from  the  command.  The  lattt  r  employed  counsel  to 
maintain  his  right  tliereto.  Held,  that  the  owner,  if  his  in- 
terests co-illicted  with  the  course  pursued  by  the  master,  would 
not  be  l.iible  for  fees  of  counsel  employed  by  him:  Barker  v. 
York,  3  La.  Ann.  90.  B  is  employcMj  by  one  defendant  to  a 
suit  to  act  as  counsel  for  him,  and  su^o  for  another  defendant, 
of  which  the  latter  was  apprised,  but  who  had  counsel  of  his 


4  Carr  v.  Wilkina,  44  Tex.  424. 
»  Pm-ry  v.  Lord,  1 1 1  Mas<i.  504. 
^  Ward  V.  Lee.  13  Wj^OtaL  41. 


*  Ball  V.  Vasou,  .'jO  Ga.  204. 
^  Dorsey    v.     Goodenow,     Wright, 
120. 


337 


LIABILITY   OF   CLIENT   TO   ATTOUNEY. 


§  202 


own  employment,  and  had  not  employed  B.     Ilchl,  tliat  al- 
though tlio  services  of  I>  may  have  heen  beneficial  to  such  other 
defendant,  and  received  and  accepted  by  him,  yet  he  would  not 
thereby  incur  any  liability  to  pay  for  them;  otherwise,  if  he  was 
api)rised  tliat  he  was  looked  to  by  B  for  compensation  for  his 
services,  and  afterwards  received  them  without  informi:ig  him 
that  he  would  not  pay  for  them:  Savings  Bank  etc.  v.  Benton,  2 
Met.  (Ky.)  240.     In  an  action  to  recover  for  professional  services 
rendered  to  the  defendant  in  a  divorce  case,  it  appeared  that  he 
adopted  the  papers  prepared  by  the  plaintiffs,  and  that  they 
were  recognized  by  the  libelant's  counsel  as  counsel  for  the 
defendant.     Held,  that  the  employment  of  the  plaintilfs  was  es- 
tablished: Hood  V.  Ware,  34  Ga.  328.     An  attorney  employed 
to  defend  a  suit  signed  as  bail  for  an  appeal  taken  by  his  client 
therein.     Subsequently  an  action  was  brought  upon  the  recog- 
nizance against  both  prineipo'  and  surety,  and  the  latter,  the 
attorney,  without  express  authority,  appeared   for  both,  and 
pleaded,  as  the  only  defense,  a  tender  which  had  Ijcen  made 
by  him  without  any  request  by  his  principal.     Held,  that  he 
could  not  recover  in  any  action  of  book-account  for  his  jirofes- 
sional  services  in  defending  the  suit  on  the  recognizance,  al- 
though the  principal  knew  that  he  was  defending  the  suit  and 
made  no  objection:  Smith  v.  Dougherty,  37  Vt.  530.     An  attor- 
ney who  was  employed  by  his  client  in  the  prosecution  and 
defense  of  many  suits  gave  a  voluntary  appearance  for  liim  in 
a  new  suit  brought  against  him  upon  a  subject  connected  witli 
suits  then  ponding.     About  the  time  of  serving  <liis  appearance 
the  attorney  told  liim  that  ho  had  appeared  for  him,  and  he 
expressed  no  dissent.     Held,  that  the  attorney's  appearance 
was  not  unauthorized,  but  under  such  facts  he  might  well  as- 
sume a  retainer:  Bogardus  v.  Livingston,  7  Abb.  Pr.  4'2S.     Proof 
that  an  attorney  was  employed  by  one  having  a  claim  at  law 
to  assist  him  in  its  prosecution,  agreed  to  do  so,  and  gave  him 
advice  several  times,  held,  to  warrant  a  finding  for  a  retainer: 
rcrry  v.  Lord,  111  Mass.  504.     A,  an  attorney,  having  no  au- 
thority from   his  client  B  to  employ  additional  counsel,  em- 
ployetl  C,  an  attorney  in  another  county,  to  attend  to  a  case  in 
that  county  pending  against  B.     At  the  trial  of  the  case,  C, 
with  B's  knowledge,  though  not  at  his  request,  assisted  in  im- 
paneling the  jury  in  taking  evidence,  and  in  consultation  re- 
garding the  defense.     Held,  that  C  was  entitled  to  recover  from 
B  for  his  services:  Hogate  v.  Edwards,  G5  Ind.  372.     Attorneys 
acting  without  any  employment  under  seal,  but  at  the  request 
of  the  town  council,  addressed  a  meeting  of  the  citizens,  ex- 
plaining tlie  terms  upo.i  which  the  holders  of  bonds  of  the  town 
ptoposed  to  cancel  them.     The  proposal  was  accepted  by  the- 

Vol.  I.— 22 


203 


PRINCIPAL   AND    AGENT. 


338 


mcoting,  and  the  attorneys  were  directed  to  prepare  an  ordi- 
nant'c  ibr  the  purpose  of  consummating  the  eettlement.  They 
did  Ko,  and  tlio  town  council  afterwards  adopted  the  ordinance, 
and  the  bonds  were  taken  up  in  pursuance  thereof,  and  the 
wliolc  matter  adjusted  witli  the  assistance  of  the  attorneys. 
Held,  tljat  they  wore  entitled  to  recover  paj''  from  the  town  for 
their  services:  Xeiv  Athens  v.  Thomas,  ii2  111.  259.  An  attorney 
who  had  conducted  a  suit  in  which  L.  was  plaintiff  charged 
his  fees  to  L.  and  W.  jointly,  and  brought  an  action  against 
botli  to  recover  them.  L.  and  W.  had  called  ou  the  attorney, 
W.  being  the  father-in-law  of  L.,  and  together  stated  the  case, 
which  was  a  claim  of  L.  for  damages  for  a  personal  injury;  W. 
saying:  "We  have  a  case  that  wo  want  to  lay  before  you,  and 
have  you  prosecute  if  you  think  best";  and  in  the  course  of  tlie 
conviTsation  also  saying:  "If  you  think  the  case  a  good  one 
we  want  you  to  go  through  with  it";  but  nothing  was  said 
directly  by  cither  party  as  to  whether  \V.  would  be  responsible 
for  the  attorney's  fees,  and  W.  did  not  intend  to  be  under- 
stood as  agreeing  to  be  responsible,  though  the  attorney  sup- 
posed ho  was  to  be  so,  and  charged  his  fees  to  them  both.  On 
these  facts  the  auditor  submitted  the  question  to  the  court  as  a 
question  of  law  whether  W.  was  liable.  Held,  that  the  question 
whether  W.  employed  the  attorney  was  a  question  of  fact  which 
should  have  been  decided  by  the  auditor,  and  that  the  facts  as 
found  presented  no  question  which  the  court  could  decide  as  a 
question  of  law:  Graves  v.  Lockwood,  30  Conn.  27G.  An  attor- 
ney brought  an  action  in  the  district  court  of  an  adjoining 
county,  and  after  the  filing  of  the  petition  wrote  to  a  firm  of 
attorneys  there  requesting  them  to  file  the  proper  pleadings, 
informing  them  that  his  client  would  call  to  state  necessary 
facts,  and  saying:  "  I  will  sec  you  paid  for  your  trruble."  The 
client  called  on  said  attorneys  a  number  of  times,  and  they  filed 
the  necessary  papers,  and  assisted  in  the  trial  of  the  case,  and 
in  procuring  a  decree,  nothing  being  said  by  her  to  them  about 
the  contract  made  by  her  with  the  attorney  who  filed  the  peti- 
tion, and  they  had  no  knowledge  of  such  contract.  Held,  that 
the  client  was  liable  for  their  fees:  Sedgwick  v.  Bliss,  'z3  Neb. 
617. 


§  203.  And  that  Services  were  Rendered. — Evidence 
alone  that  the  attorney  was  employed  is  not  enough;  he 
must  show  also  that  he  has  performed  the  service.  The 
law  will  not  presume  from  the  mere  proof  of  the  under- 
taking that  the  party  has  performed  any  valuable  service 


338 


339 


LIABILITY   OP   CLIENT   TO   ATTORNEY. 


§204 


under  it.'  Where  a  solicitor  sought  by  a  creditor's  bill  to 
obtain  payment  for  professional  services  out  of  an  estate, 
the  remainder  in  fee  of  which  was  in  certain  infants, 
on  the  ground  that  the  services  were  necessary  to  preserve 
the  inheritance  to  those  who  were  entitled  to  it,  and 
failed  to  prove  that  his  services  were  necessary  or  had 
produced  that  effect,  his  bill  was  dismissed,  and  he  was 
admitted  pro  rata  with  other  creditors  to  share  the  pro- 
ceeds of  the  estate  which  were  in  the  hands  or  in  the 
possession  of  a  trustee.* 

Illustrations. — M.  rendered  valuable  services  in  a  suit  at 
the  request  of  and  as  assistant  attorney  to  G.,  a  defendant  with 
whom  the  co-defendants  had  contracted  that  he,  G.,  should,  for 
a  stipulated  sum,  defend  the  suit  and  employ  and  pay  aspistant 
counsel.  Held,  that  ^I.,  not  being  informed  of  such  special  con- 
tract, might  recover  his  compensation  against  all  the  defend- 
ants: McCrary  v.  Ruddlclc,  o3  Iowa,  521.  One  attorney  agreed 
to  recover  a  certain  claim  by  suit;  ho  agreed  with  another  at- 
torney that  the  latter  should  prosecute  the  suit  referred  to  for 
half  the  pay  and  costs;  the  latter  brouglit  a  suit  and  lost  it; 
the  former  then  filed  a  bill  and  recovered  the  claim,  the  latter 
not  offering  to  aid  in  the  prosecution.  Held,  that  the  latter  had 
done  no  work  in  the  successful  suit,  and  was  net  entitled  to  do 
any  under  his  agreement,  and  therefore  could  recover  no  pay 
under  his  agreement:  English  v.  McConnell,  23  111.  513. 


§  204.  In  Appellate  Courts.  —  A  retainer  to  conduct  a 
suit  in  the  lower  courts  does  not  necessarily  imply  a 
retainer  to  carry  the  case  up  to  the  court  of  last  resort. 
But  where  a  case  is  intrusted  to  an  attorney  for  appeal  to 
a  higher  court,  he  is  not  responsible  for  the  merits  or 
demerits  of  the  appeal,  but  is  entitled  to  payment  for  his 
services  in  any  event.'  Where  there  is  a  general  em- 
ployment of  an  attorney  for  an  agreed  sum,  the  employ- 
ment extends  until  the  final  termination  of  the  case  in 
the  court  of  last  resort,  so  that  no  additional  sum  can  be 

'  Stow  V.  Hamlin,  1 1  How.  Pr.  452.        '  Weeks  on  Attorneys,  citing  Case 
'  Warner  v.  Hoffman,  4  Edw.  Ch.     v.  Hotchkiss,  3  Keyes,  334;  3  Abb. 
381.  Pr.,  N.  S.,  381. 


§205 


rniNcirAL  and  agent. 


340 


cliargcd  for  services  rendered,  unless  there  is  an  express 
agreement  to  pay  for  the  same.* 

Illistkations.  —  An  attorney,  on  his  own  motion,  after 
knowledge  that  the  cause  was  settled,  j)rocurcd  a  transcript  to 
he  fdod  in  tlio  suproinc  court,  and  a  judgment  of  allirnianco 
rendered.  Jfrld,  that  lie  could  not  rt-cover  for  such  services: 
Ellwood  V,  Wihon,  21  Iowa,  523,  A  chent  signed  an  agree- 
ment witli  his  attorney,  running  suljstantially  thus:  II.  is 
to  argue  my  case  heforo  the  supreme  court,  and  if  he  succeeds, 
I  am  to  pay  him  one  thousand  dollars;  and  if  it  shall  he  neces- 
Bary  to  contest  the  case  in  the  court  of  appeals,  he  is  to  have 
further  just  compensation.  If  I  settle  the  case  with  the  other 
parties  without  his  approval,  I  am  to  bo  liable  for  his  full  com- 
pensation, as  herein  provided.  11.  was  unsuccessful  in  tho 
supreme  court,  and  by  direction  of  liis  client  appealed  to  tho 
court  of  appeals.  Soon  after,  his  client,  without  consulting  II., 
settled  tho  case.  Held,  that  the  agreement  to  pay  the  one 
thousand  dollars  was  conditional  on  II. 's  success  in  the  su- 
preme court,  and  that  the  settlement  of  the  case,  after  the  fail- 
ure there,  did  not  resuscitate  II. 's  claim:  Ilitchings  v.  Van 
Brunt,  38  N.  Y.  335. 


§  205.    Attorney  cannot  Recover  Compensation,  when. 

— The  attorney  cannot  recover  compensation  when  tho 
services  were  of  no  avail,  because  of  his  fraud,  negligence, 
and  want  of  skill.^     IIo  is  not  necessarily  precluded  from 


'  Bartholomew  v.  Langsdale,  35  Iiul. 

27S. 

'^  Maynard  v.  Briggs,  2G  Vt.  94; 
Nixon  V.  rheli)s,  *J1)  Vt.  IDS;  Toarson 
V.  Darrinfrtoii,  o'2  Ala.  227;  Braekctt 
r.  Nortiiu,  4  C'oim.  517;  JO  Am.  Dec. 
171);  Gleason  i:  Clark,  i>  Cow.  57; 
Runyau  r.  Nichols,  11  Johns.  547; 
Bowman  v.  Tallinaii,  40  How.  Pr.  1; 
Bridges  i\  Paige,  13  Cal.  G41,  the  court 
Baying:  "Tlie  pluintifi's  aver  that  tlie 
dci'endaut  is  imlehted  to  them  in  the 
sum  of  say  tifteen  hundred  dollars, 
for  services  reuilereil;  that  lie  is  in- 
debted to  this  amount  because  this 
was  the  value  of  these  .services.  The 
defendant  denies  that  he  is  indebted 
at  all,  and  denies,  further,  that  the 
services  were  of  the  value  charged. 
He  proposes  to  show  that  they  were 
not  of  this  value.  He  can  do  this  by 
any  legal  proof,  and  he  ia  not  bound 


to  set  out  hi.s  jiroofs  in  his  pleading. 
Facts,  and  not  the  evidence  of  facts, 
are  required  to  be  pleaded.  What- 
ever, therefore,  had  a  legal  tendency 
to  prove  that  f'^se  services  were  wortli 
the  sum  was  competent  for  plaintiO's, 
as  tho  nature  of  the  suit,  its  dilficulty, 
the  amount  involved,  tlie  skill  re- 
quired, the  skill  employed,  and  the 
like.  So  the  defense  had  a  right  to 
prove  these  same  general  matters,  or 
the  negation  of  them,  as,  for  example, 
that  this  was  a  plain  case,  requiring 
but  little  labor  or  skill,  learning  or 
time;  or  if  it  required  skill  and  atten- 
tion, that  these  were  not  bestowed. 
The  value  of  a  lawyer's  services  de- 
pends upon  his  skill  and  learning,  and 
the  attention  he  gives  to  the  busine:<s 
of  the  client.  It  is  evident,  therefore, 
that  proof  of  his  skillful  conduct  of 
liis  caae,  or  of  bia  negligent  and  uu- 


340 


341 


LIADILITY   OF  CLIENT  TO   ATTORNEY. 


205 


recovering  compensation  for  services  in  a  suit,  where  tho 
adverse  decision  rendered  was  anticipated  by  him,  not- 
withstanding tho  services  may  have  been  of  no  vahio.' 
IIo  may  explain  his  reason  for  dehiy  in  instituting  an  ac- 
tion for  his  client,  when  his  claim  for  fees  is  contested  on 
tho  ground  of  unreasonable  delay .^  An  attorney  under 
general  emiiloyment  can  enforce  no  claim  for  services  until 
final  termination  of  tho  suit,  unless  the  relation  of  attorney 
and  client  changes  before  that  time.'  Ho  cannot  recover 
against  his  client  tho  costs  of  a  suit  in  which  judgment 
is  set  aside  for  irregularity  committed  by  himself,  nor 
the  costs  of  opposing  the  motion  to  set  aside  tho  proceed- 
ings; nor  can  he  recover  for  money  paid  for  his  client,  if 
it  were  paid  to  satisfy  costs  of  a  judgment  of  discontinu- 
ance suffered  by  his  ignorance  or  neglect.^  So  if  an 
attorney,  after  having  obtained  final  judgment  and  exe- 
cution, prevents  the  collection  of  the  execution  by  fraudu- 


skillful  treatment  of  it,  is  an  impor- 
tant inquiry.  It  does  not  follow,  by 
any  means,  that  because  a  trial  results 
in  a  verdict  for  the  client,  there  has 
been  no  negligence  in  the  attorney. 
Ill  consequence  of  tho  negligence,  the 
client  may  have  been  put  to  great 
trouble  and  expense,  though,  by  acci- 
dent or  otherwise,  he  happened  to 
gain  the  case;  and  though  the  court 
bolow  may  have  decided  on  the  trial 
of  a  case  tliat  errors  negligently  com- 
mitted were  not  fatal,  yet  the  defend- 
ant might  show,  when  sued  for  fees  by 
the  attorney,  that  the  judge  was  mis- 
taken in  thus  holding.  Besides,  a 
case  may  be  negligently  conducted 
oven  when  it  is  not  eventually  lost  by 
neglect.  It  may  put  the  client  to 
great  trouble,  expense,  and  delay  to 
gi;t  rid  of  blunders  of  his  lawyer.  If, 
for  example,  an  attorney  should,  by 
his  neglect,  consent  to  a  bill  of  excep- 
tions lull  of  errors  and  misstatements, 
and  raising  unnecessarily  many  diffi- 
cult and  cndjarrassing  questions  of 
law  for  revision  in  the  appellate  court, 
wliich  questions,  as  the  case,  in  fact, 
was  presented  below,  did  not  arise,  no 
one  would  pretend  that  though  the 


cause  was,  after  long  delay  and  much 
loss,  gained  in  the  supreme  court,  tlio 
attorney  would  not  be  anienablo  to 
the  charge  of  neglect;  or  if  tlio  attor- 
ney suffered  testimony  to  be  intro- 
duced i)lainly  inadmissible,  and  tlio 
client  was  put  to  the  expense  and 
trouble  of  summoning  many  wit- 
nesses to  counteract  it,  though  he  at 
length  did  so  successfully,  tlio  same 
objection  would  lie;  and  in  liotli  llieso 
instances  tlio  attorneys  would  be  held 
entitled  to  a  less  sum  on  (jwintui.i 
meruit  than  if  a  contrary  course  had 
been  pursued."  In  New  Yurk  it  is 
said  that  the  law  does  not  tolerate  pre- 
varication in  tho  service  of  an  attor- 
ney, or  permit  him  to  use  his  position 
as  such  to  the  prejudice  of  the  party 
for  whom  he  professes  to  act.  Such 
conduct  deprives  him  of  the  right  to 
claim  a  fee:  Andrews  v.  Tyng,  94 
N.  Y.  10. 

'  Murphey  v.  Shepardson,  GO  Wis. 
412. 

•  Union  Mut.  Life  Ins.  Co.        'Bu- 
chanan, 100  Ind.  63. 

»  Eliot  V.  Lawton,  7  Allen,  274;  83 
Am.  Dec.  683. 

*  Hopping  V.  Quin,  12  Wend.  517. 


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205 


PRINCIPAL  AND  AOENT. 


342 


lent  conduct,  this  will  be  in  violation  of  his  duty  as 
attorney,  and  will  deprive  him  of  all  legal  claim  for  his 
services  in  procuring  such  judgment  and  execution.*  His 
fraud  or  unfaithfulness  in  one  matter  intrusted  to  him 
will  not  deprive  him  of  his  right  to  compensation  for 
other  independent  services  which  were  duly  performed.'- 
An  act  of  impropriety  or  neglect  on  the  part  of  an  attor- 
ney in  transacting  his  client's  business,  if  condoned,  will 
not  defeat  the  right  to  recover  for  retainer  and  services.' 
The  Massachusetts  statute  relating  to  the  removal  and 
^>unishraent  of  attorneys  at  law  for  deceit,  malpractice,  or 
*.>Uer  gross  misconduct,  and  to  their  liability  in  damages 
tu  ;aities  injured  thereby,  does  not  prevent  the  defend- 
ant, ivt  an  action  by  an  attorney  at  law  for  services  ren- 
d' .-eJ,  from  showing  that  they  were  of  no  value.* 

Ho  cannot  recover  where  he  has  collected  money,  and 
has  refused  or  neglected  to  pay  it  over  to  his  clif^nt  after 
demand  and  until  sued  for  it;*^  nor  where  his  services 


'  Brackett  v.  Norton,  4  Conn.  517; 
10  Am.  Dec.  179. 

^  Currie  v.  C'owles.  G  Bosw.  452. 

^Gleasonv.  Kellogg,  52  Vt.  14. 

♦  Caver ly    v.    McOwen,    126    Mass. 
222. 

"^'wilU  V.  Kane,  2  Grant  Cas.  CO; 
Fisher  v.  Knox,  13  Pa.  St.  022;  53 
Am.  Dec.  503;  Gray  v.  Conyers,  70 
Ga.  349.  In  Brediii  v.  Kingland,  4 
Watts,  420,  the  court  say:  "The 
third  objection  is,  that  the  court  erred 
in  charging  the  jury  that  where  an 
attorney  receives  money  for  his  client, 
and  neglects  or  refuses  for  a  length  of 
time  to  render  an  account  ot  it,  and 
his  client  is  compelled  to  have  recourse 
to  a  suit  to  recover  his  money,  such 
attorney  forfeits  all  right  to  claim  any 
deduction  as  compensation  for  his  ser- 
vices. In  this  direction  we  perceive 
no  error;  for  why  should  the  defend- 
ant receive  compensation  when  ho  has 
performed  no  service?  It  amounts  to 
nothing  more  nor  less  than  the  substi- 
tution of  one  debtor  for  another,  'ilio 
debt  is  not  nearer  collection  than  be- 
fore; and  it  is  apparent  that  if  the 
plaintiff  should  bo  equally  unfortunate 
in  the  selection  of  agents,  the  whole 


amount  will  be  consumed  under  pre- 
tense of  collection.  Iho  retention  of 
money  by  an  attorney  is  a  liuj^raut 
breach  of  trust,  for  which  ho  renders 
himself  liable  to  attachment,  and  iii 
some  cases,  to  have  his  name  stricken 
from  the  roll.  In  the  case  of  Leonard 
Ellmakcr's  Estate,  4  Watts,  35,  tiie 
court  ruled  that  an  administrator  was 
not  entitled  to  commissions  where  he 
had  been  guilty  of  fraud.     The  same 

Srinciplo  was  decided  in  Brackett  v. 
lorton,  4  Conn.  518;  10  Am.  Dec. 
179.  It  was  there  ruled  that  if  an 
attorney,  after  having  obtained  final 
judgment  and  execution,  prevent  the 
collection  of  the  execution  by  fraudu- 
lent conduct,  this  will  be  a  violation 
of  his  duty  as  attorney,  and  will  de- 
I»rive  him  of  all  legal  claini  for  his  ser- 
vices in  procuring  such  judgment  and 
execution.  It  is  the  duty  of  an  attor- 
ney, in  a  reasonable  time,  to  inform 
his  client  of  the  receipt  of  moaey,  and 
either  transmit  it  to  him  or  hold  it 
subject  to  his  order.  A  neglect  or 
refusal  to  do  so,  or  to  render  an  ac- 
count, is  such  fraudulent  conduct  as 
deprives  him  of  all  right  to  claim  coui- 
peusation  for  his  services." 


342 


343 


LIABILITY    OF    CLIFNT    TO    ATTORNEY. 


§205 


wcr9,  in  the  eye  of  the  law,  illegal  or  immoral;*  nor 
vhcrc  the  services  were  absolutely  useless;"  nor  where 
they  arc  rendered  in  a  litigation  about  officers'  fees  which 
grew  out  of  the  suit  in  which  he  was  employed,  the  client 
not  being  interested  in.  such  litigation;'  nor  where  he 
has  violated  his  instructions.* 

Illustrations.  —  C,  an  attorney  at  law,  agreed,  for  a  stated 
compensation,  to  conduct  the  contest  of  a  will.  Against  the 
consent  of  bis  clients,  and  without  leave  from  them,  he  rcluasod, 
as  their  attorney,  pending  the  suit,  certain  tracts  of  land,  and 
received  from  other  parties  nioney  for  so  executing  the  release. 
In  a  suit  brought  by  C.  to  recover  tlie  compensation  agreed 
upon,  held,  that  evidence  of  the  above  facts  was  adniissible, 
and  showed  a  complete  defense  to  C.'s  claim  under  the  con- 
tract: Chatfield  v.  Siinonson,  92  N.  Y.  209.  The  plaintiff,  a 
counselor  at  law,  instigated  the  defendant,  with  others,  to  cn- 


»Trist  V.  Child,  21  Wall.  441;  Ar- 

rin;{tou  v.  iSiiccd,  18  Tex.  1,35;  (iooil- 
eiiou£{li  r.  .Spencer,  4G  How.  Pr.  347; 
Treat  V.  J()ue3,  23  Conn.  334;  Jones  v. 
Bhicklitluc,  'J  Kan.  5G2;  12  Am.  Rep. 
503.  Thus  an  attorney  cannot  recover 
fur  sucli  advico  to  a  client  as  wouKl 
ciiahlj,  if  not  induce,  him  to  elude  the 
process  of  the  law,  nor  for  advice  to 
tho  officer  serving  tho  ])roce33,  calcu- 
lated tu  induce  him  to  violate  his 
duty:  Arrinj^jton  v.  8ueed,  18  Tex.  135. 
''  Weeks  on  Attorneys,  sec.  335.  In 
Brackett  i'.  Norton,  4  Conn.  517,  10 
Am.  J)cc.  17!),  tho  court  say:  "I  will 
assume  the  facts  to  bo  as  they  were 
sui^'L^ested  in  tho  argument,  and  as  I 
understood,  not  contraJicted;  that 
having  fraudulently  defeated  the  col- 
leetiou  of  the  execution,  and  having 
omittuil  to  give  any  iaformatioii  of 
this  fact  to  tlie  defendant,  the  plaintiff 
wa.i  re(|ui;sted  to  brin^  a  suit  against 
tho  shcrilF,  whicli,  by  reason  of  the 
culi)ablo  act  of  the  plaintiff,  was  de- 
feated. To  recover  for  his  services  in 
tlio  action  aforesaid  is  one  object  of 
tho  present  suit.  I  do  not  admit  that 
any  authority  except  what  was  origi- 
nally given  to  pursue  tho  requisite 
measures  for  collecting  the  defendant's 
dol)t  was  legally  necessary;  but  the 
consideration  of  this  subject,  as  being 
of  no  importance  in  this  case,  I  shall 
waive.    Had  the  fact  bccu  fully  kuowu 


by  the  defendant,  and  after  this  he 
had  thought  proper  to  invest  the 
plaintiff  with  autliority  to  brin;;  tho 
suit  in  question,  I  should  not  consider 
his  services  as  invalidated  by  tho  iinte- 
cedcnt  fraud.  U.it  the  suppression  of 
tho  trutii,  iii  this  important  particular, 
if  such  M'cro  the  fact,  was  itself  a 
fraud,  and  contaminated  uU  tlie  sub- 
sequent acts  of  the  plaiiitilT.  On  tlio 
supposition  assumed,  tlie  plaintifi'lincw 
that  I)y  fraud  he  had  prevented  tho 
collection  of  the  execution,  and  that  a 
recovery  against  tho  sheriff  was  iui- 
possiblc.  With  tliis  knowlcd;,'o  not 
comnmnicated  to  tho  defendant,  but 
conlined  in  his  own  breast,  ho  com- 
menced a  hopeless  suit,  whieh,  as  lie 
must  have  anticipated,  was  ileterniined 
against  his  client.  Having  violated 
his  d\ity  by  the  perpetration  of  a 
framl,  and  by  this  act  oceaisioiied  to 
tho  defendant  the  loss  of  his  deljt,  he 
now  demands  remuneration  for  his 
faithless  services.  The  ground  of  a 
mere  precedent,  if  it  existed,  must  l)o 
unquestionable  to  sanction  tlio  reward 
of  such  misconduct,  a:id  mucli  more 
to  authorize  tho  establishment  of  a 
principle  that  will  protect  aud  invito 
results  so  ilagrantly  u.iju;',t." 

»  Burns  v.  AlK"',  15  K.  I.  32;  2  Am. 
St.  Hep.  8-14. 

*  U.  S.  Mortgage  Co.  v.  Henderson, 
111  lud.  24. 


§  20G 


PRINCIPAL   AND   AGENT. 


344 


gage  in  a  riot,  and  promised  to  defend  them  if  they  were  prose- 
cuted. Tlio  defendant  jvas  prosecuted,  and  employed  the 
plaintiff  to  defend  him.  The  plaintiff  afterwards  sued  him  for 
his  services  and  dishurscments  in  defending  him.  Held,  that 
he  could  not  recover:  Treat  v.  Jones,  28  Conn.  334. 


§  206.  Attorney  may  Make  Special  Contract  for  Com- 
pensation.— Even  where  a  fee  bill  is  provided  by  law,  an 
attorney  may  make  an  express  and  special  contract  witli 
his  client  for  extra  compensation.'  But  the  courts  scru- 
tinize such  agreements  with  great  care,  and  the  burden  is 
on  the  attorney  to  show  that  the  contract  was  just  and 
fair,  and  that  the  client  has  not  been  taken  advantage  of.- 
Therefore,  every  special  agreement  for  compensation  be- 
tween attorney  and  client  is  not  good.  As  said  in  a  Ten- 
nessee case,^it  is  essential  that  "the  means  used  to  obtain 
the  contract  be  free,  not  only  of  fraud,  actual  or  construc- 
tive, but  also  of  any  other  inequitable  consideration;  that 
every  material  circumstance  or  fact  connected  with  the 
execution  of  the  contract,  and  calculated  to  inform  the 
client  of  his  rights  and  resposibilities,  be  declared  to  him 
without  reservation;  that  the  attorney  inform  himself  of 
all  such  facts  and  circumstances  which  would  reasonably 
come  within  the  knowledge  of,  and  which  would  likely 
prevent  the  execution  of  the  contract  by,  the  client;  that 
he  does  not  contract  for  a  greater  benefit  than  his  ser- 
vices are  reasonably  worth,  with  reference  to  the  trouble 
and  difficulties  of  the  particular  case,  amount  involved. 


*  Wullis  V.  Loiibat,  2  Denio,  607; 
Lecatt  V.  Salleo,  3  Port.  115;  29  Am. 
Dec.  24t>;  Lender  v.  Caldwell,  4  Kan. 
33y;  E;iston  r.  Smith,  1  E.  D.  Smith, 
318;  Jenkins  v.  Williams,  2  How.  Pr. 
201;  McElrath  v.  Dupuy,  2  La.  Ann. 
521;  Porter  v.  Parmly,  3")  N.  Y.  .Sup. 
Ct.  219;  lilaisdellt.  Ahern,  144  Mass. 
393;  59  Am.  Rep.  99. 

''  Haiglit  V.  Moore,  5  Jones  &  S.  161; 
McMahan  v.  Smith,  6  Heisk.  167;  Ma- 
son V.  Ring,  3  Abb.  App.  210;  Ford  v. 
Harrington,  IG  N.  Y.  285;  Evans  v. 
Ellis,  5  Deuio,  640;  Dickinson  v.  Brad- 


ford, 59  Ala.  581;  31  Am.  I:ep.  23; 
Allison  r.  Scheeper,  9  Daly,  365;  Ciies- 
ter  Co.  V.  Barl)er,  97  Pa.  St.  455;  Gru- 
by  V.  Smith,  13  111.  App.  43;  Yonge  ?■. 
Hooper,  73  Ala.  119.  Nothing  in  the 
law  of  Texas  prohibits  an  attorney  from 
contracting  in  good  faith  for  a  contin- 
gent fee:  Stewart »'.  Houston  ami  Te.xas 
Central  R'y  Co.,  62  Tex.  246;  Watei- 
bury  V.  Laredo,  68  Tex.  505.  See 
title  Contracts,  Champerty  and  Main- 
tenance. 

*  Planters'  Bank  v,  Hornberger,  4 
Cold.  53L 


844 


345 


LIABILITY   OF   CLIENT   TO   ATTORNEY. 


206 


cither  of  a  pecuniary  character  or  reputation  personally, 
etc.;  that  the  onus  shall  devolve  on  the  attorney  to  show 
that  the  contract  was  free  from  all  fraud,  undue  influence, 
and  exorbitancy  of  demand ;  that  the  attorney,  having  per- 
formed his  part  of  the  contract  reasonably,  and  with  duo 
skill  and  diligence,  without  regard  to  the  result  of  the  liti- 
gation, shall  be  entitled  to  recover  the  amount  specified, 
provided  ho  brings  the  contract  within  the  foregoing  prin- 
ciples. In  the  absence  of  a  contract,  the  attorney  is  en- 
titled to  recover  on  a  quantum  meruit  for  such  labor  as  ho 
shall  have  performed."  An  attorney  cannot  stipulate  for 
a  compensation  incommensurate  with  the  services  to  bo 
performed.  The  onus  is  upon  him  to  show  his  con- 
tract for  compensation  to  be  just  and  reasonable.*  In 
New  York  an  attorney  is  not  prohibited  from  taking  in 
advance  a  mortgage  to  secure  payment  of  his  costs  yet  to 
be  earned  in  a  suit.^  An  attorney  who  has  made  a  spe- 
cial contract  with  his  client  to  prosecute  a  case  to  its 
final  termination  cannot  recover  for  his  services  on  a 
quantum  mei  dit.  The  parties  must  be  governed  by  their 
contract,  and  it  is  for  the  jury  to  say  whether  there  was  a 
special  contract  or  not.'  He  cannot  recover  more  than  he 
agreed  to  receive  by  proof  that  his  services  were  worth 
more.'*  The  power  of  the  court  to  reform  contracts  be- 
tween attorney  and  client  is  limited  to  the  duty  of  protect- 
ing the  latter  against  the  undue  influence  of  the  former. 
It  cannot,  therefore,  increase  the  amount  of  compensation 
agreed  on  by  special  contract  as  the  value  of  the  attorney's 
services.'  A  contract  to  render  services  for  a  contingent 
fee  may  be  valid,  although  it  is  understood  that  the  attor- 
ney will  be,  as  in  fact  he  was,  an  indispensable  witness 
on  the  trial  of  his  client's  case.®  An  attorney  who  is  by 
agreement  to  receive  a  certain  per  cent  on  recovery  is  not 

'  Newman  r.    Davenport,    9    Baxt.  *  Coopwood  v.  Wallace,  1 2  Ala.  790. 

53S;  McMahan  v.  Smith,  G  Heisk.  107.  *  Lewis  v.  Yale,  4  Fla.  418. 

^  UM  V.  Crouse,  13  Hun,  557.  «  Perry  v.  Dicken,  105  Pa.  St.  83; 

'  BuU  V.  St.  Johns,  39  Qa.  78.  51  Am.  'Rep.  181. 


§  206 


PRINCIPAL  AND  AGENT. 


34G 


a  necessary  party  plaintiff,  and  need  not  be  joined  as  such.' 
Where  he  has  agreed  to  attend  to  all  of  a  person's  legal  busi- 
ness without  charge,  in  consideration  of  being  furnished 
with  offices  without  charge,  and  ho  is  called  upon  to  bid  in 
land  for  such  client,  which  ho  does,  and  assists  in  leasing 
the  same,  even  if  the  services  do  not  strictly  fall  within 
his  contract,  he  will  have  no  right  to  have  their  value 
estimated  upon  the  basis  of  commissions.^  So  where  ho 
takes  a  written  power  of  attorney  to  transact  and  manage 
certain  business  for  his  client,  which  fixes  his  compensa- 
tion for  his  services  and  trouble  at  twenty-f.vo  per  cent  of 
the  net  sum  realized  by  him,  if,  instead  of  attending  to  the 
business  him&elf,  he  employs  other  attorneys,  he  will  have 
no  right  to  charge  their  fee  to  his  client  in  addition  to  his 
commissions,  and  he  will  have  no  right  to  charge  a  fee  fur 
his  legal  services  above  the  cr  jpensation  provided  in  the 
contract.*  And  where  he  argues  a  case  for  an  agreed  sum 
at  one  term,  and  charges  more  for  a  second  argument  of 
the  same  case,  it  is  a  question  of  fact  whether  he  is  en- 
titled to  the  same  or  otlier  compensation.*  Under  a  con- 
tract to  pay  an  attorney  one  third  of  the  property  to  bo 
recovered  by  way  of  compensation,  the  fees  of  counsel 
employed,  not  by  him,  but  by  a  third  person,  are  not 
chargeable  to  the  attorney's  share.®  On  the  question 
whctlier  litigation  has  been  successful,  so  that  an  attor- 
ney has  earned  a  contingent  fee,  substantial,  not  absolute, 
success  may  in  some  circumstances  entitle  the  attorney  to 
his  fee." 

Illustrations. — A  mortgage  stipulated  that  "in  the  event 
of  foreclosure,  sixty  dollars  attorney's  fees  shall  be  by  the  court 
also  taxL'd  and  included  in  the  decree  and  foreclosure."  Held, 
that  the  mere  commencement  of  foreclosure  proceedings  did 
not  entitle  plaintiff  to  collect  the  attorney's  fees,  and  that  if, 
before  decree,  defendant  tenders  to  plaintiff  the  amount  of  the 


'  McDonald  r.  R.  R.  Co.,  26  Iowa, 
124;  m  Am.  Due.  114. 

••^  Dyer  v.  Sutherlaml,  73  III.  583. 
8  Hughes  V.  Zoiglcr,  (39111.  38. 


*  Strong  V.  McComiel,  5  Vt.  3.38. 
"  In  re  Hynes,  105  N.  Y.  560. 
^  Colo  V.  Kichinoad  Miaiug  Co.,  18 
Nev.  120. 


34G 


347 


LIABILITY   OF  CLIENT  TO   ATTORNEY. 


§207 


mortgage  nnd  costs  accrued,  he  is  discharged  from  all  further 
lialtility:  Schmidt  v.  Potter,  35  Iowa,  42G.  On  an  agreement  to 
p;iy  a  law  firm  for  defending  a  suit  in  the  United  States  cir- 
cuit court,  and  if  necessary  in  the  United  States  supremo  court, 
for  ono  thousand  dollars  in  cash,  and  such  further  sum  "as 
may  be  fair,  reasonable,  and  just  under  all  the  circumstances," 
]icld,  that  no  action  lay  before  the  time  for  suing  out  a  writ  of 
error  had  expired:  Holly  Springs  v.  Manning,  55  Miss.  380. 
M.  being  indicted  for  counterfeiting,  his  brother  gave  II.,  an 
{ittorney,  six  hundred  dollars  cash,  and  a  note  for  four  hundred 
dollars,  under  an  agreement  that  II.  should  procure  M.'s  acquit- 
tal and  discharge  at  a  specified  term  of  court;  but  M.  failed  to 
appear  thereat  and  answer.  Held,  that  the  contingency  not 
having  occurred,  11.  could  not  recover  on  the  note;  but  K.  could 
retain  of  the  money  sufficient  to  compensate  him  for  his  ser- 
vices in  good  faith  rendered  under  the  agreement  before  ascer- 
taining that  its  performance  had  become  impossible:  Moore  v. 
liolilnson,  02  111.  491.  An  attorney  received  about  sixty  thou- 
sand dollars'  worth  of  claims  for  collection.  The  rate  of  com- 
pensation agreed  upon  when  the  claims  were  given  to  him  was 
live  per  cent  upon  the  amount  collected.  After  collecting  most 
of  the  claims  the  contract  was  abandoned  by  mutual  consent. 
The  attorney  claimed,  in  addition  to  his  percentage  upon  tb,e 
amount  of  claims  collected,  the  value  of  services  actually  ren- 
dered in  connection  with  the  uncollected  claims:  Held,  that  he 
was  entitled  lo  nothing  on  account  of  these  claims:  Brncc  v. 
Baxter,  7  Lta,  477.  An  attorney  agreed  with  a  county,  against 
which  vxandamvfi  was  pending  to  compel  the  issue  of  certain 
bonds,  to  defend  the  suits  relating  thereto  for  a  stipulated  fee, 
and  for  a  further  sum  to  be  paid  "  in  the  event  the  county  shall 
not  be  obliged  to  issue  said  bonds,"  or  in  tlie  event  of  a  com- 
promise without  the  attorney's  consent,  and  to  be  paid  v;hen  "the 
validity  of  the  bonds  is  determined  in  favor  of  said  county." 
A  suit  was  pending  concerning  similar  bonds  already  issued, 
and  the  supreme  court  decided  these  bonds  to  be  invalid.  The 
attorney  thereupon  claimed  his  contingent  fee  to  have  been 
earned.  Held,  that  to  declare  bonds  already  issued  invalid  was 
a  different  thing  from  preventing  their  issuance,  and  that  the 
contingency  had  not  arrived  when  the  attorney  could  claim 
that  his  fee  was  earned:  Richland  v.  Millard,  9  111.  App.  396. 


§  207.    Special  Contracts  for  Compensation  Sustained. 

— Tested  by  the  principles  in  the  last  section,  the  follow- 
ing agreements  between  attorney  and  client  have  been 
held  good:  an  agreement  that  the  attorney  shall  have  a 


§207 


PRINCIPAL   AND   AGENT. 


348 


34 


percentage  on  the  amount  recovered  in  the  suit;'  that  tlio 
attorney  nhall  be  first  paid  out  of  the  sum  recovered;*  that 
the  costs  recovered  in  the  suit  shall  belong  to  the  attorney;' 
an  agreement,  after  judgment  recovered,  that  the  attorney 
shall  have  half  of  it  when  collected;*  a  parol  assignment 
of  a  cause,  by  a  plaintiff  to  his  attorney,  in  consideration 
of  the  attorney's  former  services  and  advancements;*  an 
agreement  by  an  attorney  to  commence  and  conduct  and 
pay  all  the  expenses  of  a  suit,  and  give  the  plaintiff  a  certain 
share  of  the  proceeds."  Au  attorney  at  law  may  stipulate  to 
prosecute  a  claim  against  the  United  States  for  a  contin- 
gent fee,  and  a  contingent  fee  of  fifty  per  cent  may, 
under  certain  circumstances,  bo  not  an  exorbitant  fcc.^ 
A  defendant  has  a  right  to  assign  to  his  attorney  the 
prospective  costs  against  his  adversary,  in  consideration 
of  the  services  to  bo  rendered  by  the  attorney  in  earning 
such  costs,  and  where  such  transfer  has  been  made,  in 
case  the  defense  is  successful,  the  claim  of  the  attorney  to 
a  judgment  for  the  costs  cannot  be  defeated  by  setting  off 
against  the  same  a  prior  judgment  in  favor  of  the  plain- 
tiff against  the  defendant.*  An  agreement  made  by  an 
attorney  with  a  client  to  render  his  professional  services, 
"in  the  courts  of  this  state,"  in  actions  to  test  the  validity 
of  the  client's  title  to  certain  real  estate,  in  consideration  of 


1  Benedict  v.  Stuart.  23  Bar'v  420; 
Regan  v.  Martin,  18  Wis.  672;  Wilhite 
V.  Roberts.  4  Dana,  172;  Mayor  v. 
Gibson,  1  Tat.  &  II.  48;  Ex  parte  Plitt, 
2  Wall.  Jr.  453;  Bayard  v.  McLano,  3 
Harr.  (Del.)  139;  Tapley  v.  Coffin,  12 
Gray,  420;  Ogdcn  v.  Des  Arts,  4  Duer, 
275;  Evans  r.  Bell,  6  Dana,  479;  Schomp 
V.  Schenck,  40N.  J.  L.  1C5;  29  Am.  Rep. 
2'9;  McDonald  v.  Chicago  etc.  R.  R. 
Co.,  29  Iowa,  170;  Hoffman  v.  Vallejo, 
45  Cal.  5G4;  Moses  v.  Bagley,  53  Ga. 
283;  contra,  HoUoway  v.  Lowe,  7 
Port.  480;  Satterlee  v.  Frazer,  2  Sand. 
141;  Elliott  r.  McClelland,  17  Ala. 
206;  Duraaa  v.  Smith,  17  Ala.  305; 
Boardmau  v.  Thompson,  25  Iowa, 
427. 


»  Christie  v.  Sawyer,  44  N.  H.  248. 
In  New  Jersey  where  there  are  no 
laws  against  champerty  and  mainte- 
nance, an  attorney  assigned  to  assist  a 
poor  woman  in  recovering  one  thoiusand 
dollars,  and  three  hundred  dollars  in- 
terest due  on  a  policy,  may  stipulate 
for  one  half  the  amount  in  case  of 
success,  he  to  have  nothing  other- 
wise: Hassell  v.  Van  Houten,  39  N.  J. 
Eq.  105. 

"  Ely  V.  Cooke,  28  N.  Y.  365. 

*  Floyd  V.  Goodwin,  8  Yerg.  484;  29 
Am.  Dec.  130. 

*  Jordan  v.  Gillen,  44  N.  H.  424. 
«  Fogerty  v.  Jordan,  2  Robt.  319. 
'  Taylor  v.  Bemiss,  110  U.  S.  42. 
8  Perry  v.  Chester,  63  N.  Y.  240. 


349 


LIABILITY   OP   CLIENT  TO  ATTORNEY. 


208 


a  conTeyance  by  the  client  to  the  attorney  of  a  portion 
of  the  land,  does  not  bind  the  attorney  to  render  his  ser- 
vices in  an  action  brought  to  test  the  validity  of  the  sumo 
title  in  the  circuit  court  of  the  United  States  of  that 
state.*  An  attorney  cannot  recover  on  an  agreement  by 
his  client  to  pay  him  for  services  when  the  agreement 
was  brought  about  by  his  fraudulent  misrepresentations 
ari  to  the  amount  which  would  bo  recovered  in  a  suit,  and 
by  threatening  to  withhold  and  destroy  valuable  papers 
relating  to  suits  in  which  ho  was  acting  for  his  client." 
Under  a  contract  to  pay  an  attorney  a  percentage  "on  all 
amounts  collected,"  the  attorney  is  entitled  to  his  percent- 
age, although  the  claim  is  pai<l  without  his  interference.' 

Illustrations.  —  It  was  agreed  that  an  attorney  should  take 
such  legal  proceedings  as  to  him  Rhould  seem  fit  to  vacate  cer- 
tain assessments.  He  took  proceedings  to  vacate  some  of  them, 
but  not  all,  rightly  believing  that  in  the  case  of  the  others  pro- 
ceedings would  bo  unavailing.  Held,  that  he  was  entitled  to 
the  compensation  agreed  on:  Deering  v.  McCahill,  51  N.  Y. 
Sup.  Ct.  2G3. 

§  208.  Special  Contracts  for  Compensation  not  Sus- 
tained.—  But  the  following  have  been  held  invalid:  an 
agreement  between  attorney  and  client  that  the  former 
shall  defend  the  suit  in  consideration  of  the  rents  and 
profits  of  the  land  in  question  during  the  litigation;^  an 
agreement  after  the  attorney  had  been  employed,  by  which 
greater  compensation  is  given  to  him.**  A  written  contract 
between  a  county  and  an  individual,  which  shows  upon 
its  face  that  it  was  made  by  the  county  for  the  professional 
services  of  the  individual  as  an  attorney,  which  services 
are  such  as  the  law  requires  to  be  performed  by  the  county 
attorney,  is  prima  facie  void.® 


1  Mahoney  v.  Bergiii,  41  Cal.  4P.3. 

''  Jiulah  V.  V  incennes  University, 
23  lud.  273. 

'  Jacks  V.  Thweatt,  39  Ark.  340. 

*  Merritt  v.  Lambert,  10  Paige,  352. 
See  title  Contracts,  Champerty. 


^Lecatt  V.  Sallee,  3  Port.  115;  29 
Am.  Dec.  249. 

«  Clougli  V.  Hart,  8  Kan.  487.  In  a 
New  York  case  an  attorney  at  law 
acquired  knowledge  of  au  unclaimed 
savings  bank  deposit.     He  induced  A, 


209 


PRINCIPAL  AND   AGENT. 


350 


§  209.  Special  Contract  for  Complete  Service  —  Com- 
pletion of  Service  Interrupted.  —  Where  there  is  a  special 
contract  between  attorney  and  client  for  a  stipulated  fee 
for  prosecuting  the  suit  to  its  termination,  and  the  attor- 
ney, after  rendering  part  of  the  services,  is  prevented  by 
a  cause  not  within  his  control  from  completing  his  con- 
tract,  he  is  entitled  to  bo  paid  the  reasonable  value  of  his 
services.*  Thus,  if  he  becomes  incapable  of  acting  further 
on  account  of  being  elected  to  the  bench,  he  may  recover 
for  what  ho  has  already  done.^  A  note  given  for  a  fee 
may  be  collected  though  the  cause  be  compromised  before 
the  payee  has  performed  all  the  services  ho  was  expected 
to  render.'  So  where,  under  the  circumstances,  the  at- 
torney dies  before  the  cause  is  determined,  his  adminis- 
trator may  recover  a  quantum  meruit.*  A  contract  with 
an  attorney  to  present  a  claim  against  a  foreign  govern- 
ment, for  a  stipulated  proportion  of  the  amount  recovered, 
is  not  dissolved  by  the  death  of  the  claimant  after  services 
have  been  rendered,  but  creates  a  lien  on  the  money,  when 
subsequently  recovered,  which  is  a  foundation  for  juris- 
diction in  equity."  The  retainer  of  an  attorney  in  a 
criminal  case  makes  it  his  duty  to  render  all  his  profes- 
sional services  up  to  final  judgment  and  the  end  of  the 
case.  Where  a  note  is  given  for  the  fee,  the  death  of  the 
maker  at  the  hands  of  a  mob  before  trial  constitutes  a 
partial  failure  of  consideration." 

Illustrations.  —  Indictments  were  found  and  drawn  up 
durirg  the  term  of  a  circuit  attorney,  and  he  performed  all  the 


one  of  the  next  of  kin  of  the  deceased 
depositor,  to  procure  himself  to  be 
appointed  administrator,  and  to  agree 
to  give  the  attorney  one  half  of  the 
deposit  as  compensation  for  the  attor- 
ney's services  in  securing  it.  A  after- 
wards refused  to  carry  out  the  agree- 
ment. It  was  held  that  the  ^.ttorney 
was  not  entitled  to  a  judgment  against 
A,  who  was  insolvenr,  co  be  paid  out 
of  the  estate:  Murphy  v.  Banderet,  13 
Daly,  385. 


^Morgan  v.  Roberts,  38  111.  65; 
Major  V.  McLester,  4  Ind.  591. 

•■«  Baird  v.  Ratcliflf,  10  Tex.  81. 

'  McLain  v.  Williams,  8  Yerg. 
230. 

*  Coe  V.  Smith,  4  Ind.  79;  58  Am. 
Dec.  618;  Baylor  v.  Morrison,  2  Bibb, 
103;  Clendinen  v.  Black,  2  Bail.  488; 
23  Am.  Dec.  149. 

»  Wylie  V.  Coxe,  15  How.  416. 

'  Agnew  V.  Waldeu,  84  Ala.  42. 


350 


351 


LIABILITY   OP   CLIENT  TO  ATTORNEY.      §§  210,  211 


actual  services  which  were  rendered,  and  the  cases  were  con- 
tinued and  not  brought  to  trial,  and  no  services  were  rondered 
in  theiu  by  his  successor.  Held,  that  the  fees  thus  accruing 
belonged  to  the  former:  Vasline  v.  VoullairCy  45  Mo.  504.  A 
law  firm  began  the  defense  of  an  equity  suit,  receiving  their 
entire  fee  in  advance,  and  one  of  the  firm  dying,  the  Hurviving 
partner  conducted  the  suit  to  its  conclusion.  JfchJ,  that  ho 
could  not  claim  additional  compensation  in  the  absence  o(  a 
new  contract:  Dowd  v.  Tnmp,  57  Miss.  204.  W.,  an  attorney, 
was  engaged  by  the  city  of  Detroit  to  prosecute  a  particular 
cause  for  the  city,  and  was  to  bo  paid  the  value  of  his  services. 
Wiiilo  the  cause  was  pending  ho  was  elected  city  counselor, 
under  ordinances  which  required  the  city  counselor  to  prosecute 
all  the  city  law  business,  and  gave  a  stated  salary  therefor. 
//(•/(/,  that  his  salary  must  bo  deemed  to  cover  all  services  ren- 
dered after  his  becoming  city  counselor.  His  election  to  and 
acceptance  of  that  office  terminated,  by  implication,  the  previous 
engagement,  and  his  right  to  recover  for  services  under  it:  City 
of  Detroit  v.  Whittemore,  27  Mich.  281. 

§  210.  By  Withdrawal  from  Case. — If  an  attorney  witli- 
draws  from  a  case  with  the  consent  of  his  client,  lie  docs 
not  lose  hi'j  right  to  compensation  for  services  already 
rendered.*  If  he  abandons  the  case  he  cannot  recover  on 
his  special  contract,  though  he  may  on  a  quantum  weruit. 
If  the  client  employ  a  certain  firm  or  association  of  law- 
yers, one  cannot  abandon  the  case,  and  the  others  carry 
out  the  contract.^  The  attorney  is  justified  in  withdraw- 
ing by  the  client's  failure  to  supply  him  with  funds  to 
carry  on  the  litigation.' 


Yerg. 


§  211.  By  Dismissal  of  or  from  Case. — If  the  attorney 
is  dismissed  by  his  client  without  cause,  he  may  recover 
for  the  services  rendered,  and  perhaps  the  stipulated  fee  for 
the  whole  case.*     If  a  client  prevents  his  attorney  from 


*  Coop  wood  w.  Wallace,  12  Ala. 
790. 

'  Morgan  v.  Roberts,  38  111.  65.  In 
Simon  v.  Brashear,  9  Rob.  (La.)  59, 
41  Am.  Dec.  321,  it  was  said  that 
business  intrusted  to  two  professional 
men  maj'  be  attended  to  by  either. 

*  Weeks  on  Attorneys,  sec.  365. 


*  Myers  v.  Crockett,  14  Tex.  259. 
Where  an  attorney  at  law  is  employed 
to  defend  a  suit  at  an  agreed  compen- 
sation, and  fully  performs  his  agree- 
ment until  discharged  without  cause, 
the  measure  of  his  damages  is  the 
compensation  named  in  the  contract: 
Webb  r.  Trescony,  Cal.  1888. 


§211 


PRINCIPAL  AND  AGENT. 


352 


OJ 


completing  tlio  services  contracted  for,  tho  attorney  may 
recover  as  though  he  had  fully  performed  them.*  A 
client  cannot,  at  his  own  option,  by  tho  employment  of 
additional  counsel,  reduce  tho  amount  of  tho  compensa- 
tion  or  fee  which  ho  had  stipulated  to  pay  to  the  original 
attorney.''  An  attorney  at  law  is  entitled  to  claim  com- 
missions upon  judgments  obtained  through  his  agency, 
as  well  as  upon  moneys  actually  collected  on  executions, 
and  accounted  for  to  his  clients,  although  he  be  super- 
seded by  the  appointment  of  another  attorney."  If  tho 
client  dismisses  tho  suit  without  tho  attorney's  consent, 
thereby  preventing  him  from  completing  his  contract  to 
the  end,  it  is  held  by  some  courts  that  ho  may,  and  by 
others  that  ho  may  not,  recover  the  stipulated  fee  for  the 
full  service.^  But  such  a  contract  gives  him  no  right 
which  can  prevent  or  affect  the  settlement  or  compromise 
of  the  suit  by  the  client.®  If  tho  fees  of  an  attorney  arc 
contingent  on  success,  and  tho  client  settles  the  suit 
without  tlio  attorney's  consent,  tho  attorney  can  recover 
what  his  services  were  worth."  If,  by  compromise  be- 
tween the  plaintitF  and  defendant,  after  judgment,  tho 
defendant  agrees  to  pay  tho  counsel  fees  of  plaintiff  in 
the  case,  such  agreement  is  not  binding  on  the  attor- 
ney, and  he  may,  notwithstanding  the  agreement,  recover 
from  his  client  a  fair  compensation  for  his  services.' 


*  Kcraey  «•.  Garton,  77  Mo.  G45. 

*  Randall  V.  Archer,  5  Fla.  438; 
Morgan  v.  Brown,  12  La.  Ana. 
159. 

*  Morel  V.  New  Orleans,  12  La.  Ann. 
485;  Coiumanilcnr  V.  CarroUton,  15  La. 
Anu.  7. 

*  Hill  V.  Cunningham,  25  Tex.  25; 
Hunt  V.  Test,  8  Ala.  IC;  Polsley  v. 
Anderson,  7  W.  Va.  202;  23  Am.  Rep. 
613.  Where  an  attorney  has  agreed 
to  prosecute  an  action,  for  a  compen- 
sation to  he  contingent  on  success,  and 
is  diligently  prosecuting  it,  the  client 
cannot,  by  settling  the  action  without 
bis  consent,  deprive  him  of  bis  right 


to  compensation.  On  a  settlement  so 
made,  the  attorney  is  at  least  entitled 
to  be  paid  in  proportion  to  tho  sum 
received  by  the  client  in  settlement 
of  the  action:  Marsh  v.  Holbrook,  3 
Abb.  App.  176. 

''  Kusterer  v.  City  of  Beaver  Dam,  56 
Wis.  471;  43  Am.  Rep.  725;  Lamoiit 
V.  Washington  etc.  R.  R.  Co.,  2  Mac- 
key,  502;  47  Am.  Rep.  268;  Miller  v. 
Newell,  20  S.  C.  122;  47  Am.  Rep. 
833;  Roberts  v.  Doty,  31  Hun,  128. 

"  Quint  V.  Ophir  etc.  Mining  Co.,  4 
Nev.  304. 

^  bafibrd  v.  Carroll,  23  La.  Ann. 
382. 


cli 

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tin 

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t.is 

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tho 


352 


053 


LIADILITY    OP   CLIENT   TO    ATTOKNICY. 


§211 


Ann, 


Illustrations.  —  An  nttornoy  Itiul  a  ppocial  contract  with  his 
cHcnt  to  perform  certain  Hcrviccs,  hut  was  wrongfully  prt-venti'd 
hy  the  client  from  coinpl(;ting  thctn,  tho  attorney  having  at  all 
tinios  continued  ready  to  siTve.  Held,  that  he  could  claim  tho 
entire  amount  agreed  upon,  less  buch  expenses  as  he  would  have 
incurred,  hut  not  charged  to  his  client,  had  ho  completed  his 
task  according  to  agreement:  Jirodic  v.  Wotkins,  o',i  Ark.  54'); 
151  Am.  Rep,  4'.).  An  attorney  was  appointed  hy  a  hank  for 
the  term  of  two  years,  with  an  agreement  that  ho  should  receive 
a  certain  commission  upon  all  collections  mado  hy  him.  Jfdd, 
entitled  to  f;uch  commission  on  the  an)ount  of  a  judgment,  on 
which  execution  issued  hefore  his  term  expired,  hut  which  was 
not  received  hy  him  till  after  the  expiration  of  his  odice:  State 
V.  Hawkins,  2.S  Mo.  oOG.  Aii  attorney  rr(;eiveil  notes  for  collec- 
tion, on  an  agreojuent  to  charge  nothing  m  til  they  were  col- 
lected, and  then  to  have  eight  per  cent,  llo  prosecuted  tho 
notes  to  judgment,  hut  did  no  more.  Seven  years  afterwards, 
the  client,  with  this  attorney's  consent  nplo}  ed  another  attor- 
ney, who  collected  the  indehtedness.  Held,  that  the  first  attor- 
roy  was  not  entitled  to  any  compensation:  Ri>  >.eau  v.  Mnrrimi- 
cnii'x,  28  La.  Ann.  2*.)3.  A  employed  1>,  t\n  attorney,  to  collect 
a  decree  rendered  in  his  favor,  and  agreed  in  writing  to  give 
him  a  certain  sum  when  he  should  collect  it.  Ueforc  li  had 
collected  the  whole  of  the  decree,  A  hecamo  dissatisiu  c1,  and 
employed  another  attorney  to  collect  tho  halance,  and  brought 
suit  against  li  for  tho  amount  lie  had  collected.  Ildd,  recover- 
ahle  on  the  ground  that  if  the  contract  was  in  force,  tlio  stipu- 
lated compensation  could  not  bo  claimed  by  li,  as  lie  had  not 
collected  the  whole  amount  decreed,  and  if  the  contract  was 
broken  and  rescinded,  he  was  entitled  only  to  a  reasonable 
compensation  for  his  services,  and  perhaps  damages  for  the 
breach  of  the  contract,  which  amount  could  not  bo  set  off 
against  A's  claim,  as  ho  had  filed  neither  special  plea,  notice, 
nor  counterclaim:  Scohcy  v.  Ross,  5  Ind.  445.  A  creditor  left  a 
claim  with  a  lawyer  for  collection,  and  among  other  things 
agreed  that  in  case  he  should  himself  '*  settle,  compromise,  or 
receive,  or  in  any  way  dispose  of  the  claim,"  the  attorney 
should  be  allowed  twenty-five  per  cent.  Held,  that  the  mere 
taking  by  the  creditor  of  tho  debtor's  note,  without  security  or 
payment,  did  not  entitle  the  attorney  to  his  commission:  UHlls 
v.  Fox,  4  E.  D.  Smith,  220.  An  attorney  was  employed  to  do- 
fend  a  party  on  a  criminal  charge,  for  a  fixed  price,  to  be  paid 
after  the  services  were  rendered.  He  tendered  his  services, 
which  were  refused,  the  defendant  saying  that  his  wife  had 
employed  other  counsel.  The  attorney  told  defendant  he  was 
ready  to  comply  with  his  contract,  and  would  make  him  do  so, 
Vol.  L— 23 


§211 


PRINCIPAL  AND  AGENT. 


354 


but  afterwards  volunteered  in  the  prosecution,  and  conducted 
the  case  against  defendant.  Held^  that  this  action  was  an 
abandonment  of  the  contract,  and  that  the  plaintiff,  the  attor- 
ney, could  not  recover  in  an  action  for  the  fee:  Cantrel  v. 
Chism,  5  Sneed,  116.  An  attorney  agreed  with  a  father  to 
institute  proceedings  for  the  division  and  sale  of  land  held  by 
the  father  and  his  daughter  in  common,  and  the  father  agreed 
to  pay  for  such  services  five  hundred  dollars  when  the  land 
should  be  sdd  and  the  purchase-money  become  due,  or  the 
usuat-  fee  in  case  the  attorney  should  fail  to  procure  the  divis- 
ion. The  father  died  after  an  ord^r  for  the  sale  had  been 
entered  by  the  court,  but  before  the  sale  had  taken  place;  and 
the  guardian  of  the  daughter  had  the  suit  dismissed.  Held, 
that  the  attorney  was  only  entitled  to  the  usual  fee  for  his  ser- 
vices: Bunn  V.  Prather,  21  111.  217.  An  action  was  brought  for 
the  specific  performance  of  a  contract  for  the  sale  of  real  prop- 
erty, and  after  issue,  but  before  trial,  the  parties  made  a  settle- 
ment of  the  subject  of  the  action,  notwithstanding  which  the 
defendant's  attorney  insisted  upon  proceeding  with  the  action 
unless  his  costs  were  paid.  The  plaintiff  thereupon  moved  for 
a  dismissal  of  the  action.  Held,  that  as  in  fact  there  was  no 
longer  a  controversy  between  the  parties,  the  action  should  not 
be  continued  at  their  expense,  either  for  the  profit  or  emolu- 
ment of  others,  and  that  the  motion  for  discontinuance  should 
be  granted:  Sullivan  v.  O'Keefe,  53  How.  Pr.  426.  After  action 
brought  and  sent  to  referee  for  trial,  the  parties  settled,  and 
plaintiff  gave  a  release  to  defendant,  who  agreed  to  pay  all 
costs.  Defendant  moved  for  a  discontinuance,  and  an  order 
was  entered,  directing  discontinuance  on  payment  of  plaintiff's 
taxable  costs.  Plaintiff's  attorney  showed,  upon  the  motion, 
that  the  agreement  between  him  and  his  client  was,  that  he 
should  not  charr^e  the  plaintiff  personally  for  services  or  dis- 
bursements, but  that  he  should  be  paid  out  of  the  amount  col- 
lected a  fee  contingent  on  recovery;  but  it  did  not  appear,  as 
matter  of  fact,  that  any  amount  beyond  taxable  costs  and  dis- 
bursements was  due  to  him.  Held,  that  upon  these  facts  the 
court  should  not  have  held,  as  matter  of  law,  that  the  attorney 
for  the  plaintiff  was  entitled  to  an  allowance  for  compensation 
beyond  the  taxable  costs  and  disbursements:  Wright  v.  Wright, 
41  N.  Y.  Sup.  Ct.  432.  An  attorney  agreed  with  his  client  to 
bring  a  suit  for  him  against  a  railroad  company,  for  a  personal 
injury,  in  consideration  of  one  half  the  damages  recovered,  the 
attorney  to  pay  the  expenses  of  the  litigation.  When  the  sum- 
mons was  served  upon  one  of  the  directors  of  the  company,  he 
was  notified  of  this  arrangement,  and  forbidden  to  settle  with 
the  client.    Notwithstanding,  the  company  compromised  the 


355 


LIABILITY   OF   CLIENT  TO   ATTORNEY. 


§211 


matter  with  the  client,  and  took  a  release  from  him,  which 
they  set  up  in  their  answer,  as  a  defense  to  the  suit.  Held, 
that  although  such  release  should  not  be  set  aside,  it  was  void 
as  against  the  attorney;  and  that  the  referee  before  whom  the 
case  was  tried  should  have  gone  on  and  assessed  plaintiffs' 
damages,  and  given  judgment  against  defendant  for  one  half 
the  amount  of  such  damages:'  Coughlin  v.  N.  Y.  Central 
etc.  R.  R.  Go.,  8  Hun,  18G.  An  attorney  was  employed  to 
prosecute  a  claim  before  the  treasury  department  for  one  half 
the  sum  to  be  recovered.  After  filing  the  papers,  etc.,  ho 
was  disbarred  from  further  practice  in  the  department.  Held, 
that  the  contract  fell  to  the  ground,  but  that,  for  services  in  fact 
rendered,  he  was  entitled  to  a  reasonable  compensation,  and 
that  it  made  no  difference  that  after  his  disbarment,  and  the 
employment  of  other  counsel,  the  order  of  disbarment  was  re- 
voked: Moyers  v.  Graham,  15  Lea,  57. 

•Otherwise,  where  defendant  had    Walsh  t>.  Flatbush  etc.  R.  R.  Co.,  11 
no  notice  of  the  attorney's  rights,  and    Hun,  190. 
made  the  settlement  in  good  faith: 


§212 


PRINCIPAL   AND  AGENT. 


356 


Part  III.— AUCTIONEERS. 


CHAPTER   XVIII. 

AUCTIONEERS. 

§  212.  Nature  and  effect  of  sales  by  auction. 

§  213.  Auctioneer  defined,  etc. 

§  214.  Duties  of  auctioneer. 

§  215.  Powers  possessed  by  auctioneer. 

§  216.  Auctioneer  as  agent  of  both  —  Statute  of  fraads. 

§  217.  Powers  not  possessed  by  auctioneer. 

§  218.  Liabilities  of  auctioneers. 

§  219.  Liabilities  and  rights  of  bidders. 

§  220.  Fictitious  bids  —  "Puffers " -^  Agreementa  not  to  compete. 

§  221.  Tlie  auctioneer's  compensation. 


§  212.    Nature  and  Effect  of  Sales  by  Auction. — An 

auction  is  a  public  sale  of  property  to  the  highest  bidder.' 
The  bidding  at  an  auction  is  an  offer  by  the  bidder  which 
is  not  binding  on  either  side  until  assented  to,  which  as- 
sent is  signified  on  the  part  of  the  seller  by  knocking 
down  the  hammer.  Therefore  a  bid  may  be  retracted 
before  the  hammer  goes  down.''  Putting  up  goods  pub- 
licly for  sale  at  a  certain  high  price,  and  then  gradually 
lowering  the  price  till  some  one  accepts  it  as  a  buyer,  is 
a  sale  at  auction.^  By  advertising  that  the  propert}'^  is 
to  be  sold  "without  reserve,"  one  contracts  with  the  high- 
est bona  fide  bidder  that  the  sale  shall  be  without  reserve; 
and  the  contract  is  broken  if  during  the  aut'tion  a  bid 
is  made  by  or  on  behalf  of  the  owner  of  the  property  sold, 
and  in  such  case  the  auctioneer  is  liable  to  an  action  at 


iRex  V.  Taylor,  13  Price,  C.Sli; 
Campbellt'.  Swan,  48  Barb.  109;  Cran- 
dall  V.  State,  28  Ohio  St.  479;  Walker 
V.  Advocate,  1  Dow,  111. 

*  2  Kent's  Com.  537;  Payne  v.  Cave, 


3  Term  Rep.  148;  Warlowr.  Harrison, 
1   El.  &  E.  295;  Ives  v.  Tregent,  29 
Mich.  390. 
^  Deposit  V.  Pitta,  18  Hun,  475. 


357 


AUCTIONEERS. 


§212 


the  sviit  of  the  highest  bona  fide  oidder.^  When  property 
is  advertised  to  be  sold  "without  reserve,"  such  advertise- 
ment is  understood  to  exclude  any  interference  by  the 
vendor,  either  direct  or  indirect,  which  can  under  any 
possible  circumstances  affect  the  right  of  the  highest 
bidder,  whatever  may  be  the  amount  of  his  bidding,  to 
bo  declared  the  purchaser.^  Therefore  any  arrangement 
by  him  with  others,  the  result  of  which  will  be  io  prevent 
a  sale  under  a  fixed  sum,  will  operate  to  avoid  the  sale.^ 
But  the  owner  may  cause  the  auctioneer  to  publicly  an- 
nounce that  no  bids  less  than  five  cents  will  be  received; 
and  after  such  notice  a  person  who  bids  only  one  cent  in 
advance  of  a  previous  bid,  although  the  previous  bid  was 
one  left  by  an  absentee,  acquires  no  title  to  the  article  upon 
which  he  bid.*  A  bid  may  likewise  bo  retracted  or  with- 
drawn by  the  auctioneer  withdrawing  the  article  bid  on 
and  passing  to  something  else,®  or  adjourning  the  sale.' 
If  the  description  of  the  property  sold  be  substantially 
true,  and  the  purchaser  gets  what  he  bargained  for,  with 
only  slight  defects,  he  will  generally  be  held  to  abide  by 
the  purchase,  with  an  allowance  from  the  price  by  way  of 
compensation.'  Where  the  owner  advertises  a  lot  of  very 
valuable  property  to  be  sold  at  auction,  and  only  offers 
for  sale  articles  of  very  little  value,  this  fraud  has  no 
effect  upon  any  particular  sale  effected  at  the  auction.* 
But  if  while  the  auctioneer  is  selling  goods  of  one  man 
another  procures  him  to  sell  his  goods,  without  informing 
him  whose  they  are,  it  is  a  fraud,  both  on  the  auctioneer 
and  on  the  bidders,  such  as  would  entitle  him  to  whom 
the  goods  were  sold  to  repudiate  the  sale  upon  the  dis- 


*  Warlow  ?'.  Harriaon,  29  L.  J.  Q.  B. 
14;  6  Jur.,  N.  8.,  66;  1  El.  &  E.  295; 
in  Exchequer,  5  Jur.,  N.  S.,  313;  28 
L.  J.  Q.  li.  7. 

•^Robinson  V.  Wall,  2  Phill.  Ch. 
37'2;  11  Jur.  577;  16  L.  J.  Ch. 
401. 

3  Davis  ?'.  Petway,  3  Head,  667;  75 
Am.  Dec.  789. 


♦  Farrr'.  John,  23  Iowa,  286;  92  Am. 
Dec.  42G. 

'•>  Don.iKlson  v.  Kerr,  6  Pa.  St.  486. 

''  Wharton  on  Agency,  sec.  640. 

'^  2  Kent's  Com.  537;  Ashcom  v. 
Smith,  2  Penr.  &  W.  211;  21  Am. 
Dec.  4.37. 

8  Farr  r.  John,  23  Iowa,  286;  92 
Am.  Dec.  426. 


§212 


PRINCIPAL  AND  AGENT. 


358 


covery  of  the  fraud.*  The  advertisement  is  no  part  of 
the  conditions  of  sale,  and  does  not  bind  the  vendor 
unless  expressly  made  so.^  Conditions  of  sale  read  before 
the  biddings  commenced,  but  not  annexed  to  the  cata- 
logue on  which  the  purchasers'  names  were  entered  or 
referred  to  therein,  cannot  supply  the  terms  of  sale 
omitted  from  the  catalogue."  As  between  the  seller  and 
the  purchaser  of  the  goods  at  auction,  evidence  is  admis- 
sible to  vary  the  conditions  of  the  sale  publicly  stated.* 
But  the  printed  conditions  upon  which  a  siale  by  auction 
proceeds  cannot  be  varied  or  contradicted  by  parol  evi- 
dence of  the  verbal  statements  of  the  auctioneer  made  at 
the  time  of  the  sale,  except  for  the  purpose  of  showing 
fraud.  Hence  parol  evidence  that  is  not  repugnant  to  the 
printed  terms  of  sale,  but  consistent  with  and  explanatory 
of  them,  is  admissible.  Thus  where  the  wrecks  of  vessels 
lying  in  a  river  are  sold  by  name  as  lying  at  certain 
localities,  evidence  is  admissible  to  show  that  the  mate- 
rials were  lying  in  the  river  at  the  localities  named,  and 
that  the  names  were  wrongly  given,  the  wrecks  being 
incapable  of  identification  by  their  names,  and  being 
masses  of  rubbish  rather  than  specific  chattels.^  Specific 
performance  of  a  sale  by  auction  may  be  decreed."  An 
action  on  the  case  lies  for  the  disturbance  of  a  sale  by 


I  Thomas  v.  Kerr,  3  Bush,  619;  96 
Am.  Dec.  262. 

^  111  Ashcom  V.  Smith,  2  Penr.  & 
W.  211,  21  Am.  Dec.  437,  it  is  said: 
"The  office  of  aa  advertisement, 
both  here  and  in  England,  is  to 
give  notice  of  the  fact  that  a  sale 
IS  intended,  and  Jio  object  of  the 
description  is  to  attract  bidders,  leav- 
ing the  terms  to  be  settled  on  the 
ground.  Even  were  the  conditions 
published  beforehand,  the  vendor 
would  not  be  precluded  from  chan- 
ging them,  as  ho  may  sell  on  his  own 
terms,  or  not  at  all.  The  conditions 
are,  therefore,  superadded  as  a  distinct 
matter  by  the  auctioneer,  and  pub- 


lished by  parol  or  in  writing.  Where, 
indeed,  the  advertisement  is  refurred 
to  as  containing  the  conditions,  it  will 
no  doubt  answer  the  purpose;  but  it 
is  not  pretended  here  that  the  land 
was  sold  by  the  advertisement,  or  in 
gross,  or  aa  containing  a  deHnite  qiuui- 
tity,  or  any  other  way  than  by  the 
acre." 

» Johnson  v.  Buck,  35  N.  J.  L.  338; 
10  Am.  Rep.  243. 

*  Mitchell  V.  Zimmerman,  109  Pa. 
St.  183;  58  Am.  Rep.  715. 

»  Chouteau  v.  Goddin.  39  Mo.  229; 
90  Am.  Dec.  462. 

"  King  V.  Bardeau,  6  Johns.  Ch.  3S; 
10  Am.  Dec.  312. 


359 


AUCTIONEERS. 


§213 


auction.'  A  sale  of  a  number  of  articles  or  pieces  of 
property  constitutes  but  one  contract,  though  they  are 
separately  struck  off  at  different  prices.''  A  lease  of  real 
estate  for  five  years,  by  auction,  to  the  highest  bitkler  is 
not  a  "  sale  of  real  estate"  within  a  Massachusetts  statute.^ 

Illustrations. — A  testator  ordered  that  his  estate  should 
bo  sold  by  "auction."  It  was  advertised  for  sale  on  a  certain 
day,  but  before  that  time  a  person,  by  letter,  offered  a  certain 
price  for  it.  On  the  day  named  the  estate  was  put  up,  but  no 
one  bidding  as  much  as  the  offer  by  letter,  it  was  withdrawn 
and  conveyed  to  the  writer.  Ileld,  that  this  was  a  sale  by 
auction:  Tyrce  v.  Williams,  3  Bibb,  365;  G  Am.  Dec.  GG3.  A 
municipal  ordinance  provides  that  certain  property  shall  be 
sold  at  public  auction,  and  that  the  city  reserves  the  right  to 
reject  any  bid  not  deemed  satisfactory  and  for  the  best  inter- 
ests of  the  city.  Held,  that  this  does  not  reserve  any  greater 
right  than  the  city  would  have  had  without  the  ordinance,  and 
a  bid  cannot  be  rejected  after  the  hammer  is  brought  down: 
Kerr  V.  City,  1  Leg.  Gaz.  Rep.  254.  At  the  sale  of  premises,  the 
vendor  invited  each  bidder  to  put  down  two  sums  on  a  slip  of 
paper,  and  upon  collating  such  biddings,  he  whose  paper  con- 
tained the  highest  bidding  was  to  be  declared  the  purchaser  at 
the  lowest  of  the  two  sums,  if  that  exceeded  the  liighest  of  any 
bidder.  Held,  that  this  was  a  sale  by  "auction,"  and  that  the 
vendor  incurred  the  penalty  as  an  auctioneer  without  being 
licensed,  although  the  purchase  was  never  completed:  Rex  v. 
Taylor,  McClel.  3G2;  13  Price,  G3G.  A.,  on  the  sale  of  a  barge 
by  auction,  imder  an  execution,  addressed  the  company,  stat- 
ing that  he  had  built  it  for  a  person  against  whom  the  exe- 
cution was  issued,  who  had  not  paid  him  for  it;  on  which  no 
person  bid  against  him,  the  auctioneer  refused  to  knock  it  down 
to  him  at  his  first  bidding,  when  a  friend  of  his  made  another 
bidding.  A.  advanced  one  shilling  more,  and  j)aid  a  deposit 
as  part  of  the  purchase-money.  Held,  that  he  did  not  acquire 
anv  property  in  the  barge  under  such  sale:  Fuller  v.  Abrahams, 
6  Moore,  316;  3  Ball  &  B.  IIG. 


§  213.     Auctioneer  Defined,  etc. — An  auctioneer  is  one 
who  is  authorized  to  sell  goods  or  merchandise  at  public 


'  Furness  v.  Anderson,  1  Pa.  L.  J. 
324;  and  see  Like  v.  McKiustry,  3 
Abb.  App.  C)2. 
J^CoflFnian  v.  Hampton,  2  Watts  &  S. 
377;  37  Am.  Dec.  511;  Dykes  r.  Blake, 
4  Bing.  N.  C.  403;  Mills  v.  Hunt,  17 


Wend.  333;  Jenness  r.  Wendell,  51 
N.  H.  63;  12  Am.  Rep.  48;  rmitm, 
Messer  r.  Woodman,  22  N.  H.  172;  53 
Am.  Dec.  241;  Van  Eps  r.  Schenec- 
tady, 12  Johns.  436;  7  Am.  Dec.  330. 
^  Sewall  V.  Jones,  9  Pick.  412. 


§214 


PRINCIPAL  AND   AGENT. 


360 


auction  or  sale  for  a  commission.  Ho  usually  acts  under 
a  license  from  tho  state,  under  regulation — as  a  license, 
the  giving  of  bond,  etc. — prescribed  by  statute.^  Ho 
may  be  verbally  authorized  to  sell  lands,^  and  his  author- 
ity is  revocable  by  bis  principal.^  A  shopkeeper  who,  in 
selling  goods,  adheres  to  his  fixed  retail  price  is  not 
amenable  to  tho  charge  of  violating  a  statute  prohibiting 
sales  at  auction  without  a  license,  by  reason  that  ho  em- 
ploys outcries  and  loud  offers  of  the  goods,  to  all  persons 
present,  in  manner  like  that  of  auctioneers.  The  essen- 
tial feature  of  an  auction,  within  such  a  statute,  is  tho 
endeavor  to  increase  the  price  by  means  of  competition 
among  bidders.''  A  note  for  goods  previously  bought  at 
a  sale  by  an  unlicensed  auctioneer,  and  delivered  to  the 
purchaser,  is  valid.®  An  auction  sale  by  one  not  licensed 
as  an  auctioneer  will  not  avoid  the  con^  eyance  to  an  in- 
nocent purchaser  without  knowledge  that  the  auctioneer 
was  not  licensed,  although  it  may  render  the  seller  liable 
to  a  penalty." 


§  214.  Duties  of  Auctioneer. — The  duties  of  an  auc- 
tioneer are  to  use  reasonable  skill  and  diligence  in  his 
business;'   to  keep  the  goods  intrusted  to  his  care  as  a 


1  Brown  v.  State,  12  Wheat.  443; 
State  i\  Conkling,  19  Cal.  501;  Clark 
V.  Cushman,  r»  Mass.  505;  State  v. 
Rucker,  24  Alo.  557;  Hunt  v.  Phila- 
delphia, .35  Pa.  St.  277;  City  Council 
V.  Paterson,  2  Bailey,  165;  Davia  v. 
Coinniouwoaltli,  3  Watts,  297;  Girard 
V.  Taggart,  5  Serg.  &  R.  19;  9  Am. 
Dec.  327;  Jordan  v.  Smith,  19  Pick. 
287;  State  v.  Poulterer,  16  Cal.  514; 
Fretwell  v.  Troy.  18  Kan.  271;  Water- 
house  V.  Dorr,  4  Mo.  333;  Sewall  v. 
Jones,  9  Pick.  412;  McMechea  v. 
Mayor,  3  Har.  &  J.  534;  Commission- 
ers r.  Holloway,  3  Hawks,  234. 

»Yourfc  V.  Hopkins,  24  111.  326; 
Cossitt  V.  Hobbd,  56  HI.  233;  Doty  v. 
Wilder,  15  111.  407;  60  Am.  Dec.  756. 

'  Taplin  v.  Florence,  10  Com.  B. 
744. 


♦  Crandall  v.  SUte,  23  Ohio  St.  479. 

^  Gunnaldson  v.  Nyhus,  27  Minn. 
440. 

8  Williston  V.  Morse,  10  Met.  17. 

'  "I  pay  an  auctioneer, "  said  Lord 
Ellenborough,  ia  Deiicw  v.  Daverell,  3 
Camp.  451,  "as  I  ■'  >  ■"._.'  ether  pro- 
fessional man,  for  t  ■;  .'tci.e  of  skill 
on  my  behalf  v/h...'  viou  myself 

possess,  and  I  hav<i  a  i'jlii  to  the  ex- 
ercise of  such  skill  n  , vdinarily  pos- 
sessed by  men  of  taai  profession  or 
business.  If  from  his  ignorance  or 
carelessness  he  loads  mo  into  mischief, 
he  cannot  ask  for  a  recompense,  al- 
though from  a  misplaced  confidence  I 
followed  his  advice  without  renion- 
str.anco  or  suspicion."  In  Hicks  v, 
Minturn,  19  Wend.  550,  it  is  said: 
"Like    other    professional    men    or 


360 


361 


AUCTIONEERS. 


§215 


prudent  man  wmild  keep  his  own;*  to  account  to  his  em- 
ployer;* to  obey  the  instructions  of  his  principals;'  to  sell 
for  cash  when  instructed  to  do  so,  and  not  to  tako  a  ch'^ck.* 
Doubts  about  the  identity  of  the  property  or  its  title  will 
justify  the  auctioneer  in  postponing  the  sale.^  Paying 
over  the  proceeds  of  an  auction  sale  to  the  person  for 
whom  he  sells  is  one  of  the  official  dutic;  of  an  auctioneer. 
Hence,  neglect  so  to  pay  over  constitutes  breach  of  a  bond 
conditioned  simply  that  the  auctioneer  shall  well  and 
faithfully  perform  all  the  duties  of  said  office  during  his 
continuance  therein.*  Where  auctioneers,  who  were  not 
authorized  to  sell  a  house  and  lot  for  less  than  $2,800, 
struck  the  same  off  to  the  plaintiff  for  $2,250,  it  was 
hold  that  the  contract  was  not  binding  upon  the  owner, 
but  that  the  auctioneers  were  personally  bound  by  it.^ 


§  215.    Powers  Posse^  .ed  by  Auctioneer. — He  may  sue 

for  the  property  or  the  price  in  his  own  name,®  or  in  the 


agents,  auctioneers  assume  upon  them- 
sclvoa  an  obligation  to  their  employers 
to  perforin  the  service  confided  to 
tlie.n  witli  ordinary  care  and  skill,  and 
become  responsible  in  default  of  either; 
ill  other  words,  they  are  responsible 
fill'  I0.53  arising  from  gross  negligence 
or  ignorance.  Beyond  this  their  du- 
ties or  liabilities  do  not  extend. " 

'  Evans  on  Agency,  217;  Maltby  v. 
Christie,  1  Esp.  .340. 

-  Ilariugton  v.  Hoggart,  1  Bam.  & 
Aid.  577. 

^  Evans  on  Agency,  218;  Wilkinson 
V.  Campbell,  1  Bay,  169;  Bush  v.  Cole, 
23  N.  Y.  2C1;  84  Am.  Dec.  343;  Steele 
r.  EUmaker,  11  Serg.  &  R.  86;  Wolfe 
r.  Luyster,  1  Hall,  161;  Williams  v. 
Poor,  3  C'ranch  C.  C  251;  Townes  ». 
Birchett,  12  Leigh.  173. 

*  Broughton  «».  Silloway,  114  Mass. 
71;  19  Am.  Rep.  312. 

"  Roberts  v.  Roberts,  13  Gratt.  639; 
70  Am.  Dec.  435. 

"  Tripp  V.  Barton,  13  R.  I.  1.30. 

'Bush  V.  Cole,  28  N.  Y,  261;  84 
Am.  Dec.  343. 

"  Robinson  v.  Rutter,  4  El.  &  B. 
951;  Beller  v.  Block,  19  Ark.  666;  or 


maintain  replevin:  Tyler  v.  Freeman, 
3  Cush.  261;  Haae  v.  Young,  16 
Johns.  1;  Minturn  v.  Main,  7  N.  Y. 
220;  Bleccker  v.  Franklin,  2  E.  D. 
Smith.  93;  Beller  v.  Black,  19  Ark. 
666;  Johnson  v.  Buck,  35  N.  J.  L. 
338;  10  Am.  Rep.  243;  Bogart  v. 
O'Regan,  1  E^  D.  Smith,  590.  But 
SCO  Grice  v.  Kenrick,  L.  R.  5  Q.  B. 
340;  Dickenson  v.  Naul,  4  Barn.  & 
Adol.  638.  In  Thompson  v.  Kelly, 
101  Mass.  291,  3  Am.  Rep.  353,  it  is 
said:  "In  case  of  personal  property, 
an  auctioneer  employed  to  sell  may 
ordinarily  maintain  an  action  for  the 
price,  or  for  the  property  itself: 
Chitty  on  Contracts,  10th  Am.  ed.,  252; 
1  Chitty  on  Pleadings,  6th  cd.,  7,  8; 
Story  on  Agency,  sees.  27,  107,  397; 
Tyler  1).  Freeman,  3  Cush.  261.  This 
doctrine  stands  upon  the  right  of  the 
auctioneer  to  receive,  and  his  respon- 
sibility to  his  principal  for  the  price 
of  the  property  sold,  and  his  lien 
thereon  for  his  commissions,  which 
give  him  a  special  property  in  the 
goods  intrusted  to  him  for  sale,  and 
an  interest  in  the  proceeds.  In  ca.se 
of  real  estate,  be  can  have  no  such 


§215 


PRINCIPAL   AND   AGENT. 


362 


name  of  his  principal.*  "An  auctioneer  has  a  possession 
coupled  with  on  interest  in  goods  which  he  is  employed 
to  sell,  not  a  hore  custody,  like  a  servant  or  shopman. 
There  is  no  difference  whether  the  sale  be  on  the  prem- 
ises of  the  owner  or  at  a  public  auction-room;  for  on  the 
premises  of  the  owner  an  actual  possession  is  given  to 
the  auctioner  and  his  servants  by  the  owner,  not  merely 
an  authority  to  scll.'"^  So  the  principal  may  sue.^  An 
auctioneer  can  maintain  a  suit  in  his  own  name  for  goods 
sold  and  delivered  bv  him,  whereon  he  holds  a  lion  for 
his  charges.^  Being  in  possession  of  goods  and  chattels 
which  he  sells,  he  is  authorized  to  receive  payment.^  lie 
has  authority  to  prescribe  the  rules  of  bidding  and  terms 
of  sale."  Printed  terms  of  sale  cannot  be  varied  by  parol 
declarations  of  the  autioncer.'  But  an  advertisement  of 
a  sale  of  property  by  an  auctioneer  may  be  explained  at 
the  time  of  sale.^  Where  is  it  provided  by  the  terms  of  an 
auction  sale  that  a  proportion  of  the  purchase-money 
shell  be  paid  Avithin  a  given  time,  and  the  auctioneer  is 
authorized  to  receive  it,  his  authority  is  not  revoked  im- 
mediaieiy  uj.on  the  expiration  of  the  time  limited,  with- 
out further  orders  from  his  principal,  prohibiting  the 
subsequent  reception  of  such  money.* 

Illustrations.  —  A  licensed  auctioneer  sells  goods  on  credit. 
The  buyer  refuses  to  take  them.     The  owner  may  bring  an 


special  property,  and  would  not  or- 
dinarily be  held  entitled  to  receive 
the  price.  But  when  the  terms  of  his 
employment,  and  of  the  authorized 
Bale,  contemplate  the  payment  of  a 
deposit  into  his  hands  at  the  time 
of  the  auction,  and  before  the  com- 
pletion of  the  sale  by  the  delivery 
of  the  deed,  he  stands,  in  relation  to 
such  deposit,  in  the  same  position  as 
he  does  to  the  price  of  personal  prop- 
erty sold  and  delivered  by  him.  He 
may  receive  and  receipt  for  the  de- 
posit; his  lien  for  commissions  will 
attach  to  it;  and  we  see  no  reason  why 
he  may  not  sue  for  it  in  his  own  name, 
whenever  an  action  for  the  deposit, 


separate    from    the    other    purchase- 
money,  may  become  necessary." 

*  Girard  v.  Taggart,  5  Serg.  &  R.  19; 
9  Am.  Dec.  327. 

■*  Loughborough,  C.  J.,  in  Williams  v. 
Millington,  1  H.  Black.  84. 

*  Girard  v.  Taggart,  5  Serg.  &  R.  19; 
9  Am.  Dec.  327. 

*  Flanigan  v.  CniU,  53  111.  352. 

6  Capel  V.  Thornton,  3  Car.  &  P.  352; 
yourt  V.  Hopkins,  24  111.  320. 

*  Story  on  Agency,  sec.  107;  Paley 
on  Agency,  sec.  257;  Menson  v.  Al- 
dridge,  3  Esp.  271. 

^  Wright  V.  Deklyno,  Pet.  C.  C.  109. 
«  Rankin  v.  Matthews,  7  Ired.  280. 
'  Fiackney  v.  Hagadorn,  1  Ducr,  89. 


363 


AUCTIONEERS. 


§216 


action  for  damages  in  his  own  name  before  the  expiration  of 
the  credit.  But  he  cannot  sue  for  the  price  until  i\)o  credit 
expires:  Girard  v.  Taggart,  5  Serg.  &  R.  19;  9  Am.  Dec.  327. 

§  216.  Auctioneer  as  Agent  of  Both  —  Statute  of 
Frauds. — An  auctioneer  is  primarily  the  agent  for  the 
seller,  but  he  is,  for  certain  purposes,  the  agent  :>''  the 
buyer  also.'  He  may  bind  both  seller  and  purchaser  by 
his  memorandum  of  sale  and  purchase,"  and  his  writing 
the  name  of  the  purchaser  on  the  memorandum  immedi- 
ately on  his  knocking  the  thing  down  is  a  suflicient  sign- 
ing within  the  statute  of  frauds,  as  to  both  real  and  personal 
property,' auction  sales  being  within  the  statute  of  frauds.* 
"He  is  the   igent  of  the  vendor  by  virtue  of  his  employ- 


'  Story  on  Agency,  sec.  27.  lu 
Williams  v.  Milliiigton,  1  H.  Black. 
85,  Heath,  J.,  said:  "Though  he  is 
ail  agent  to  some  purposes,  he  ia  not 
so  to  all.  He  is  an  agent  for  each 
party  in  difl'erent  things,  but  not  in 
the  same  tiling.  When  he  prescribes 
the  rules  of  bidding,  and  the  terms 
of  tlie  sale,  ho  is  the  agent  of  the 
seller.  But  when  he  puts  down  the 
name  of  the  buyer,  he  is  agent  for 
him  only." 

-  Story  on  Agency,  sees.  27.  107; 
Smitli  V.  Jones,  7  Leigh,  1G5;  30  Am. 
Dec.  498. 

^  Cleaves  v.  Foss,  4  Me.  1 ;  McComb 
?'.  Wright,  4  Johns.  Ch.  059;  Alna  v. 
Plummer,  4  Mc.  258;  Jenkins  v.  Hogg, 
'J  Tread.  Const.  821;  Pike  v.  Balch, 
?.S  Mc.  .•502;  61  Am.  Dec.  248;  Smith 
r.  Aruold,  5  Mason,  414;  Johnson  v. 
Back,  35  N.  J.  L.  338;  10  Am.  Rep. 
24!);  Pugh  n  Chesseldine,  11  Ohio, 
109;  37  Am.  Dec.  414;  Hart  r.  Woods, 
7  Bl:>ekf.  568;  Burke  v.  Haley,  7  111. 
014;  White  v.  Crew,  16  Ga.  416; 
Ada:n3  r.  McMillan,  7  Port.  73;  Gill 
V.  Hewitt,  7  Bush,  10;  Walker  v.  Her- 
ring, 21  Gratt.  678;  8  Am.  Rep.  016; 
iSiiigstack  V.  Harding,  4  Har.  &  J. 
ISO;  7  Am.  Dec.  669;  Davis  v.  Robert- 
son, 1  Mill  Const.  71;  12  Am.  Dec. 
(ill;  Episcopal  Church  v.  Wiley,  2 
Hill  Ch.  584;  30  Am.  Dec.  386; 
Doty  V.  Wilder,  15  111.  410;  60 
Am.  Dec.  756;  Smith  v.  Jones,  7 
Leigh,  165;   30  Am.  Dec.  498;  Craig 


V.  Godfroy,  1  Cal.  415;  54  Am.  Deo. 
299;  Lake  v.  Campbell,  18  111.  109; 
Lewis  V.  Wells,  .")0  Ala.  198;  Black- 
wood V.  Leinau,  Harp.  219;  Arden  v. 
Brown,  4  Cranch  C.  C.  121;  Thomas 
V.  Kerr,  3  Bush,  619;  %  Am.  Dec. 
262.  In  Morton  v.  Dean,  13  Met. 
388,  it  is  said:  "  A  sale  by  auction  is 
within  the  statute  of  frauds,  and  the 
auctioneer  who  makes  the  sale  is  tlie 
agent  of  both  parties,  and  his  mc::io- 
randum  will  take  the  case  out  of  the 
statute  as  well  when  lands  as  whe.i 
chattels  are  sold.  But  the  momorau- 
dum  of  sale  must  refer  to  tlio  cnn.ii- 
tions  of  sale,  or  the  case  will  bo  wit'-iiu 
the  statute.  Where  the  fonuoelion 
between  the  meinorauiluin  and  (h3 
conditions  is  to  be  proved  e.itirely  by 
parol  evidence,  it  is  within  tlie  mis- 
chief intended  to  bj  prevented  by  Uie 
statute.  The  terms  of  the  agreement 
which  are  material  nmst  be  stated  in 
writing." 

*  Arden  v.  Brown,  4  Cranch  C.  C. 
121;  Talman  v.  Fratddiu,  3  Ducr,  .'J95; 
Burke  r.  Haley,  7  111.  614;  Piko  v. 
Baluh,  38  Me.  302;  61  Am.  Dec.  248; 
O'Donnell  v.  Lee  man,  43  Me.  158;  09 
Am.  Dec.  54;  Brent  r.  Green,  6  Leigh. 
10;  Davis  v.  Rowell,  2  Pick.  04;  13 
Am.  Dec.  398;  Morton  v.  Dean,  13 
Jlet.  388;  People  v.  White,  6  Cal.  75; 
Davis  V.  Robertson,  supra;  Bailey  v. 
Ogdcn,  3  Johns.  399;  3  Am.  Dec.  609; 
Meadows  v.  Meadows,  3  McCord,  458; 
15  Am.  Dec.  C45. 


§21G 


PRINCIPAL  AND  AOENT. 


3Gt 


3G 


ment  to  make  the  sale,  and  he  is  made  tho  agont  of  tin- 
vendee  by  tho  act  of  the  latter  in  giving  him  liis  bid, 
and  receiving  from  him,  without  objection,  the  an- 
nouncement  that  the  property  sold  is  knocked  off  to  him 
as  purchaser."*  The  true  reason  probably  is,  it  is  said,- 
"  that  a  sale  by  auction,  being  open  and  visible,  and  in  tho 
presence  of  witnesses,  either  competitors  or  persons  pres- 
ent, and  closely  watching  the  proceeding,  there  is  less 
danger  of  fraud  or  perjury  in  proving  the  making  and 
terms  of  the  contract,  and  so  the  main  reason  for  requir- 
ing a  memorandum  in  writing  does  not  exist.  Tho  tech- 
nical ground  is,  that  the  purchaser,  by  the  very  act  of 
bidding,  connected  with  the  ui-age  and  practice  of  auc- 
tion sales,  loudly  and  notoriously  calls  on  the  auctioneer 
or  his  clerk  to  put  down  his  name  as  a  bidder,  and  thus 
confers  an  authority  on  the  auctioneer  or  clerk  to  sign 
his  name,  and  this  is  the  whole  extent  of  the  authority." 
The  memorandum,  nowever,  must  refer  to  the  conditions 
of  sale;"'  it  must  bo  in  writing,*  and  contain  the  names  of 
the  parties,  the  property  sold,  and  the  price,^  but  not 
necessarily  tho  terms  of  payment.*  It  is  sufficient  if 
made  by  the  auctioneer's  clerk ;^  but  neither  of  the  con- 
tracting parties  can  bo  agent  of  the  other  to  make  tho 
memorandum;*  nor  is  it  good  if  the  auctioneer  is  himself 


1  Bent  V.  Cobb,  9  Gray,  397;  69  Am. 
Dec.  295. 

2  Gill  V.  Bicknell,  2  Gush.  358. 

» Morton  y.  Dean,  13  Met.  385; 
Price  V.  Durin,  5(5  Barb.  647;  Gowen 
V.  Klous,  101  Mass.  449;  Adams  v. 
Scales,  1  Baxt.  337;  25  Am.  Rep.  775. 

*  Baltzen  v.  Nicolay,  53  N.  Y.  470; 
Gill  V.  Bicknell,  2  Cush.  358. 

"  Johnson  v.  Buck.  35  N.  J.  L.  338; 
10  Am.  Ken.  243;  Potter  v.  Duffield, 
L.  R.  18  Eq.  47;  Norris  v.  Blair,  39 
Ind.  90;  10  Am.  Rep.  135;  Meadows 
V.  Meadows,  3  McCord,  458;  15  Am. 
Dec.  645;  Doty  v.  Wilder,  15  111.  407; 
60  Am.  Dec.  750;  Ridgway  v.  Ingram, 
50  Ind.  145;  19  Am.  Rep.  706;  Gwath- 
ney  v.  Cason,  74  N.  C.  5;  21  Am.  Rep. 
484. 


•  Smith  V.  Jones,  7  Leigh,  105;  30 
Am.  Dec.  498. 

'  Jenkins  v.  Hogg,  2  Tread.  Const 
821;  Johnson  v.  Buck,  35  N.  J.  L. 
338;  10  Am.  Rep.  243;  Harvey  v. 
Stevens,  43  Vt.  653;  Alnar.  Pluiir.iicr, 
4  Me.  258;  Pope  v.  Chafee,  14  Rich. 
Eq.  69;  Baptist  Church  v.  Bigdow, 
16  Wend.  28;  Norris  v.  Blair,  39  Ind. 
90;  10  Am.  Rep.  135;  Cathcartr.  Kcir- 
naghan,  5  Strob.  129;  contra,  Meadows 
V.  Meadows,  supra. 

*  Johnson  v.  Buck,  35  N.  J.  L.  338; 
10  Am.  Rep.  243;  Wright  v.  Daniiah, 
2  Camp.  205;  Thomas  v.  Trnatues,  3 
A.  K.  Marsh.  298;  13  Am.  Dec.  1(15; 
Rayner  r.  Linthorn,  2  Car.  &  P. 
124;  Sherman  v.  Brandt,  L.  11.  0 
Q.  B.  720.     "The  chief  reason,"  it  ia 


th( 
it 
th( 
pre 


305 


AUCTI0NEEU3. 


S  1210 


the  vendor,*  or  it  is  a  private  and  not  a  public  sale;"  nor  is 
it  sufficient  if  the  owner  is  present  directing  the  sale,  and 
the  auctioneer  simply  cries  the  bids  and  knocks  o(F  the 
property;^  nor  is  it  sufficient  if  the  sale  has  really  been 
made  before  the  auction,*  or  if  the  momoran<iuin  was 
made  after  the  sale  was  adjourned.®  Only  the  parties  can 
take  advantage  of  the  defects  in  the  memorandum.*  A 
trustee  who,  at  an  auction  sale  under  a  deed  of  trust,  acts 
as  his  own  auctioneer,  canncc  bind  his  purchaser  by  a 
memorandum  of  the  sale  made  by  himself,  because  such 
memorandum  is  not  executed  by  the  "party  to  bo  charged 
therewith,  or  some  other  person  by  him  thereto  lawfully 
authorized,"  as  required  by  the  Missouri  statute  of  frauds.^ 
A  parol  agreement  of  the  purchaser  at  a  public  sale,  that 
another  shall  be  regarded  as  a  joint  purchaser,  is  void, 
under  the  statute  of  frauds.*  A  general  memorandum 
entered  in  a  book  by  the  auctioneer  at  the  commencc- 


saiil  in  Bent  v.  Cobb,  9  Gray,  .397,  69 
Am.  Dec.  295,  "  in  support  of  the  rule 
tliat  an  auctioneer  acting  solely  as 
such  may  be  tho  agent  of  both  parties 
tfi  bind  them  by  bis  njemoranuuni  is, 
that  ho  is  supposed  to  be  a  disiuter- 
cstt'il  person,  having  no  motive  to 
misstate  tlie  bargain,  and  entitled 
eiiuiiUy  to  tlie  contidence  of  both  par- 
tics.  But  this  reason  fails  when  ho  is 
the  party  to  the  contract  and  the 
party  in  interest  also." 

'  As,  for  instance,  a  guardian  selling 
liy  auction  land  of  his  ward:  Bent  i\ 
fobl),  9  Gray,  .397;  69  Am.  Dec.  295; 
Tiill  r.  David,  45  Mo.  444;  100  Am. 
Dec.  3S.j;  Adams  v.   Scales,   1  Baxt. 


BUT 


2o  Am.  Rep.  775. 


''  Mews  V.  Carr,  1  Hurl.  &  N.  484. 

^Ailams  i\  Scales,  1  Baxt.  337;  25 
Am.  Hup.  775. 

*  Wharton  on  Agency,  sec.  656, 
citing  Bartlett  v.  Puruell,  4  Ad.  &  E. 
792. 

'  Wharton  on  Agency,  sec.  656,  cit- 
ini,'Iiorton  v.  McCartey,  53  Me.  394; 
Mews  V.  Carr,  1  Hurl.  &  N.  484;  Mc- 
Coinb  v.  Wright,  4. Johns.  Ch.  659;  Gill 
V.  Bicknell,  2  Cush.  355;  Walker  t\ 
Herring,  21  Gratt.  678;  8  Am.  Rep.  616 
(Craig  i).  Godfrey,  1  C'al.  415;  54  Am. 


Dec.  299,  even  on  tho  same  dav); 
Hicks  V.  Whitmore,  12  Wend.  fi4H; 
Smith  V.  Arnold,  5  Mason,  414; 
Gwathney  v.  Cason,  74  N.  C.  5; 
21  Am.  Rep.  4S4.  A  mcmoranduMi 
made  in  pencil  at  the  time  of  the 
sale,  and  entered  upon  tho  books  as 
soon  as  practicable,  i>>  suilicient:  Epi.-<- 
copal  Church  v.  Wiley,  1  Kiley  Ch. 
156;  2  Hill  Ch.  583;  30  Am.  Dec. 
386.  In  Horton  v.  McCarty,  snpnr, 
it  i;3  said:  "Tlio  law,  in  allowing  th  ; 
auctioneer  to  act  i:i  the  nearly  un- 
precedented relation  of  agent  of  both 
parties,  imposes  a  qualitication  not 
applied  to  tiio  usual  cases  of  agency, 
and  requires  that  tho  single  act  w'lich 
almost  from  necessity  be  id  uuthoriiic'd 
to  perform  for  the  buyer  shall  bo  done 
at  the  time  of  sale,  and  before  the 
termination  of  the  proceeding.s."  In 
Gill  V.  Bicknell,  2  Cush.  35.5,  Shaw, 
C.  J.,  said:  "The  name  of  the  b!<lder 
must  bo  entered  by  the  auctioneer  or 
by  his  clerk,  under  his  direction,  ou 
the  spot." 

«  Lewis  r.  Wells,  50  Ala.  198. 

'  TuU  V.  David,  45  Mo.  444;  100  Am. 
Dec.  385. 

^  Arden  v.  Brown,  4  Cranch  C.  C. 
121. 


§210 


PRINCIPAL   AND   AGENT. 


36G 


mcnt  of  an  nuctioii  sulc,  showing  the  name  of  tho  person 
on  whoso  account  tho  sale  is  nmdo,  tho  nature  of  tiio 
property,  tho  terms  of  payment,  referring  to  entries  fol- 
lowing for  tho  names  of  purchasers  and  lots  struck  olf  to 
each,  and  wigned  hy  tho  auctioneer,  under  which  ho  enters 
tho  name  of  each  purchaser,  tho  description  of  tlio  goods 
sold,  and  tho  price,  is  a  sufHcicnt  memorandum  of  oacli 
sale  within  tho  statute  of  frauds.  It  is  not  necessary  that 
such  general  memorandum  should  bo  made  as  often  as  a 
parcel  of  goods  is  sold;  even  though  the  sale  is  adjourned 
to  and  continues  on  tho  second  day  without  any  repetition 
of  tho  memorandum.* 

Ilu'strations. — At  a  public  sale  of  town  lots  a  lot  was 
struck  off  to  a  person  for  a  certain  sum,  and  a  memoranduin  of 
the  purchase  was  made  at  the  time,  by  the  clerk  of  tho  sale,  in 
the  sale-book.  Held,  that  tho  sale  was  valid  under  the  statute 
of  frauds:  Hart  v.  Woods,  7  Blackf.  5G8.  At  a  sale  at  auction 
of  a  house  and  blacksmith's  shop,  with  a  leasehold  interest  in 
tho  lot  on  which  they  stood,  the  auctioneer  wrote  with  a  pencil, 
on  tho  back  of  the  lease,  "$200. . . .  $350. . . .  Richard  Burke." 
Held,  that  this  was  not  sufficient  to  bind  tho  purchaser,  Burke: 
Burke  v.  Haley,  7  111.  GM.  At  an  auction  sale  of  real  estate 
the  property  was  knocked  down  to  C.  No  memorandum  was 
signed,  but  the  auctioneer  went  into  his  office,  two  hundred 
yards  from  tho  sale,  and  in  C.'s  absence  began  to  draw  a  deed, 
before  ho  had  finished  which  he  was  informed  that  C.  refused 
to  complete  tho  purchase.  Held,  that  the  sale  was  invalid 
under  the  statute  of  frauds:  Gwathney  v.  Cason,  74  N.  C.  5;  21 
Am.  Rep.  484.  W.  and  H.  agreed  to  purchase  property  jointly 
at  auction.  In  pursuance  thereof  W.  bid  on  the  property,  and 
W.'s  name  was  written  in  the  auctioneer's  book  as  purchaser. 
The  next  day  a  partner  of  W.  added  H.'s  name  as  purchaser. 
A  loss  having  occurred  by  a  resale  in  an  action  by  W.  against 
H.  to  recover  his  share  of  the  loss,  held,  that  the  memorandmn 
did  not  take  the  case  out  of  the  statute  of  frauds,  and  that 
H.  was  not  liable:  Walker  v.  Herring,  21  Gratt.  678;  8  Am.  Rep. 
610.  The  terms  of  sale  at  a  public  auction  were  a  credit  of  nine 
months  on  notes  with  approved  security,  waiving  valuation  and 
appraisement  laws.  The  auctioneer's  memorandum  did  not 
state  these  terms.  Held,  that  the  sale  was  void  under  the 
statute  of  frauds:  Norris  v.  Blair,  39  Ind.  90;  10  Am.  Rep.  135. 

»  Price  V.  Durin,  56  Barb.  G47. 


3G7 


AUCTIONEERS. 


8  210 


A  truetce  offorcd  lands  at  auction,  l^oing  proBcnt  and  directing 
tilt'  Palo,  l»iit  employing  a  erirr  to  receive  and  .mnounee  (lio 
liide  and  knock  down  the  property.  The  trustee  made  a  mem- 
orandum of  tho  Bale  to  S.  Ilehl,  that  this  was  not  tjullieient  to 
hind  S.  within  thy  Htatuto  of  frauils:  Adams  v.  Snilcs,  1  Ikixt. 
o.'JT;  25  Am.  Kep.  772.  In  an  auctioneer's  Ijook  was  the  follow- 
ing entry:  "The  tract  of  land  to  William  Meadowf,  Jr.,  at  fivo 
dollars  and  forty-(!ight  cents."  Jlrld,  an  insunieicnt  memoran- 
dum within  tile  statute  of  frauds:  McddoiVH  v.  Mcadoits,  .'{  Mc- 
Cord,  458;  15  Auj.  Dec.  045,  A  memorandum  of  pale  made  l»y 
the  clerk  of  an  auctioneer  in  his  Ixwjk  v.as  as  follows:  "  Fox 
tract  of  land,  four  dollars  and  ten  cents  per  acre;  purchaser,  W. 
Smith."  Held,  sulllcient  within  tho  statute  of  frauds:  Siuitk  v. 
JoncH,  7  Leigh,  1G5;  30  Am.  Dec.  408.  An  auctioneer,  on  sell- 
ing real  estate  to  S.  D.  at  auction,  after  reading  or  exhibiting 
written  conditions  of  sale,  made  this  memorandum  in  writing: 
"  Sale  on  account  of  Messrs.  Morton  and  Dean,  assignees  of  tho 
Taunton  Iron  Company,  of  tho  real  estate,  nail-vorks,  water 
privilege,  buildings,  and  machinery,  agreeable  to  the  plans  and 
schedule  herewith.  Saio  to  Silas  Dean  for  $.'>0,**00.  April  5, 
1843."  Held,  that  as  this  memorandum  did  not  contain  nor 
refer  to  tho  conditions  of  sale,  it  did  not  take  the  case  out  of 
the  statute  of  frauds:  Morton  v.  Dean,  13  Met.  385.  In  as- 
sumpsit against  M.  for  .$112..50,  the  price  of  a  pew,  tho  plain- 
tiff proved  the  following  entry  in  the  auctioneer's  book  of  sales: 
"  Sale  of  pew  in  B.  church  for  account,  S.  F.  [tho  plaintift], 
Monday,  March  24, 1 845.  Pew  No.  1 8,  B.  M.,  f}  1 1 2.50.  Charges, 
advertising,  and  commission,  $5."  Held,  a  sufficient  nioni- 
orandum  within  the  statute,  if  made  at  the  time  and  place  of 
sale  by  the  auctioneer  or  under  his  direction;  the  omission  of 
the  middle  letter  of  defendant's  name  not  being  fatal,  if  it  could 
bo  shown  by  parol  that  he  was  the  person  intended,  or  that  ho 
was  known  by  one  name  as  well  as  tho  other:  Feascnden  v. 
Mussey,  11  Cush.  127.  A  memorandum  in  writing  of  an  auction 
sale  of  land  signed  by  the  auctioneer,  authorized  by  the  vendor 
to  conduct  the  sale,  contained  a  description  of  the  premises 
sold,  the  names  of  both  parties  to  the  agreement,  the  price 
agreed  upon,  an  acknowledgment  of  the  receipt  of  a  sum  of 
money  in  part  payment,  and  a  clause  in  which  the  auctioneer 
agreed  that  "  the  vendor  shall  in  all  respects  fulfill  the  condi- 
tions of  sale,"  but  did  not  set  f;>rth  what  were  these  "  conditions 
of  sale."  Held,  that  this  was  not  a  sufficient  memorandum 
within  the  statute  of  frauds:  lilley  v.  Farnsworth,  IIG  Mass. 
223.  The  auctioneer's  clerk  made  a  memorandum  as  follows: 
*■  Rayner  tract  to  James  S.  Long,  at  forty  dollars  per  acre,"  by- 
order  of  the  auctioneer,  and  it  was  shown  that  *'  Rayner  tract " 


§217 


PRINCIPAL  AND   AGENT. 


368 


was  a  well-known  designation.  Held,  that  under  the  circum- 
stances, the  memorandum  was  sufficient  witliin  the  statute  of 
frauds:  Cherry  v.  Long,  Phill.  (N.  C.)  466.  G.,  the  auctioneer 
at  an  auction  sale  of  the  property  of  H.,  caused  to  he  entered 
hy  his  clerk,  as  the  sales  were  made,  the  articles  sold,  tlie 
names  of  the  huyers,  and  the  prices  at  which  the  articles  were 
sold,  in  a  book  headed,  on  the  inside  of  the  front  cover,  "John 
Harvey's  auction  sale  book."  Held,  that  this  memorandum 
was  suflicient  to  satisfy  the  requirements  of  the  statute  of 
frauds,  and  therefore  bound  the  parties  upon  a  contract  of  sale 
made  by  the  auctioneer:  Harvey  v.  Stevens,  43  Vt.  G53. 


§  217.  Powers  not  Possessed  by  Auctioneer.  —  An  auc- 
ctioneer  has  no  authority  to  purchase  (he  is  to  sell,  not  to 
buy);^  nor  to  sell  in  private;^  nor  to  give  a  warranty  as  to 
the  goods  sold;*  nor  to  sell  on  credit;*  nor  to  bind  his 
principal  by  verbal  declarations  at  the  sale  inconsistent 
witii  the  i)rinted  or  published  particulars  of  the  sale;^  nor 
to  delegate  his  authority  by  employing  another  person  to 
sell  the  property  intrusted  to  him  to  sell;*^  nor  to  receive 


'  Story  on  Agency,  sec.  27;  Brock  v. 
Rice,  '27  Gratt.  812. 

■^  Wilkes  V.  Ellis,  2  IT.  Black.  555; 
Daniel  r.  Adams,  Amb.  495;  Jonea  v. 
Naaaey,  13  Price,  70;  Marsh  r.  Jelf, 
3  Fost.  &  F.  234. 

''  "Sales  at  auction  in  the  usual 
mode  are  never  unilcrstoiid  to  bo  ac- 
companied by  a  warranty.  Auction- 
eers arc  special  agents,  and  hav3  only 
authority  to  sell,  and  not  to  warraiit, 
unless  specially  instructed  so  to  do": 
The  Monte  Allegro,  9  Wheat.  G15. 
"  Wo  doubt  whether,  in  an  ordinary 
sale  of  good.1  by  auction,  an  auctioneer 
vir/ufroj/irii  has  any  right  or  aiitliority 
to  warrant  goods  sold  by  him  in  the 
absence  of  any  express  autlirrity  from 
his  principal  to  <lo  no,  and  without 
proof  of  some  known  and  established 
usage  of  trade  from  which  an  authority 

can  bo  implied However  this 

may  h-^,  we  are  clear  that  lie  has  no 
such  authority  in  a  case  like  this  where 
ho  acts  as  agent  for  an  administrator 
in  selling  the  goods  of  his  intestate  ": 
Blood  V.  French,  DGray,  197. 

*  Story  on  Agency,  sec.  107;  Wil- 
liams V.  livans,  L.  R.  1  Q.  B.  352. 
Nor  to  receive  a  check  where  the  terms 


were  cash:  Broughton  r.  Silloway,  114 
Mas.s.  71;  19  A;u.  Rep.  312;  Bridges 
V.  Garrett,  L.  R.  4  C\)m.  P.  580;  Townts 
V.  Birchett,  12  Leigli,  17.3.  But  see 
Pinckncy  v.  Ilagadorn,  1  Duer,  90. 

^  Story  on  Agcncj',  sec.  107;  Gunnis 
V.  Erhart,  1  II.  Black.  289;  Wriglit  v. 
Deklyne,  Pet.  C.  C.  199;  Porec  r. 
Bonueval,  0  La.  Ann.  3SG;  Layton  r. 
Ilennen,  3  La.  Ann.  1.  But  see  Ran- 
kin V.  Mattliews,  7  Ired.  2SG;  Siitter- 
fiehl  V.  Smith,  11  Ired.  GO.  If  t!ie 
purchaser  gets  substantially  wliat  ho 
barf^fained  for,  he  may  geacr.ally  be 
held  to  abide  by  tno  purchase,  with 
the  allowance  of  some  deduction  from 
the  price  by  way  of  compensation  for 
any  small  deficiency  in  the  value  by 
reason  of  the;  variation  between  the 
description  and  tbe  articlesold:  Whar- 
ton on  Agency,  toe.  G4G,  citing 2 Kent's 
Com.  537. 

"Coles  V.  Trecothick,  9  Ves.  234; 
Bloro  V.  Sutton,  3  Mcr.  237;  Stone  r. 
State,  12  Mo.  400;  Porco  r.  P.'.riueval, 
G  La.  Ann.  S86.  In  Commonwoaltli  v. 
Harndcn,  19  Pick.  482,  the  court  say: 
"Special  trust  and  coutidenceis  placed 
in  an  auctioneer  which  he  cannot  del- 
egate.    Yet  this  docs  not  require  tint 


368 


869 


AUCTIONEERS. 


217 


the  purchase  price  of  real  property  sold  by  him.'  His 
authority  ceases  when  the  sale  is  made,  and  he  has  no 
power  therefore  to  subsequently  deal  with  the  purchaser  as 
to  terms/  or  to  rescind  the  contract.*  He  cannot  act  for 
himself  or  any  other  person  as  a  purchaser."* 


es.  '2M; 
>tono  r. 

riiieval, 
wiltli  r. 

rt  say: 

not  iIl'1- 

ii-c  tli.it 


lie  should  make  aJl  the  sales  in  person. 
He  may  employ  all  necessary  and 
proper  clerkd  and  servants.  And  in 
the  course  of  a  protracted  sale,  he  may 
undoubtedly,  without  a  violation  of 
law,  relieve  himself  by  employing 
otliers  to  use  the  hammer  and  make 
tlie  outcry.  But  this  should  be  done 
under  his  immediate  direction  and 
E-ipervision.  We  do  not  mean,  how- 
ever, by  this  that  he  must  bo  actually 
present  during  the  whole  time  of  the 
sale.  An  occasional  absence  would 
not  subject  his  servant  or  substitute 
to  the  [jenalties  of  the  statute.  If  the 
a.ictioneer  really  conducted  the  auc- 
tion and  n'.ide  the  sales,  he  might, 
within  hif)  authority,  call  to  liis  aid 
such  assistance  as  might  be  needed  to 
transact  llie  bnsiness  in  a  convenient 
and  proper  manner;  but  he  clearly 
could  not  appoint  deputies  to  make 
s.ik's  at  different  places  and  times  in 
Ills  absence.  This  would  be  inconsis- 
tent with  his  duty  to  manage  liis  auc- 
tions fairly,  and  to  render  under  t)ath 
a  true  account  of  his  sales.  It  would, 
too,  enable  him  to  employ  those  to 
carry  on  t'u  bu.-'iness  who  mighfc  not 
iju  .'eeiued,  by  the  proper  authorities, 
suitaiile  pe  oons  to  be  '  'rusted  with 
tile  iiowi  r." 

'  SykLS  V.  Ciles,  5  Mees.  &  VV.  045. 
It  seciii;!  he  may  receive  the  deposit 
required,  but  not  tlie  whole  purchase 
price:  Myi.n  v.  Joliffe,  1  Moody  &  R. 
3-Jll. 

-'  Setou  V.  Slade,  7  Ves.  27G;  Pinck- 
111  y  r.  li.>.,a  orn,  1  Dult,  89;  Boinest 
r.  Leigiiez,  2  Ilicli.  404;  Nelson  v. 
Al  !rid-e,  •_'  .'".tark.  loo. 

^>:uiion  r.  Aldril;e,  2  Stark.  435; 
Bfiine;it  r.  Le:i  nez,  2  llich.  404. 

'  Broek  V.  liice,  27  *  ^ratt.  812;  Tate 
V.  VulliamsoM,  L.  R.  2  Ch.  55.  In 
Veazie  ?•.  Williams,  8  How.  134,  it 
is  s:iid:  "It  is  very  cpicstionablo 
whether  in  point  of  law  or  equity  an 
Vol.  I. -24 


auctioneer  can  be  allowed  to  bid  oft' 
for  himself  tlie  very  property  ho  is 
selling.  It  has  been  laid  down  that 
he  cannot:  Hughes's  Case,  G  Vcs.  017; 
Oliver  ct  al.  v.  C(mrt  et  al.,  8  Price, 
120;  9  Ves.  234;  8  Ves.  337;  Long  on 
Sales,  228;  Bai)ington  on  Auctions, 
104.  Tlie  principles  againut  it  arc 
stronger,  if  possible,  and  certainly 
were  enforced  earlier  in  courts  of 
equity  than  of  law.  An  opposite 
course  wouhl  give  to  an  auctioneer 
many  undue  advantages.  It  v.ould 
tend,  also,  to  weaken  his  lidelity  ia 
the  execution  of  his  duties  tor  the 
owner.  He  would  be  allowed  to  act 
in  double  and  inconsistent  c:ipacitic?, 
as  agent  for  the  seller  and  as  buyer 
also;  a;id  the  precedents  are  numerous 
holding  such  sales  voidalilc,  if  not  void, 
and  at  all  events  unlawful,  as  ripcfiod 
to  the  soundest  public  iiolicy:  See 
Miclioudr.  Girod,  41Iov,'.  554;  loPick. 
30;  1  Maion,  344;  2  Johns.  Cli.  51; 
Tufts  V.  Tufts,  Mass.  Dlst,  ISl^^,  and 
cases  there  cited;  Long  on  iSales,  £23; 
9  Paige,  003;  1  Story's  Eq.  Jur.,  tec. 
315;  3  Story,  025.  That  an  auctioneer 
is  a  general  agent  for  the  owner  usu- 
ally, though  questioned  in  tlio  argu- 
ment, cannot  bo  doubtail:  .""^ee  How- 
ard r.  Braithwaite,  1  Ves.  &  B.  LOD; 
Story  on  Agency,  sees.  27,  23;  4  Burr. 
1921;  1  11.  Black.  85.  Ho  is  to  till, 
t.je  sale  is  completed:  Long  en  Sales, 
231;  .Sjtoni'.  Made,  7  Ve.<.  270;  Bab- 
ington  on  Auclions,  90;  2J  Wnid.  43. 
And  though  ho  may  be  age.it  of  the 
buyer  after  the  sale  for  boiiie  pur- 
poses', such  as  to  tal;e  the  ea-io  out  of 
the  statute  of  frauds:  Williams  v, 
MiUington,  1  H.  Black.  8-1;  3  T^rra 
Rep.  148;  Cowp.  395;  Long  on  Sales, 
00,  03,  228;  Emerson  r.  He  li  >,  2 
Taunt.  38;  1  Esp.  101;  yet  this  doe.i 
not  affect  the  other  principle,  that  till 
the  sale,  and  before  it,  he  acts  for  the- 
vendor  alone." 


218 


rr.IXCIPAL  AND   AGENT. 


370 


§  218.  Liabilities  of  Auctioneers. — The  auctioneer  is 
personally  liable  if  he  docs  not  disclose  the  name  of  his 
principal  at  or  before  the  sale.*  Where  the  name  of  the 
owner  of  the  chattel  sold  is  not  disclosed,  and  it  is  after- 
wards claimed  by  a  superior  title,  the  purchaser  may,  in 
an  action  for  money  had  and  received,  recover  the  pur- 
chape-money  of  the  auctioneer.^  An  auctioneer  is  liable 
for  the  state's  charges,  whether  he  collects  them  from  the 
vendor  or  not.  The  law  makes  no  exception  in  cases  nf 
succession,  bankruptcy,  and  judicial  sales.  The  charges 
are  due,  however,  only  upon  actual  complete  sales.^  An 
auctioneer  selling  realty  for  a  less  sum  than  he  is  author- 
ized to  do,  and  at  such  sale  signing  the  contract  as  agent 
of  an  undisclosed  principal,  does  not  thereby  bind  the 
owner  of  the  property,  but  becomes  personally  liable  un- 
der the  contract  to  refund  to  the  purchaser  the  amount  of 
any  deposit  he  may  make  and  auctioneers'  fees,  with  in- 
terest; and  if  he  knew  that  he  was  not  authorized  so  to 
sell,  will  also  be  held  liable  for  what  the  premises  were 
worth  over  and  above  the  price  he  was  to  pay  therefor.^ 
An  auctioneer  who  innocently  sells  stolen  goods  is  liable 
to  the  true  owner,  even  where  the  proceeds  have  been 
paid  over  to  the  thief  without  notice  of  the  felony.^  An 
auctioneer  who  sells  goods  which  are  claimed  by  a  third 
person  is  liable  to  him  if  he  pay  over  the  proceeds  after 
notice.*  If  the  purchaser  of  land  at  auction  deposits  with 
the  auctioneer  a  sum  of  money,  in  compliance  with  the 
terms  of  sale,  and  the  sale  is  afterwatds  abandoned  by 


1  Mills  V.  Hunt,  17  Wend.  333;  20 
Wend.  431;  Hanson  v.  Roberdeau, 
Peake,  120;  Franklyn  v.  Lamond,  4 
Com.  B.  C.37;  Schcll  v.  Stephens,  50 
Mo.  375.  The  bidder  may  repudiate 
his  bid  if  the  actioneer  refuses  to  dis- 
close the  principal:  Thomas  v.  Kerr,  3 
Bush,  619;  «G  Am.  Dec.  2G2. 

^  Seemuller  i-.  Fuchs,  CI  Md.  217; 
54  Am.  Rnp.  766. 

^  State  V.  Girardey,  34  La.  Ann. 
620. 


*  Bush  V.  Cole,  28  N.  Y.  261;  84  Am. 
Dec.  343. 

^  Hoffman  v.  Carow,  20  Wend.  21; 
22  Wend.  285;  Chambess  v.  McCor- 
mick,  4  N.  Y.  Leg.  Obs.  342;  Allen  v. 
Brown,  5  Mo.  323;  Dent  v.  McGratli, 
3  Bush,  174;  Rogers  v.  Huie,  1  Cal. 
429;  54  Am.  Dec.  300;  mntm,  Ja- 
cobs's  Case,  2  Bay,  84;  Rogers  v.  Huie, 
2Cal.  571;  56  Am.  Dec.  363. 

*  Hardacro  v.  Stewart,  5  Esp.  103; 
Jacobs's  Case,  2  Bay,  84. 


370 


871 


AUCTIONEERS. 


§218 


All 


1 ;  84  A:n. 


mutual  consent  of  the  parties,  and  the  purchaser  there- 
upon forbids  the  auctioneer  to  pay  over  the  money  to  the 
vendor,  and  thus  prevents  him  from  doing  so,  the  latter 
is  not  responsible  to  the  purchaser  for  its  return.*  But 
if  the  sale  is  not  completed,  through  the  fault  of  the  ven- 
dor, the  latter  is  responsible  to  the  purchaser  for  the 
return  of  the  money,  although  he  has  never  personally 
received  the  same.^  In  an  action  against  an  auctioneer 
to  recover  the  price  of  property  sold  by  the  auctioneer, 
the  plaintiff  must  prove  such  a  property  in  the  articles 
sold  as  will  entitle  him  to  the  proceeds  of  sale.  It  is  not 
sufficient  to  show  merely  that  he  delivered  them  to  the 
auctioneer.^  An  auctioneer  who  sells  the  property  of  an 
estate  under  an  order  of  court,  and  receives  the  price 
therefor,  is  not  a  depositary  for  the  purchaser.  He  can- 
not, therefore,  be  held  liable  to  the  purchaser  for  the  re- 
turn of  the  purchase-money,  in  case  the  latter  fails  to 
receive  the  goods  purchased,  unless  it  is  shown  that  the 
purchase-money  is  still  in  the  hands  of  the  auctioneer, 
and  is  not  claimed  by  any  one  else.*  The  mere  fact  that 
auctioneers  acted  as  such  in  making  the  sale  is  not  of 
itself  notice  that  they  were  not  selling  their  own  goods. 
They  must  be  deemed  vendors,  and  responsible  as  such 
for  the  title  of  the  goods  sold,  unless  they  disclose  at  the 
time  of  the  sale  the  name  of  the  principal.  And  the  joint 
signature  of  the  bill  of  sale  by  the  auctioneer  with  the 
principal  will  raise  a  presumption  that  the  auctioneer 
acted  also  as  principal,  which  cannot  be  contradicted  by 
parol  evidence  that  he  did  not  sell  or  intend  to  hold  him- 
self responsible  as  principal.^ 

As  to  sales  made  without  reserve,  an  auctioneer  who  ad- 
vertises to  sell  "without  reserve,"  but  who  knocks  the 
goods  down  to  an  illusory  bidder,  is  liable  to  an  action  at 


Esp.  103; 


•  Robinson  v.   Trofitter,    11   Allen, 
330. 
^  Teaffe  v,  Simmons,  11  Allen,  342. 


'  Allen  V.  Brown,  5  Mo.  323. 
*  Lara  v.  Nash,  24  La.  Ann.  310. 
''  Schell  V.  Stephens,  60  Mo.  375. 


§218 


PRINCIPAL    AND   AGENT. 


372 


the  suit  of  the  highest  bona  fide  bidder.*  The  last  hoim  fide 
bidder  at  an  auction,  which  is  advertised  as  a  peremptory 
sale,  has  no  remedy  against  the  auctioneer  for  knocking 
the  property  down  to  a  subsequent  bid  by  the  vendor's 
agent.^  An  action  does  not  lie  against  an  auctioneer  for 
selling  a  horse  at  the  highest  price  bid  for  him,  contrary 
to  the  owner's  express  directions  not  to  let  him  go  under 
a  larger  sum  named.^  A  sheriff,  selling  property  at  auc- 
tion, is  not  obliged  to  attend  to  the  bid  of  an  insufticient 
purchaser.''  An  auctioneer  by  advertising  that  tlie  sale 
of  certain  goods  would  take  place  on  a  certain  day  docs 
not  so  bind  himself  to  sell  them  then  as  to  make  himself 
liable  to  persons  who  went  to  expense  in  order  to  attend 
the  sale.°  A  statement  by  an  auctioneer,  made  as  an  in- 
ducement to  purchase,  that  a  building  is  suited  for  tene- 
ment purposes,  and  could  bo  removed  for  that  purpose, 
but  not  shown  to  be  made  or  understood  to  varv  the  terms 
of  a  printed  advertisement,  is  a  statement  of  opinion  only, 
and  cannot  be  construed  as  an  implied  guaranty  that  the 
proper  authorities  would  grant  a  permit  to  remove  the 


'  Wallow  V.  Harrison,  1  El.  &  E. 
309.  In  this  case  Martin,  B.,  said:  "  In 
a  sale  bj'  auction  there  are  three  par- 
ties; namely,  tlie  owner  of  the  prop- 
erty to  be  sold,  the  auctioneer,  and 
the  portion  of  the  public  who  intend 
to  bid,  which  includes,  of  course,  the 
highest  bidder.  In  this,  a.i  in  most 
cases  of  auction,  the  owner's  name  was 
not  disclosed;  ho  was  a  concealed 
principal.  The  names  of  the  auction- 
eers, of  whom  the  dei'cudant  was  one, 
alone  were  published,  and  the  sale  was 
anui  unced  by  tlicm  to  be  '  without  re- 
serve.' This,  according  to  all  the 
cases,  both  in  law  and  in  equity,  means 
that  neither  the  vendor  nor  anj'  per- 
son in  his  behalf  may  bid  at  the  auc- 
tion, and  that  the  property  bo  sold  to 
the  highest  bidder,  whether  the  sum 
be  equivalent  to  the  real  value  or  not. 
....  Upon  the  same  principle,  it 
seems  to  us  that  the  highest  bonajide 
bidder  at  an  auction  may  sue  the  auc- 
tioneer as  upon  a  contract  that  the  sale 
shall  be  without  reserve.    We  think 


that  the  auctioneer  who  puts  up  prop- 
erty for  sale  upon  such  a  coiuJition 
pledges  himself  that  the  s;dc  shr.ll  be 
without  reserve,  or  in  other  words, 
contracts  that  ib  shall  be  so,  and  that 
this  contract  is  made  with  the  highest 
boiiajide  bidder;  and  incase  of  a  l;;c:;ch 
of  it,  he  has  a  right  of  action  ngainat  the 

auctioneer Wo    entertain    no 

doubt  that  the  owner  may  at  any 
time  before  the  contract  ij  le^f.dly 
complete  interfere  and  revoke  the 
auctioneer's  authority;  but  ho  (loc3  so 
at  his  own  peril;  and  if  the  auctioneer 
has  contracted  any  liability  in  co:ice- 
quence  of  his  employment  and  the 
subsequent  revocation  or  conduct  of 
the  owner,  he  is  entitled  to  be  iudcm- 
nitied." 

^  Mainprice  v.  Westley,  G  Best  &  S. 
420;  l.T  L.  T.,  N.  8.,  5(J0;  M  L.  J. 
Q.  B.  229;  14  Week.  Kep.  9. 

*  Bexwell  r.  Christie,  Cowp.  395. 

♦  Den  V.  Zellers,  7  N.  J.  L.  15:5. 

^  Harris  v.  Nickerson,  L.  R.  8  Q.  B. 
2SG. 


373 


AUCTIONEERS. 


§219 


building  through  the  public  streets.^  An  auctioneer  em- 
ployed  under  an  agreement  that  he  shall  be  paid  expenses 
of  printing  advertisements  of  the  sale  cannot  charge  for 
ordinary  rates  if  the  printer  has  allowed  him  any  dis- 
count therefrom.  Whether  he  were  allowed  the  discount 
under  an  arrangement  with  the  printer  embracing  all  his 
advertising,  or  only  under  a  special  agreement  for  the 
advertisement  of  his  employer,  the  discount  would  bo  no 
part  of  the  expense  of  advertising.  And,  independently 
of  the  special  authority,  the  agent  would  be  bound  to 
procure  advertising  on  the  best  terms  he  could  for  his 
principal.* 

Illustrations.  —  The  persons  present  at  an  auction  sale, 
being  distrustful  of  the  title  of  W.,  the  reputed  owner  of  the 
article  to  be  sold,  tho  auctioneer  announced  that  he  "  knew  W. 
well,  and  ho  was  all  right,  and  he,  C,  the  auctioneer,  would 
wiirrant  that  his  title  was  good."  Held,  that  this  amounted  to 
a  warranty:  Dent  v.  McGrath,  3  Bush,  174.  An  auctioneer 
accepted  a  bid  for  a  horse,  but  did  not  call  for  the  name  of  the 
buyer.  The  buyer  was  asked  by  the  auctioneer  to  come  to  the 
desk,  but  did  not  do  so.  Later  the  auctioneer  put  up  the  horse 
again,  and  sold  him  for  a  less  sum.  Held,  that  the  auctioneer 
was  liable  to  the  owner  for  the  sum  first  bid:  Townaend  v.  Van 
Tassel,  8  Daly,  261. 

§  219.    Liabilities  and  Rights  of  Bidders.— One  who 

bids  for  another  at  an  auction,  without  disclosing  his 
agency,  w411  be  personally  liable  as  purchaser;''  so  of  one 
who  stands  by  and  allows  his  name  to  be  put  down  as 
purchaser,  though  he  did  not  bid.*  A  bidder  of  a 
"choice"  from  a  lot  must  make  his  election  at  once.' 
Where  the  purchaser  at  a  public  sale  fails  to  comply  with 
the  conditions,  and  the  property  is  resold,  he  can  be  held 
liable  for  a  deficiency  only  when  the  conditions  of  the 
second  sale  are  the  same,  or  are  not  more  onerous  than 

'  Woodwardt'.  Boston,  115  Mass.  81.  *  Jenkins  v.  Hoffg,  2  Tread.  Const. 

L  iiion  Refining  etc.  Co.  v.  Pente-  821. 

cost   7'J  Pa.  St.  491.  a  Coffman  v.  Hampton,  2  Watts  &  S. 

•■  McComb  V.  Wright,  4  Johns.  Ch.  377;  37  Am.  Dec.  611. 

oj9. 


§219 


PRINCIPAL  AND  AGENT. 


374 


those  of  the  first  sale.'  Where  A  offers  property  for  sale 
at  public  auction,  and  the  property  is  knocked  off  to  B, 
the  contract  is  binding  upon  A,  although  he  before  told 
B  that  his  bid  should  not  be  received,  unless  he  directed 
the  auctioneer  not  to  receive  the  bid  of  B.'*  One  who 
sells  chattels  at  auction  on  credit,  to  a  purchaser  who  fails 
to  comply  with  the  terms  of  the  sale  within  the  time  for 
which  the  credit  was  given,  may,  after  the  expiration  of 
that  time,  sue  for  the  price  without  a  delivery  of  or  an 
offer  to  deliver  such  chattels  to  the  purchaser.*  A  mistake 
by  the  auctioneer  in  entering  the  vendor's  name  will  be 
corrected  in  equity.''  By  being  knocked  down  to  a  bid- 
der, the  property  does  not  vest  if  a  higher  bid  was  made 
and  recognized,  and  the  sale  was  reopened.^  The  auc- 
tioneer should  reopen  the  sale  where  it  is  affirmed,  and 
he  has  good  reason  to  believe,  that  there  was  a  higher  bid 
made."  The  bidder  to  whom  land  is  knocked  down  is 
not  bound  to  pay  the  purchase-money  and  accept  the 
deed  tendered,  and  leave  the  seller  to  clear  up  defects  in 
the  title  afterwards  with  the  aid  of  the  purchase-money.'^ 
Where  a  tract  of  land  divided  into  city  lots  is  put  up 
and  sold  at  auction  in  separate  and  independent  parcels, 
a  defect  in  the  title  to  one  parcel,  or  to  a  lot  included 
therein,  will  not  avoid  or  affect  the  sale  of  another  parcel; 
but  a  defect  in  the  title  to  any  one  of  several  lots  put  up 
and  sold  as  one  parcel  avoids  the  sale  of  the  whole  parcel.* 
A  bidder  may  repudiate  a  purchase  of  goods  knocked 
down  to  him,  if  the  auctioneer  refuses  to  disclose  the 
owner.'  An  agent  for  complainants  in  a  foreclosure  suit 
may  bid  upon  the  property  for  his  principals  without 
giving  notice  to  other  bidders  that  he  is  not  bidding  for 


'^t 


'  Weast  V.  Derrick,  100  Pa.  St. 
509. 

^  Ricks  V.  Battle,  7  Ired.  269. 

3  Wade  V.  Moflfett,  21  111.  110;  74 
Am.  Dec.  79. 

*  Pugh  V.  Cheaseldine,  11  Ohio,  109; 
37  Am.  Dec.  414. 


"  Pike  I'.  Balch,  38  Me.  302;  61  Am. 
Dec.  248. 

*  Pike  V.  Balch,  supra. 

"•  Gormley  v.  Kyle,  137  Mass.  189. 
8  Mott  V.  Mott,  68  N.  Y.  246. 

•  Thomas  v.  Kerr,  3  Buah,  Oil);  96 
Am.  Dec.  262. 


374 

for  sale 
)fF  to  B, 
ore  told 
directed 
•ne  who 
'•ho  fails 
ime  for 
ation  of 
f  or  an 
mistake 

will  be 
>  a  bid- 
is  made 
he  auc- 
cd,  and 
her  bid 
lown  is 
ept  the 
fects  in 
iioney.'' 
put  up 
parcels, 
icludcd 
parcel; 
put  up 
Parcel.* 
nocked 
►se  the 
re  suit 
■ithout 
ng  for 

61  Am. 


3.  189. 
6. 
C19;  96 


375 


AUCTIONEERS. 


§219 


himself,  but  for  the  complainants.  But  if  such  agent 
bids  off  the  property,  without  disclosing  his  principal, 
in  his  own  name,  he  will  be  responsible  for  the  comple- 
tion of  the  purchase.^  If  the  terms  of  sale  of  land  are, 
that  the  buyer  shall,  within  thirty  days,  give  his  notes, 
with  good  indorsers,  and  if  he  shall  fail  so  to  do,  then  the 
land  to  be  resold  on  his  account,  the  vendor  cannot  main- 
tain an  action  for  breach  of  the  contract  until  the  deficit 
is  ascertained  by  a  resale.*  When  an  auctioneer  sells  a 
balance  of  goods  without  specifying  their  quantity,  he 
has  a  reasonable  time  to  ascertain  it;  when  this  is  done, 
and  a  bill  of  particulars  is  made  out  and  delivered  to  the 
purchaser,  who  pays  the  purchase-money,  or  a  portion  of 
it,  the  contract  becomes  executed,  and  the  auctioneer  will 
not  afterwards  be  permitted  to  allege  a  mistake  as  to  the 
quantity.^  It  is  illegal  to  concert  with  an  auctioneer  a 
private  signal  denoting  a  bid  at  a  sale  of  property  by 
public  auction.  Such  a  contrivance  g'ves  an  advantage 
to  one  person  over  the  other  fair  and  open  bidders  at  the 
sale.*  • 

Illustrations. — At  a  mortgage  sale  the  auctioneer  offbred 
the  property  free  of  encumbrances,  and  the  defendant  purchased 
with  that  understanding,  at  the  full  value  of  the  property.  Held, 
that  the  defendant  could  not  be  compelled  to  accept  the  title 
when  the  property  was  encumbered  with  prior  mortgages: 
Mayer  v.  Adrian,  77  N.  C.  83.  Plaintiff  Lid  off  a  carriage  at 
auction  sale,  for  which  secured  notes  were  to  be  given,  which 
he  did  not  give,  but  left  the  carriage  with  the  understanding 
that  it  was  not  to  be  taken  away  until  paid  for,  and  did  not 
call  for  it  for  four  months.  Held,  that  he  had  no  title  to  it:  Mat- 
thews V.  MeElroy,  79  Mo.  202.  In  an  action  by  an  auctioneer 
to  recover  the  price  of  an  article  under  the  value  often  jmunds, 
which  was  described  in  the  written  catalogue  of  sale  as  being 
of  silver,  held,  that  evidence  was  receivable  to  sliow  that  be- 
fore the  article  was  put  up  for  sale,  the  auctioneer,  without 
making  any  alteration  in  the  catalogue,  stated  publicly  from 
his  box,  in  the  hearing  of  the  defendant,  that  tlie  catalogue  was 


'  National  Fire  Ins.  Co.  v.  Loomis, 
11  Puige,  431. 
■'  Webster  v.  Hoban,  7  Crauch,  399. 


'  Burgoyne  v.  Middleton,  4  Cal.  64. 
*  Couover  v.  Walling,  15  N.  J.  Eq. 
173. 


§219 


PRINCIPAL   AND   AGENT. 


37G 


incorroct,  and  that  the  article  would  only  bo  sold  as  plated, 
BLibsequently  to  which  the  defendant  lid  for  it:  Ldca  v.  l.lalc, 
13  Mccs.  &  W.  G14;  9  Jur.  21,3;  14  L.  J.  Ex.  194.  A  put  goods 
up  at  auction,  one  of  the  conditions  of  the  sale  beinfi;  that  the 
goods  should  l)e  taken  away  at  the  buyer's  expense  within  four- 
teen duys,  in  default  of  which  the  deposit  to  be  forfeited,  the 
goods  to  be  resold,  and  the  loss  to  be  made  good  by  the  pur- 
chaser at  the  auction.  B  bought  the  goods,  and  a  bought-noto 
was  then  entered  into  with  this  clause,  "fourteen  days  for  re- 
ceiving and  delivery."  Held,  that  the  meaning  of  the  two  con- 
tracts (the  conditions  of  sale  and  the  bought-notc)  was,  that 
the  fourteen  days  should  be  allowed  to  the  purchaser  only;  and 
that  the  vendor  should  have  been  always  ready  to  deliver  them 
on  request:  Ilagedon  v.  Laintj,  1  Marsh.  514;  G  Taunt.  1G2. 
Land  was  sold  under  a  power  in  a  mortgage  for  a  sum  more 
than  suflicient  to  pay  the  mortgage  debt,  and  the  mortgagee 
refused  to  execute  a  deed  to  the  purchaser,  on  the  ground  that 
the  purchaser  had  not  paid  down  fifty  dollars  in  cash  as  re- 
quired by  the  terms  of  sale.  It  appeared  that  the  purchaser, 
when  he  bid  off  the  estate,  did  not  have  the  sum,  but  that  the 
auctioneer  agreed  to  advance  it,  and  told  the  mortgagee  that 
the  purchaser  had  paid  it,  and  that  the  money  was  ready  for 
him.  Held,  that  this  being  so,  and  the  auctioneer  being  ready 
to  pay,  the  effect  was  the  same  as  if  the  sum  had  been  paid  in 
fact  by  the  purchaser  to  the  auctioneer:  Muhlig  v.  Fislce,  131 
Mass.  110.  A  offered  at  public  outcry  to  rent  a  tract  of  land 
in  separate  parcels,  and  B  bid  off  two  fields  which  the  crier 
represented  as  containing  seventy  acres,  but  which  probably 
contained  much  less.  After  the  biddings  were  over,  A  and  B 
made  a  contract  for  the  rent  of  the  whole  tract,  and  B  gave  to 
A  hi.-!  note  for  the  sum  agreed  on.  Held,  that  this  was  a  new 
and  independent  contract,  unaffected  by  the  representations  of 
the  crier:  Daru  v.  Winsmith,  5  S.  C.  332.  By  the  terms  of  an 
auction  sale  of  coal,  the  coal  was  to  be  taken  away  by  the  pur- 
chaser in  October;  and  if  ho  failed  to  do  so,  defendants  had  the 
option  to  discontinue  further  delivery,  and  to  retain  the  earnest- 
money,  or  to  resell  on  account  of  the  purchaser.  Plaintiff  did 
not  demand  the  coal  until  February,  when  defendant's  stock 
of  coal  was  exhausted  and  they  refused  to  deliver,  and  plain- 
tiff sued  to  recover  therefor.  Held,  that  the  stipulation  as  to 
time  was  to  be  deemed  of  the  essence  of  the  contract,  and  a 
condition  precedent,  which  must  be  observed  by  plaintiff  to 
enable  him  to  enforce  it;  and  that  defendants  were  not  limited 
to  the  remedies  prescribed,  but  had  the  right  to  hold  them- 
selves absolved  from  the  contract  upon  the  failure  of  plaintiff 
to  perform:  Higgina  v.  Delaware  etc.  R.  R.  Co.,  GO  N.  Y.  5j3. 


377 


AUCTIONEERS. 


§219 


A  map  prcpfirod  by  defendant,  and  produced  at  an  auction  sale 
of  lots  in  Now  York  City,  of  which  he  was  the  owner,  repre- 
sented a  ftrip  of  hind  at  One  Hundred  and  Tiiirty-fiflh  Street, 
and  the  auctioneer  Bokl  lots  as  laid  out  on  the  strip,  and  a 
boulevard  nhown  by  the  map  which  crossed  it,  stating  that 
they  were  corner  lots.  Held, —  1.  That  plaintiff,  who  purchased 
the  lots  at  the  sale,  and  who  before  bidding  had  seen  the  map, 
was  entitled  to  all  which  he  might  properly  have  understood  from 
the  map  and  auctioneer's  language;  viz.,  to  a  conveyance  do- 
scribing  the  lots  as  being  bounded  by  One  Hundred  and  Thirty- 
fifth  Street;  2.  That  a  conveyance  stating  tluit  they  were 
bounded  by  "  the  line  of  a  certain  strip  of  land  design.'itcd  and 
laid  out  as  One  Hundred  and  Thirty-Iifth  Street  on  the  map  or 
plan  of  the  city  of  New  York,"  was  not  in  compliance  with  tho 
contract  of  sale;  3.  That  evidence  offered  by  defendant  in  an 
action  for  specific  performance  to  prove  what  ho  intended  to  sell 
was  properly  rejected:  Phillips  v.  Iliggins,  7  Lans.  ul4.  A 
house  fitted  only  with  cold  water  was  advertised  in  the  news- 
papers to  be  sold  by  auction  as  fitted  with  "hot  and  cold  water," 
and  subject  to  examination  at  any  time  before  the  sale,  the 
keys,  terms,  and  further  particulars  to  bo  obtained  on  applica- 
tion to  tho  auctioneer.  At  the  auction  tho  auctioneer  read  from 
a  paper  tho  terms  of  sale;  announced  that  there  was  an  error 
in  tho  advertisement,  as  the  house  was  not  fitted  with  hot  water; 
and  then  ofi'ered  the  house  for  bids,  when  it  was  bid  in  by  a 
person  who,  having  read  the  advertisement  in  the  newspapers, 
but  not  examined  tho  house,  nor  applied  to  the  auctioneer,  had 
come  to  the  sale,  but  arrived  after  the  announcement.  Tho  auc- 
tioneer then  presented  to  the  buyer  the  paper  from  which  the 
terms  of  sale  had  been  read,  and  the  buyer  signed  it  without 
fully  reading  it.  At  the  top  of  this  paper  was  posted  a  copy  of 
the  advertisement  cut  out  of  a  newspaper,  from  which  tho 
words  "hot  and"  were  erased,  but  the  buyer  did  not  notice  the 
erasure.  By  tho  same  paper  the  buyer  agreed  to  comply  with 
the  conditions  of  sale,  and  to  deposit  two  hundred  dollars,  to 
bo  forfeited  to  the  vendor  if  he  should  fail  so  to  comply.  After 
signing  tne  paper  he  examined  the  house,  and  finding  that  it 
was  not  fitted  with  hot  water,  refused  to  take  it,  or  to  pay  the 
two  hundred  dollars,  whereupon  the  auctioneer  advertised  the 
house  for  sale  "on  the  account  of"  said  buyer,  ami  sold  it  for 
thirty  dollars  more  than  the  amount  of  his  bid.  Tfeld,  that  in 
the  absence  of  fraud  the  first  buyer  was  bound  by  his  contract. 
Held,  also,  that  the  auctioneer  might  maintain  in  his  own  name 
an  action  for  the  two  hundred  dollars  without  regard  to  tho 
extent  of  his  lien  thereon,  and  without  deduction  on  account  of 
tho  surplus  of  thirty  dollars  realized  at  the  second  sale:  Thomp- 


§  220 


PRINCIPAL  AND   AGENT. 


'^78 


tH  I 


son  V.  Kelly,  101  Mass.  291;  3  Am.  Rep.  353.  A  master  and 
commissioners  in  partition  parted  a  decedent's  land,  and  laid 
out  a  street  bounding  on  the  lino  of  an  adjoining  land-holder. 
Afterwards,  but  before  the  petition  was  put  upon  record  or  tho 
street  opened,  the  latter  laid  out  a  town  plat,  which  was  litho- 
graphed. It  exhibited  tho  street,  with  streets  on  his  own  plat 
opening  into  it,  but  the  seller  gave  no  information  that  the  first- 
named  street  was  on  his  neighbor's  Irnd.  lie  sold  lots  at  auc- 
tion according  to  the  plat  which  was  exhibited  on  the  day  of 
sale.  The  plat  of  tho  commissioners  was  afterwards  set  aside, 
and  tho  street  vacated.  Held,  that  tho  vendor  was  liable  for 
damages  to  a  vendee  of  lots  for  a  diminution  in  the  valve  thereof 
caused  by  the  non-existence  of  the  vacated  street:  McCall  v. 
Davis,  50  Pa.  St.  431;  94  Am.  Dec.  92. 

§  220.  Fictitious  Bids — "Puffers" — Agreements  not  to 
Compete.  —  The  best  statement  of  tlio  state  of  the  English 
law  as  to  illusory  bids  and  puffing  at  auctions,  up  to 
tho  year  1850,  will  be  found  in  the  preamble  of  Lord  St. 
Loonards's  act,  passed  in  that  year.  It  recited  that "  whereas 
there  is  at  present  a  conflict  between  her  majesty's  courts 
of  law  and  equity  in  respect  to  the  validity  of  sales  by 
auction  of  land  where  a  puffer  has  bid,  although  no  right 
of  bidding  on  behalf  of  the  owner  was  reserved,  tho  courts 
of  law  holding  that  all  such  sales  are  absolutely  illegal, 
and  tho  courts  of  equity  under  some  circumstances  giv- 
ing effect  to  them,  but  even  in  courts  of  equity  the  rule 
is  unsettled."  The  statute  then  declared  invalid  sales  of 
land  by  auction  where  a  puffer  was  employed;  that  at 
sales  "without  reserve"  the  seller  nor  any  one  for  him 
should  bid;  that  at  sales  subject  to  the  right  of  the  seller 
to  bid,  it  should  bo  lawful  for  tho  seller  or  any  one  person 
to  bid.*     In  the  American  courts,  raising  the  price  at  an 

130    &    31   Vict.,   c.  48;    and    see  Jacob    &    W.    389;    R.    v.    Marsh,    3 

Wallow    V.     Harrison,     1    El.    &    E.  Younger.  J.  331 ;  Meadows  v.  Tiinncr, 

30!);  Bcxwcll  v.  Christie,  1  Cowp.  20;  5   Madd.   .34;  Twining  r.    Morrice,   2 

Howard  v.  Castle,  0  Term  Rep.   G42;  Brown  Ch.   320;   Alasoii  r.  Arniitage, 

Crowdcr  v.  Austin,  3  Bing.  3GS;  (Ireen  13   Ves.    25;    Fuller  v.    Abrahams,    0 

V.  Baverstock,  14  Com.  B.,  N.  S.,  204;  Moore,  310;  Flint  v.  Woodin,  9  Hare, 

Conolly    V.    Parsons,     3    Ves.     625;  618;  Mortimer  v.  Bell,  11  Jur.,  N.  S., 

Biuinlcy  v.  Alt,  3  Ves.  024;  Smith  v.  897;  leely  r.  Grew,  6  Car.  &  P.  671; 

Clarke,  12  Ves.  477;  Bowles  v.  Round,  Gilliat  v.  Gilliat,  L.  R.  9  Eq.  60;  Par- 

6    Ves.    508;   Jervoiae   v.    Clarke,   1  fitt  v.  Jepson,  40  L.  J.  Com.  P.  Div.  529. 


Oli 


379 


AUCTIONEERS. 


§  220 


istcr  niitl 
mid  laid 
d-liolder. 
I'd  or  tlio 
vas  litlio- 
own  plat 
the  first- 
s  at  auc- 
10  day  of 
!ot  aside, 
iablo  for 
e  thereof 
kCall  V. 


ts  not  to 

English 
,  up  to 
^ord  St. 
ft'hereas 
s  courts 
ales  by 
10  right 
)  courts 
illegal, 
es  giv- 
lic  rule 
5ales  of 
that  at 
3r  him 
0  seller 
person 
D  at  an 

Vlarsh,    3 

T;imu'r, 

orrice,   2 

irinitage, 

.hams,    (j 

9  Haio, 

.,  N.  S., 

P.  07 1; 

60;  Par- 

Div.  529. 


auction  salo  by  fictitious  bids  or^puflTcrs"  is  a  fraud  on 
the  buyer,  for  which  tho  salo  will  bo  set  asido  on  his  ap- 
plication.'    At  a  salo  of  several  lots  at  auction,  evidence 


»  Wlieelur  v.  Collier,  1  Wood.  &  M. 
12');  Minicriiff  v.  (iolilaborougli,  4  Hur. 
&  McH.  2H2;  1  Am.  Due.  407;  Tnmgh- 
tcm  )'.  Jtiliinton,  2  Hayw.  328;  2  Am. 
Due.  (52(5;  Steele  v.  Ellmaker,  1 1  Serg. 
&  K.  80;  Tru^*t  v.  Delanlaine,  3  E.  D. 
Si:itli,  21!);  Fisiier  r.  Her.iey,  17  Hun, 
370;  Towle  c.  Leavitt,  23  N.  H.  300; 
f)j  Am.  Dee.  IDfj;  Balmm  v.  Bach,  13 
La.  287;  33  Am.  Dec.  501;  Hiiide  v. 
I'eiiJk'toii,  Wythe,  144;  Moreheml  v. 
Hunt,  1  Dev.  Eq.  (55;  .Smith  r.  (rreeii- 
l;;.',  2  Dev.  120;  18  Am.  Dec.  504;  Don- 
alJ.Jou  V.  McRoy,  1  Browne,  34{); 
B.iik  of  Metropolis  v.  Sprague,  20 
N.  J.  E([-  150;  Pennock's  Appeal,  14 
Pa.  St.  440;  53  Am.  Dec.  501;  Bailey 
r.  Morgan,  Bush.  352;  Whitaker  v. 
Bowl,  03  N.  C.  200;  Staines  v.  Shore, 
10  Pii.  St.  200;  55  Am.  Dec.  402; 
Curtis  1'.  Aspinwall,  114  Mass.  187; 
10  Ai.i.  Rep.  332;  Peek  v.  List,  23 
W.  Va.  338;  48  Am.  Bep.  .308;  Mc- 
Donnell V.  Sima,  0  Ireil.  Eq.  278; 
P.cynclils  V.  Dcehamus,  24  Tex.  174; 
7o  Am.  Dee.  101;  Woods  r.  Hall,  1 
Dev.  Eq.  411;  Martin  v.  Ranlett,  5 
Piich.  541;  Davis  v.  Petway,  3  Head, 
6j7;  75  Am.  Dec.  789;  Miller  v.  Bay- 
naid,  2  Houst.  559;  83  Am.  Dec.  108. 
Tho  owner  of  property  instructed  tho 
auctioneer  to  take  fourteen  thousand 
fivo  hundred  dollars  for  it.  At  the 
salo  tho  real  biddings  stopped  at 
twenty  thousand  dollars,  but  tho  auc- 
tioneer by  fictitious  bids  ran  the  price 
up  to  forty  thousand  dollars,  at  which 
it  was  knocked  down  to  F.  /Jitil, 
that  this  was  a  fraud  upon  F.  which 
the  court  would  relieve:  Veiizioc.  Wd- 
liams,  8  How.  13.").  la  this  ease  the 
court  said:  "By-biddiag  or  pufiing 
by  the  owner,  or  caused  by  the  owner, 
or  ratified  by  him,  has  often  been  held 
to  be  a  fraud,  and  avoids  the  sale: 
Cowp.  395;  G  B.  Mon.  030;  11  Serg. 
k  R.  80;  4  Har.  &  McH.  282;  Babing- 
ton  on  Auctions,  45;  3  Bing.  308;  2 
Car.  &  P.  208;  0  Term  Rep.  042;  Rex 
V.  Marsli,  3  Younge  &  J.  331;  II 
Moore,  283.  He  may  fix  a  minimum 
price,  or  give  notice  of  by-bids,  and 
thus  escape  censure:  Ross  on  Sales, 
311;  Howard  v.  Castle,  6  Term  Rep. 


642.  But  this  showj  that,  without 
such  notice,  it  is  bad  to  re  ;ort  to  tliem: 
Crowder  v.  Austin,  .')  Bing.  StKS;  3 
Youngo  &  J.  .331.  'Tho  act  itself  is 
fraudulent,'  says  Lord  Tentcrdon: 
Wheeler  »•.  Collier,  1  Moody  &  M.  126, 
The  by-bidding  deceives,  and  iiivolvL's 
a  falsehood,  and  is  tliereforo  bad.  It 
violates,  too,  a  leading  condition  of 
the  contract  of  sales  at  auction,  which 
is,  that  tlio  article  shall  bo  knocked  off 
to  the  highest  real  bidder,  without 
puffing:  2  Kent's  Com.  538,  539.  It 
does  not  answer  to  apologize  and  say 
that  by-bidding  is  common.  For, 
observed  Lord  Mansfield,  'gaming, 
stock-jobbing,  and  swindling  arc  fro- 

Juent;  but  the  law  forbids  them  all ': 
Jowp.  .397.  In  Bexwell  r.  Christie, 
Cowp.  396,  the  pole-star  on  this  whclo 
subject,  it  is  said:  'The  basis  of  all 
dealings  ought  to  be  good  faith.  Ho 
more  especially  in  these  transactions, 
where  tlie  public  are  brought  together 
in  a  confidence  that  tho  articled  set  up 
for  sale  will  be  disposed  of  to  tlio 
highest  real  bidder.'  Even  in  a  court 
of  law.  Lord  Kenyon  has,  with  true 
regard  to  what  is  honorable  and  just, 
said:  '  All  laws  stand  on  the  beat  and 
broadest  basis,  which  go  to  caforco 
moral  and  social  duties':  Pasly  v. 
Freeman,  3  Term  Rep.  01;  yco  al;o 
Bruce  v.  Ruler,  2  Man.  &  R.  3.  And 
in  Howard  l\  Castle,  G  Term  Rep.  642, 
he  held  that  Lord  Manstield's  doctrine, 
that  all  sham  bidding  at  auctions  ia  a 
fraud,  was  a  doctrine  founded  'on 
the  noblest  principles  of  morality  and 
justice.'  Nor  does  it  lodsen  tho  in- 
jury or  tho  fraud  if  tho  by -bidding  bo 
by  tho  auctioneer  himself.  lie,  being 
agent  of  the  owner,  is  equally  with 
him  forbidden  by  sound  principle  to 
conduct  clandestinely  and  fal.icly  on 
this  subject:  Cowp.  397.  All  t,hould 
be  fair,  —  above  board.  Indeed,  in 
point  of  principle,  any  fraud  by  auc- 
tioneer is  more  dangerous  then  by 
owners  themselves.  Tho  sales  through 
the  former  extend  to  many  millions 
annually,  and  aro  distributed  over  the 
whole  country,  and  tho  acts  acconi- 
puiyiug  them  are  more  confided  in  as 


§  220 


PRINCIPAL    AND   AGENT. 


380 


38 


tlint  piifTori  were  employed  to  bid  upon  some  of  tlio  lots 
is  julinissiblc  to  show  that  their  bids  upon  another  lot 

r)37.  Sonio  cases  liold,  too,  that  tlio 
l)yl)i(l(ling  will  not  vitiato,  if  real  liiils 
Iju^iduH  tlioao  of  tho  vciulco  occurruil 
after:  3  Ves.  020.  But  noitlior  of 
tlicHO  cx^UMOs  or  aitolngiea  cxistml 
hero,  These  by-biils  wero  ina<lu  after 
80II10  thoiiHand  of  dullars  had  been 
ofl'urcil  over  tho  value  of  the  inilli,  as 
estiiiiatcd  by  tho  owners  themselves, 
and  wero  palpably  made  'to  screw 
up'  or  enhance  tho  price.  Any  otlior 
excuses,  which  have  ever  availed, 
eitiier  are  unomalies,  or  rest  on  a  false 
analogy,  'ihus  at  one  time  in  Eng- 
land duties  on  auctions  wero  remitted, 
if  tho  property  was  bought  in  by  tho 
owner:  3  Ves.  Jr.  17,  O'il;  1  Fonb.  Kq. 
220.  This,  however,  was  founded  on 
the  theory  that  no  sale  had  talien 
place,  anil  hence  no  duty  should  bo 
paid,  rather  than  that  a  sale  under 
such  circumstances  wasvalid.  It  there- 
fore strengthens  rather  than  impairs 
tho  view  taken  of  tho  present  case,' 
In  Staines  v.  Shore,  10  I'a.  St.  200,  55 
Am.  Dec.  403,  it  was  held  that  the  sale 
was  vitiated  by  tho  e;nployinent  of  puf- 
fers, whether  the  buyer  got  the  worth 
of  his  money  or  not.  (iibson,  C.  J., 
said:  "  We  held  in  Pcnnock's  Appeal, 
14  Pa.  St.  449,  SS  Am.  Dec.  501.  tint 
the  employment  of  oven  a  single  putfer 
vitiates  tlio  sale.  In  the  pre.sent  case 
tho  ruling  judge  instructed  the  jury 
that  if  the  horso  was  actually  worth 
the  sum  to  bo  paiil  for  him,  tho  Imyer 
got  tho  valno  of  his  money  and  could 
not  have  been  defraudeil.  The  fallacy 
of  tho  principle  is  in  assuming  that 
there  is  a  standard  of  value  indepen- 
dent of  tho  wishes  an<l  wants  of  tlie 
biddenj,  and  that  every  man  is  willing 
to  buy  by  it.  A  man  proposes  to  sell 
his  horso  for  a  fair  price  tt>  another, 
who  declines,  because  ho  has  no  use 
for  him,  and  does  not  choose  to  take 
tho  risk  of  getting  less  for  him  than 
ho  gave,  with  a  certainty  of  losing  his 
trouble  and  the  expense  of  keeping  in 
the  mean  time;  but  tho  case  would  be 
diflfercnt  did  the  owner  make  it  worth 
his  while  to  purchase  witli  a  view  to 
lirolit  on  a  resale.  What  is  the  woitli 
of  anything?  The  apothegm  of  Ilmli- 
bras  answers  truly,  'Just  so  much 
money  as  't  will  bring.'     A  man  is  dc- 


liomst  u;id  truo  than  acts  or  stato- 
mcnts  m:.  !o  by  owners  themsidves  in 
their  own  bcliali',  and  to  advance  their 
G\v:i  iiiterctj.  (ireat  caro  is  thereforo 
proper  to  preserve  them  unsullied, 
u:i  I  to  di;c.)uiago  and  repress  tho 
Hiiiallc  t  deviations  in  thoni  from  rec- 
titude. Hero  tho  auctioneer  virtually 
eai  I  to  hi  i  loareri,  when  ho  made  a 
iictitious  bid:  'I  havo  been  offered  bo 
much  luoro  for  this  property.'  But 
lie  Raid  it  f:dsely,  anil  said  it  with  a 
viev,'  to  induce  tho  hearers  to  offer 
Blill  more.  IIo  averred  it  as  a  1  jt, 
andn(  uutiopinicm;  and  as  a  fact  pecu- 
liarly vuh'ii  his  knowledge.  Now  if, 
under  yucli  an  untruo  and  fraudulent 
a';sertlo!i,  persons  wero  persuaded  to 
give  i.iorc,  —  relying,  as  they  had  a 
right  to,  Mi.  tho  truth  of  what  was 
tlir.ii  iiioio  within  tho  jiersonal  knowl- 
edge of  tho  auctioneer,  and  was  pub- 
licly and  expres.dy  alleged  by  him, 
and  bei;ig  ot  course  more  willing  to 
give  higher  I'or  what  others  had  oflered 
more,  wl.a  probably  were  acquainted 
with  !  uch  property  and  had  means  to 
p'.y  iV.r  it, — ihcy  were  imposed  on 
and  injured  by  tho  falsehood.  It  is 
said:  'A  naked,  willful  lie,  or  the  as- 
sertion {.f  a  fakehood  knowingly,  is 
certainly  cvidenco  of  fraud ':  2  Mill 
Const.  8.  Tho  following  authorities 
support  tho  views  hero  laid  down:  3 
Youngo  &  J.  3:il ;  Moody  &  M.  123;  2 
Car.  &  1".  203;  Baxwcll  v.  Christie, 
Cowp.  SUj;  lloward  u.  Castle,  0  Term 
Ecp.  G12;  1  Hall,  140;  1  Dcv.  35;  6 
Clark  &  L'\  o'ld,  411.  Some  cases  and 
some  reasoning  found  iu  t'^oin  at- 
tempt to  fjanction  a  contrary  dc.  trine, 
if  the  by-blds  ■were  iiiado  lacroly  to 
prevent  a  cacrifico  of  tho  pror  orty,  — 
a  '  dofeasivo  precaution  '  —  but  not 
otherwise:  Connolly  v.  Parsons,  3  Ves. 
C'25,  note;  Smith  v  Clarke,  12  Ves. 
477;  'Steele  v.  Ellmaker,  11  Serg.  &  R. 
8j;  Woodward  v.  Miller,  1  Coll.  C.  C. 
270;  5  Madd.  34.  These  exceptions 
still  concede  that  tho  by-bidding, 
when  an  artiflco  to  mislead  tho  judg- 
ment and  inflame  the  zeal  of  others, 
— '  to  screw  up  and  enhance  the 
price,'  in  tlio  language  of  Sir  William 
Grant,  — is  fraudulent,  and  makes  tlie 
salo  void:  12  Ves.  4S3;  2  Kent's  Com. 


th 
an 


AUCTIONEERS. 


220 


were  mala  fide?  But  it  is  not  illegal  to  pluco  a  limit  on 
the  price  below  which  the  property  must  not  bo  sold, 
and   to  withdraw   it  if  it    docs    not  reach   that   liguro,' 


fiauilcil  whoiiovor  lio  ia  incitcil  by 
artful  iiicaun  to  biil  inoro  tliim  lio 
otlu'iwiso  would.  He  Kia  a  ri;.^ht  to 
buy  at  ail  uiultTvaluo  wbcro  tlio  no- 
cussities  of  till)  owner  coiiipcl  biiti  to 
8cll;  ttiul  wlioiicvLT  tlio  prico  i^cvcr  so 
littl'J  ciihaiict'd  byaHcicrct  coutrivancu 
Lo  ii  cbuated.  A  iialo  by  auction  lire- 
supposes  a  sacrilico,  or  at  L-ast  a  will- 
ingiifd.s  to  sell  for  what  can  lio  bad; 
bi't  should  the  vendor  stick  for  the 
last  penny,  it  woulil  bo  idle  to  sot  the 

Iiroporty  up,  bucauao  liia  price  could 
le  as  readily  obtained  at  jn'ivato  sale. 
Should  he,  however,  sec  lit  to  make 
the  experiment,  his  object  could  bo 
attained  by  directing  the  auctirncer 
not  to  let  tiio  property  go  for  less  than 
his  estimate  of  its  market  value;  or  if 
ho  propose  to  sell  without  reservation 
as  to  price,  let  him  opeidy  reserve  a 
rigiit  to  bid.  For  no  fair  purpose  is 
tlie  employment  of  a  pufl'er  necessary; 
but  it  must  vitiate  every  sale  in  which 
recourse  is  had  to  it."  In  Curtid  v. 
Aspiuwall,  114  Matis.  187,  11)  Am. 
Rep.  33'J,  the  court  say:  "There  ia 
some  diversity  in  the  decisions  as  to 
the  circumstances  under  wiiieh  by- 
liidding  will  invalidate  a  sale  at  auc- 
tion. But  it  is  clear,  both  upon 
principle  and  the  weight  of  author- 
ities, that  when  the  sale  is  advertised 
or  stated  to  be  without  reserve,  the 
secret  employment  by  tlie  seller  of 
puffers  or  uy-bidders  renders  tho  sale 
voidable  by  the  buyer:  Phippen  v. 
Stickney,  3  Met.  384,  and  casea  cited; 
Towle  V.  Leavitt,  23  N.  U.  3G0;  55  Am. 
L)ec.  195;  Veazio  v,  Williams,  8  How. 
134;  Thornett  v.  Haines,  15  Aloes.  & 
W.  3G7.  Tho  offer  of  property  at 
auction,  without  reserve,  is  an  im- 
plied guaranty  that  it  is  to  ba  sold  to 
the  highest  bidder,  and  each  bidder 
has  the  right  to  assume  that  all  pre- 
vious bids  are  genuine.  The  seller  in 
substance  so  assures  him,  cud  the  se- 
cret employment  by  the  seller  of  an 
agent  to  make  fictitious  bids  is  equiv- 
alent to  a  false  representation  by  him 
as  to  a  matter  in  which  ho  is  bound  to 
fcpeak  the  truth  and  act  in  good  faith. 
The  real  bidder  ia  deceived,  and  the 


price  is  enhanced,  by  artifice  and  false 
pn.tenses.  In  tlio  case  at  bar  tho 
seller  stated  in  his  advertisement  that 
'the  sale  will  bo  positive.'  Tiiis  ia 
equivalent  to  stating  that  it  woubl  bo 
without  reserve,  and  wo  think  tiiat 
tho  evidence  otl'ored  by  tho  buyer  of 
by-bidding  at  tho  auction  sale  should 
have  been  admitted.  Though  hia 
oiler  was  to  nhow  by-bidding  upon  the 
otiier  lots  embraced  in  tlie  siln,  and 
not  upon  tho  lots  bid  off  by  liiin,  tho 
principle  is  tho  Haiiie,  Tlio  sale  was 
of  a  largo  pi(!co  of  land  cut  up  into 
small  lots.  Tho  sales  fif  all  tho  lota 
wero  on  the  same  day  and  were  parta 
of  tho  same  transaction.  Any  artifice 
or  fraud  used  to  deceive  the  bidders 
and  to  enhance  the  price  of  the  lota 
first  sol  I  would  tend  to  fix  tlie  appar- 
ent value  of  all  tho  lots,  and  to  mislead 
the  judgment  of  the  real  bidders  iijion 
tho  lots  afterwards  sold.  As  tho  pur- 
clia^o  by  tho  buyer  in  this  case  waa  of 
tho  l.vst  lots  sold,  it  was  competent  for 
him  to  show  that  tho  seller  secretly 
procured  fictitious  bids  to  bo  mado 
upon  tho  lots  previously  sold,  and 
that  he  was  deceived  and  misled 
thereby.  Thtre  must,  thoreforc,  be  a 
new  trial  in  both  the  suits.  If  the 
buyer  succeeds  in  provin<j  his  allcga- 
tioa  of  tho  seller's  fi\f'd  by  employing 
by-biddor3,  the  cellcr  cannot  Maintain 
his  action  against  him,  and  ho  is  en- 
titled to  recover  back  tlie  deposit  paid 
to  tho  auctioneer."  0;io  who  acta 
sinjply  as  auctioneer  or  crier  for  an 
ofBccr,  and  in  his  presence,  at  a  tiale 
of  property  uniler  a  writ,  has  a  right 
to  bid  at  the  sale;  but  if  the  crier  waa 
hinnclf  conducting  tho  s:iL',  then  he 
would  have  no  such  right:  Swires  v. 
Brotherline,  41  Ta.  St.  135;  8a  Am. 
Dec.  GOl. 

'  Yerkes  v.  Wihon,  81*  Pa.  St.  9. 

•^  1o\j\o  V.  Leavitt,  23  N.  H.  3(J0; 
.';5  A:n.  Dec.  195;  Wolfe  v.  Lyster,  1 
Hall,  140;  Hazul  r.  Dunham,  1  Hall, 
C55;  Williamrj  v.  Poor,  3  Cranch  C.  C 
221;  Steele  r.  Ellmaker,  11  Serg.  &  R. 
86.  In  Baham  v.  Bach,  13  La.  287, 
33  Am.  Pec.  501,  it  was  said:  "In  the 
case  of  CorryoUea  v.  Mossy,  2  La.  501, 


§  220 


PRINCIPAL  AND   AGEN''.'. 


382 


nor  to  make  fictitious  bids,  or  employ  a  person  to 
do  so,  for  the  solo  purpose  of  preventing  a  sacrifice 
of  the  property  offered  for  sale.*  A  sale  where  ficti- 
tious bids  have  been  made,  or  "puffers"  employed,  will 
not  be  set  aside  where  the  purchaser  has  acquiesced 
for  a  time,  and  the  price  is  not,  after  all,  exorbitant,"  or 
the  purchaser  after  knowledge  of  the  fact  confirms  the 
sale.^  As  soon  as  the  purchaser  finds  out  that  there  has 
been  by-bidding,  he  must  make  his  election  to  rescind  or 
abide  by  the  contract.  Thus  where,  at  a  sale  by  auction 
of  land  vsold  as  containing  a  gold  mine),  a  by-bidder 
was  secretly  employed  by  the  vendors  to  run  up  the  land, 
and  the  vendees  did  not  bring  their  bill  for  a  rescission  of 
the  contract  until  twelve  months  or  more  after  they  had 
knowledge  of  that  fact,  and  in  the  mean  time,  or  a  portion 
thereof,  continued  to  work  and  explore  the  land,  it  was 
held  that  this  was  too  long  a  delay  in  notifying  the  ven- 
dors of  their  wish  to  annul  the  contract.*  The  purchaser 
must  return  the  property  when  he  discovers  the  fraud.^ 
A  by-bidder  who,  by  agreement  with  the  owner,  runs  up 


th 
hi 


the  supreme  court  of  this  state  held 
that  an  owner  might  withdraw  his 
property  before  the  highest  bid  was 
accepted  by  the  auctioneer.  But  this 
gives  the  owner  no  right  to  bid,  unless 
ne  publicly  reserves  to  himself  that 
right;  still  less  can  he  bid  through  the 
auctioneer.  The  duty  of  the  auction- 
eer is  to  sell  the  property,  and  to  re- 
ceive the  bids  offered,  not  to  make 
them.  We  do  not  censure  the  con- 
duct of  the  auctioneer  in  this  instance, 
because  we  are  aware  it  is  the  general 
usage  to  conduct  sales  at  ruction  in 
this  manner;  but  it  is  a  usage  which 
we  can  neither  justify  nor  recognize 
in  the  administration  of  justice.  It  is 
equally  repugnant  to  public  policy, 
and  to  that  fairness  which  ought  to 
exist,  and  which  people  have  a  right 
to  expect  in  a  sale  of  property  avow- 
edly offered  to  the  highest  bidder. " 

»  Wolfe  V.  Lyster,  1  Hall,  146;  Jen- 
kins V.  Hogg,  2  Tread.  Const.  821;  Rey- 


nolds V.  Dechamus,  24  Tex.  174;  76 
Ara.  Dec.  101;  Steele  v.  EUmaker,  11 
Serg.  &  R.  86;  Millar  v.  Campbell,  3 
A.  K.  Marsh.  526;  Lee  r.  Lee,  19  Mo. 
420;  Davis  v.  Petway,  3  Head,  607; 
75  Am.  Dec.  789;  Miller  v.  Baynard, 
2  Houst.  559;  83  Am.  Dec.  168. 

''  Backenstoss  v.  Stabler,  33  Pa.  St. 
251;  75  Am.  Dec.  592;  Latham  v.  Mor- 
row, 6  B.  Mon.  030;  Tomlinson  v. 
Savage,  6  Ired.  Eq.  430.  See  Mc- 
Dowcil  V.  Simms,  Busb.  Eq.  130;  57 
Am.  Dec.  595,  Vuere  the  setting  aside 
of  the  sale  on  the  ground  of  by-bidding 
was  not  asked  for  a  year  and  a  h..lf 
after  its  discovery. 

»  Backenstoss  v.  Stabler,  33  Pa.  St. 
251;  75  Am.  Dec.  592. 

*  McDowell  r.  Simms,  Busb.  Eq. 
130;  57  Am.  Dec.  595. 

*  Staines  v.  Shore,  10  Pa.  St.  200; 
55  Am.  Dec.  492;  McDowell  v. 
Simms,  Busb.  Eq.  130;  57  Am.  Dec. 
595. 


382 


f>CQ 
OOO 


AUCTIONEERS. 


§  220 


srson    to 
sacrifice 
3re   ficti- 
yed,  will 
quiesced 
itant,"  or 
inns  the 
lere  has 
scind  or 
auction 
7-bidder 
he  land, 
ission  of 
hey  had 
portion 
i,  it  was 
the  ven- 
irchaser 
fraud.^ 
runs  up 

c.  174;   76 

maker,  11 
ampbell,  3 
20,  19  Mo. 
[ead,  6G7; 

Baynard, 
1G8. 

33  Pa.  St. 
iin  t>.  Mor- 
ilinson  v. 

See  Mc- 
[.  130;  57 
ting  aside 
y-bidding 
ad  a  h^lf 

3  Pa.  St. 

usb.    Eq. 

St.  200; 
owell  V. 
\.m.  Dec. 


the  property  at  an  auction,  and  it  is  knocked  down  to 
liim,  may  hold  the  property  against  such  owner.* 

Combinations  and  agreements  between  parties  not  to 
bid  against  each  other  at  a  public  auction  sale  are  illegal.'^ 
Au  agreement  between  two  persons,  who  desire  to  pur- 
chase articles  at  a  sale,  that  they  will  not  bid  against 
each  other,  but  that  one  shall  purchase  them  and  divide 
them,  is  illegal  and  void.'  Where  two  persons  are  bid- 
ding as  agents  for  a  third,  an  agreement  between  them 
that  one  shall  not  bid  does  not  vitiate  the  sale.''  So  an 
agreement  of  several  to  unite  and  bid  for  their  joint 
benefit  is  not  illegal  if  honest.®  So  an  attempt  to  prevent 
bidding  is  not  effectual  unless  successful."  An  associa- 
tion formed  for  the  purpose  of  bidding  at  an  auction  sale 
is  lawful,  and  may  become  the  purchaser,  unless  formed 
for  the  purpose  of  preventing  competition.''     So  Avhere 


'  Troughton  v.  Johnston,  2  Hayw. 
328;  2  Am.  Dec.  C2G. 

''  Jones  V.  Caswell,  3  Johns.  Cas.  29; 
2  Am.  Dec.  134;  Hook  v.  Turner,  22 
Mo.333; Thompson?,'.  Davies,  13 Johns. 
112;  Brisbane  V.  Adams,  3  N.  Y.  130; 
Towlo  V.  Leavitt,  23  N.  H.  360;  55  Am. 
Dec.  195;  Gardiner  v.  Morse,  25  Me. 
149;  Troup  v.  Sherwood,  4  Johns.  Ch. 
228;  Gulick  V  Ward,  ION.  J.  L.  87;  18 
Am.  Dec.  389;  Slingluff  v.  Eckel,  24 
Pa.  St.  472;  Dick  v.  Lindsay,  2  Grant 
Cas.  431;  Loyd  v.  Malone,  23  111.  43; 
74  Am.  Dec.  179;  Hook  v.  Turner, 
22  Miss.  333;  Goodc  v.  Hawkins,  2 
Dev.  Eq.  393;  Dudleys  Little,  2 Ohio, 
504;  15  Am.  Dec.  575;  Hamilton  v. 
Hamilton,2  Rich.  Eq.  355;  46  Am.  Dec. 
58;  Carrington  v.  Caller,  2  Stew.  175; 
Piatt  V.  Oliver,  1  McLean,  295;  and 
cannot  be  ratified:  Wheeler».  Wheeler, 
5  Lans.  355. 

^Doolin  V.  Ward,  6  Johns.  194; 
Wooton  V.  Hiukle,  20  Mo.  290;  Loyd 
V.  Malone,  23  HI.  43;  74  Am.  Dec.  179; 
Wilbur  V.  How,  8  Johns.  444;  Martin 
V.  Ranlett,  5  Rich.  541;  57  Am.  Dec. 
770;  Hawlcy  v.  Cramer,  4  Cow.  718. 

*  AUer       Stephanus,  18  Tex.  658. 

*  James  v.  Fulciod,  5  Tcnn.  512;  55 
Am.  Dec.  743;  Goodo  v.  Hawkns,  2 
Dev.  Eq.  397;  Smull  v.  Joaes,  6  Watts, 


&  S.  122;  Piatt  v.  Oliver,  1  McLean, 
301;  Hunt  v.  Elliott,  SO  Iiid.  253;  41 
Am.  Rep.  794;  Switzer  v.  Skiles,  8  HI. 
529;  44  Am.  Dec.  723. 

«  Haynes  v.  Crutchfield,  7  Ala.  189; 
Buckley  v.  Briggs,  30  Mo.  452. 

'  Smith  V.  Greenlee,  2  Dov.  126;  18 
Am.  Dec.  564;  Kearney  v.  Taylor,  15 
How.  494,  Mr.  Justice  Nelsoii  saying: 
"There  are  some  cases  deriving  their 
principles  from  the  severe  doctrines  of 
Bexwell  v.  Christie,  Cowp.  396,  and 
Howard  v.  Castle,  0  Term  Rep.  642, 
to  be  found  in  books  of  high  authority 
in  this  country,  that  would  carry  us 
the  length  of  avoiding  this  sale,  sim- 
ply on  the  ground  of  this  association 
having  been  formed  for  the  purpose  of 
bidding  otf  the  premises,  for  the  reason 
that  all  such  associations  tend  to  pre- 
vent competition,  and  thereby  to  a 
sacrifice  of  the  property:  3  Johns.  Cas. 
29;  6  Johns.  194;  8  Johns.  444;  13 
Johns.  112;  2  Ham.  505;  10  N.  J.  L. 
87;  2  Kent's  Com.  539;  1  Story's  Eij. 
Jur.,  sec.  293.  I^ater  cases,  however, 
have  qualified  this  docti  ino  by  taking  a 
more  practical  view  of  the  subject  and 
principles  involved,  and  have  placed 
it  upon  ground  more  advantageous  to 
all  persons  interested  in  the  property, 
while  at  the  same  time  affording  all 


220 


PRINCIPAL   AND   AGENT. 


384 


the  intention  of  such  an  agreement  is  to  permit  the  par- 
ties to  obtain  small  quantities  of  the  property  which  thoy 
desire,  the  lot  offered  being  larger  than  any  one  of  them 
desires  or  is  able  to  purchase,  there  is  no  illegality  in  it.* 


proper  protection  against  combinations 
to  prevent  couipetitioa:  2  Dev.  120;  3 
Met.  384;  25  xMo.  140;  2  Tread.  Const. 
821;  3  Ves.  025;  12  Ves.  477;  11  Serg. 
&  R.  80.  It  is  true  that  in  every 
association  formed  to  bid  at  the  sale, 
and  wlio  appoint  one  of  tlieir  number 
to  l)id  in  bi,lialf  of  the  company,  there 
is  an  afjreenient,  express  or  implied, 
that  no  other  member  will  participate 
in  tlic  bidding;  and  hence,  in  one 
sense,  it  may  b'j  said  to  have  the  effect 
to  prevent  competition.  But  it  Ijy  no 
means  neeessardy  follows  that  if  the 
association  had  not  been  formed,  and 
each  member  left  to  bid  on  his  own  ac- 
count, that  the  competition  at  the  .sale 
would  lie  as  strong  and  efficient  as  it 
would  by  reason  of  the  joint  bid  for  tlie 
benefit  and  upon  the  responsibility  of 
all.  The  property  at  stake  might  be  be- 
yond tlie  means  of  the  individual,  or 
might  absorb  more  of  them  than  he 
woulvl  desire  to  invest  in  the  article,  or 
be  of  a  description  that  a  mere  capital- 
ist, without  practical  men  as  associates, 
would  not  wisli  to  encumber  himself 
with.  Much  fif  the  property  of  the 
country  ii  in  the  bands  of  incorporated 
or  joint-stock  companies;  the  business 
in  which  they  are  engaged  being  of  a 
magnitude  requiring  an  outlay  of  capi- 
tal that  can  be  met  only  by  associated 
wealth.  Railroads,  canals,  ship-chan- 
nels, manufacturing  establishments, 
the  erection  of  towns,  and  improve- 
ment of  harbors  are  but  a  few  of  the 
instances  of  private  enterprise  illus- 
trating tlie  truth  of  our  remark.  It  is 
apparent  that  if,  for  any  cause,  any 
one  of  these,  or  of  similar  masses  of 
property,  should  be  brought  to  the 
stake,  competition  at  the  sales  could 
be  maintained  only  by  the  bidders 
representing  similar  companies,  or  as- 
sociations of  individuals  <if  competent 
means.  Property  of  tliis  description 
cannot  be  divided,  or  separated  into 
fragments  and  parcels,  so  as  to  bring 
the  sale  within  the  means  of  individual 
bidders.  Ihe  value  consists  in  its  en- 
tirety, and  in  tlie  use  of  it  for  the  pur- 


poses of  its  original  erection;  and  the 
capital  necessary  for  its  successful  en- 
joyment must  be  equal  not  only  to 
purchase  the  structures,  establish- 
ments, or  works,  but  sufficient  to  cm- 
ploy  them  for  the  uses  and  purpoics 
for  which  they  were  originally  de- 
signed. These  observations  are  suffi- 
cient to  show  that  the  doctrine  which 
would  prohibit  associations  of  individ- 
uals to  bid  at  the  legal  public  sales  of 
property,  as  preventing  competition, 
however  specious  in  theory,  is  too 
narrow  and  limited  for  the  practical 
business  of  life,  and  would  oftentimes 
lead  inevitably  to  the  evil  consequences 
it  was  intended  to  avoid.  Instead  of 
encouraging  competition,  it  would  de- 
stroy it.  And  sales,  in  many  instances, 
could  be  efl'ected  only  after  a  sacrilico 
of  the  value,  until  reduced  witiiin  tlio 
reach  of  the  means  of  the  individual 
bidders.  We  nmst,  therefore,  look 
beyond  the  mere  fact  of  an  association 
of  persons  formed  for  the  imrpose  of 
bidding  at  this  sale,  as  it  may  be  not 
only  unobjectionable,  but  oftentimes 
meritorious,  if  not  necessary,  and  ex- 
amine into  the  object  and  purpose  j  of 
it,  and  if,  upon  such  examination,  it  is 
found  that  the  object  ami  purpose 
arc  not  to  prevent  competition,  but 
to  enable,  or  as  an  iuduccmont  to, 
the  persons  composing  it   to  partici- 

Eate  in  the  biddings,  the  Eab',  should 
e  upheld;  otherwise,  if  for  tlie  jmr- 
pose  of  shutting  out  the  competition, 
and  depressing  the  sale,  so  as  to  ob- 
tain the  property  at  a  sacrifice.  Each 
case  nmst  depend  upon  its  own  cir- 
cumstances." 

» Smith  V.  Greenlee,  2  Dcv.  120; 
18  Am.  Dec.  564;  Switzer  i\  Skilcs,  8 
111.  529;  44  Am.  IJec.  723;  Sniull  v. 
Jones,  1  Watts  &  S.  129;  Jenkins  v. 
Frink,  30  Cal.  586;  89  Am.  Dec.  i;'.4; 
National  Bank  v.  Sprague,  20  N.  J. 
Eq.  159;  Phippen  v.  Stickney,  3  Met. 
388,  the  court  saying:  "  It  seems  to  us, 
after  some  consideration  of  this  ques- 
tion, and  an  examination  of  the  ad- 
judged cases  bearing'  upon  it,  that  we 


884 


385 


AUCTIONEERS. 


§  220 


An  agreement  by  a  guardian  or  administrator  to  offer 
the  real  estate  of  his  ward  or  intestate  for  sale  by  auction, 
and  to  sell  it  to  a  person  at  an  agreed  price,  provided  no 
higher  sum  is  bid,  is  not  invalid.'  A  sale  under  process 
of  law,  by  auction,  cannot  be  set  aside  for  mere  inade- 
quacy of  price:  fraud  also  must  be  shown.^  In  an 
action  against  a  married  woman  for  breach  of  a  written 
agreement  for  the  purchase  of  land  sold  to  her  by  auction, 
parol  evidence  that  the  plaintiff  requested  her  to  bid  on 
the  property  as  an  under-biddcr,  and  told  hpr  that  she 
would  not  be  bound  to  take  the  property,  but  might,  if 
her  husband  desired;  and  that  she  did  not  read  the  agree- 


that  wo 


cannot  judicially  declare  that  every 
contract  between  two  or  more  indi- 
viduals, in  which  it  may  be  stipulated 
that  one  is  to  be  the  purchaser  for  the 
joint  benetit  of  himself  and  another, 
and  that  the  other  is  not  to  interfere 
with  his  bidding,  shall,  when  at- 
tempted to  be  enforced  for  the  benefit 
of  the  associates,  be  held  void  as  a 
fraud  upon  the  rights  of  the  vendor, 
and  as  against  public  policy,  njerely 
because  he  who  seeks  to  enforce  the 
contract  may  have  been  thereby  in- 
duced to  abstain  from  1)idding.  Cases 
may  readily  be  imagined,  and  indeed, 
are  of  frequent  occurrence  in  sales  of 
large  magnitude,  where  two  or  more 
persons  do  thus  unite,  and  are  tliereby 
enabled  to  become  purchasers,  when 
neither  of  them  could  otherwise  have 
participated  in  the  bidding.  By  such 
an  association  as  is  just  supposed,  the 
interest  of  tlie  vendor,  as  well  as  that 
of  the  vendees,  would  bo  directly  ad- 
vanced. The  extent  to  which  the 
doctrine  of  invalidating  such  contracts 
can  be  safely  carrietl  would  rather 
seem  to  embrace  within  the  rule  all 
cases  of  fraudulent  acts,  and  all  com- 
binations having  for  their  object  to 
stifle  fair  competition  at  the  biddings, 
with  the  design  of  becoming  the  pur- 
chasers at  a  price  less  than  the  fair 
value  of  the  property.  Beyond  this 
the  application  of  the  principle  con- 
tended for  may  be  found  productive 
of  mischief,  and  an  unwarrantable 
interference  with  the  course  of  business 
Vol..  I.— 25 


in  auction  sales.  Wc  are  therefore  of 
opinion  that  an  agreement  between  A 
and  B,  tiiat  A  will  permit  Bto  become 
the  purchaser  of  certain  property 
about  to  be  offered  at  sale  at  public 
auction,  and  that  A  ahull  participate 
with  B  in  the  benctita  of  the  purchase, 
will  or  will  not  be  fraudulent  as  the 
circumstances  of  the  case  show  inno- 
cence of  intention  or  a  fraudulent  pur- 
pose in  Kiaking  such  agreement;  that 
where  such  arrangement  is  made  for 
the  purpose  and  with  tho  view  of  pre- 
venting fair  competition,  and  by  rea- 
son of  want  of  bidders  to  depress  the 
f)rice  of  the  artirl  oflFered  for  sale  be- 
ow  the  fair  market  value,  it  will  be 
illegal,  and  may  bo  avoided  as  between 
the  parties  as  a  fraud  upon  the  rights 
of  the  vendor.  But,  on  the  other  band, 
if  the  arrangement  is  entered  into  for 
no  such  fraudulent  purpose,  but  for 
the  mutual  convenience  of  tho  parties, 
as  with  the  view  of  enabling  them  to 
become  purchasers,  each  being  de- 
sirous of  purchasing  a  part  of  tho 
property  ofifered  for  sale,  and  not  an 
entire  lot,  or  induced  by  any  other 
reasonable  and  honest  purpose,  such 
agreement  will  be  valid  and  binding. 
'  A  liter  if  the  agreement  is  to  sell 
at  a  fixed  price,  disregarding  other 
bids:  Hunt  v.  Frost,  4  (Ju^h.  54. 

'^  White  V.  Damon,  7  Ves.  Jr.  34; 
Burrowa  v.  Locke,  10  Ves.  Jr.  474; 
Livingston  v.  Byrne,  11  Johns.  55o; 
Den  V.  ZoUcrs,  7  N.  J.  L.  153;  Stock- 
dale  V.  Yougue,  Rice  Eq.  3. 


§221 


PRINCIPAL   AND   AGENT. 


386 


ment  or  know  its  contents  when  she  signed  it,  does  not 
show  any  fraud  practiced  on  third  persons,  or  any  illegal 
contract  between  the  plaintiff  and  defendant,  and  is  ad- 
missible to  control  her  written  agreement.* 

Illustrations.  —  A  parcel  of  land  owned  by  a  company  to 
which  A  and  B  both  belonged  was  sold  at  auction  to  A,  and 
part  of  the  price  was  paid  by  him  to  B,  and  a  bond  and  mort- 
gage given  for  the  remainder.  On  a  bill  filed  by  A,  alleging 
that  the  sale  was  fraudulent,  on  the  ground  that  there  had  been 
under-bidding  on  behalf  of  B,  to  inflate  the  price  of  the  prop- 
erty, held,  that  as  A  was  one  of  the  owners  of  the  land,  there 
could  have  been  no  under-bidding  without  his  own  authority; 
and  that  he  should  have  proved  that  it  was  done  by  a  secret 
contrivance,  without  his  knowledge:  Small  v.  Boudinot,  9  N.  J. 
Eq.  381.  A  party  at  an  auction  sale  of  slaves  was  known  to  in- 
tend purchasing  certain  slaves  who  had  been  for  many  years  in 
his  family,  and  to  whom  he  had  supposed  he  had  a  good  title, 
at  any  price,  and  a  by-bidder  was  employed,  by  reason  of  which 
the  plaintiff  bought  the  slaves  at  an  enormous  price.  Held,  that 
the  plaintiff  was  entitled  to  relief  against  such  illegal  by-bid- 
ding, and  that  he  should  have  the  slaves  at  a  fair  price,  to  be 
determined  by  commissioners:  Hinde  v.  Pendleton,  Wythe, 
144.  Where  an  auctioneer  used  fraud  to  enhance  the  price  of 
property  sold  at  auction,  held,  that  in  an  equity  suit  by  the  pur- 
chaser for  relief  against  the  sale,  it  was  not  necessary  to  make 
the  auctioneer  a  party:  Veazie  v.  Williams,  8  How.  134.  A 
piece  of  land  was  advctised  for  sale.  Two  adjoining  land- 
owners were  desirous  of  purchasing  it;  they  agreed  that  one 
alone  should  attend  the  sale,  and  purchase,  if  it  should  be  sold, 
for  a  sum  not  exceeding  a  sum  named.  If  the  land  was  pur- 
chased, terms  were  arranged,  and  it  was  to  be  divided  between 
them.  Held,  that  the  agreement  between  the  purchasers  was 
not  contrary  to  equity,  and  that  it  did  not  vitiate  the  contract: 
Jn  re  Carew,  26  Beav.  187;  28  L.  J.  Ch.  218;  Gallon  v.  Emuss, 
8  Jur.  507;  13  L.  J.  Ch.  388. 


§  221.  The  Auctioneer's  Cor  pensation. — The  general 
rules  as  to  the  compensation  o^  agents'*  apply  to  the  com- 
pensation of  the  auctioneer;  e.  g.,  that  the  amount  of  his 
compensation  is  fixed  in  a  particular  case  by  what  o  hers 
in  the  busines3  doing  the  same  work  are  accustomed  to 


>  Faucett  v.  Currier,  109  Masa.  79. 


'  See  Part  L,  Agency. 


386 


387 


AUCTIONEERS. 


221 


receive;^  that  ho  is  entitled  to  be  reimbursed  his  expenses 
and  disbursements/  and  such  damages  as  he  has  sustained 
in  executing  his  commission;'  that  he  is  not  entitled  to 
compensation  where  he  has  been  guilty  of  negligence  or 
fraud.'*  The  rule  is  well  established  that  where  an  auc- 
tioneer intrusted  with  the  sale  of  an  estate  is  the  causa 
causans  of  the  sale  (as  by  advertising  and  putting  up  the 
estate  for  sale  by  auction,  which  the  purchaser  afterward 
attended),  he  is  entitled  to  his  commission,  even  though 
before  the  actual  sale  the  vendor  withdrew  the  property 
from  sale  by  him.^  Where  the  conditions  of  an  auction 
sale  expressly  stipulate  that  an  auctioneer's  fees  of  a 
special  sum  shall  be  paid  to  the  auctioneer  on  the  day  of 
sale,  he  may  sue  the  purchaser  in  his  own  name  to  re- 
cover such  sum;  but  his  right  to  recover  will  depend  on 
the  validity  of  the  contract  to  purchase  as  between  buyer 
and  seller.**  One  representing  himself  to  be  the  owner  of 
real  estate,  who  employs  an  auctioneer  to  sell  the  same 
under  an  agreement  that  in  event  of  a  sale  the  auctioneer 
shall  receive  for  his  services  a  percentage  on  the  amount 
bid,  cannot,  after  a  sale  by  the  auctioneer,  avoid  paying 
him  for  his  services  because  the  purchaser  refuses  to  take 
the  property,  owing  to  a  real  or  alleged  defect  in  the  title.'^ 
Where  he  sells  a  number  of  lots  for  one  owner  severally, 
ho  is  entitled  to  a  distinct  commission  upon  each  sale.® 
Under  the  New  York  statute  prohibiting  an  auctioneer 
from  demanding  more  than  two  and  one  half  per  cent 
commission  '•  unless  by  a  previous  agreement  in  writing 
between  him  and  the  owner,"  the  agreement  is  sufficient 


*  See  Part  I. ,  Agency. 

^IJ.;   Robin;  on   v.  Green,  3  Met. 
15?. 
'  1(1. ;  Russell  v.  Miner,  5  Lans.  537. 

*  Id.  If  an  auctioneer  employed  to 
sell  an  estate  is  guilty  of  negligence, 
wliereby  the  sale  becomes  nugatory, 
he  is  not  entitled  to  recover  any  com- 
pensation for  his  services  from  the 
vendor:  Denew  v.  DavercU,  3  Camp. 
451. 


*  Green  v.  Bartlett,  14  Com.  B.,  N. 
S.,  681;  32  L.  J.  Com.  P.  2G1;  11 
Week.  Rep.  834;  8  L.  J.,  N.  S.,  50.3. 

fi  Johnson  v.  Buck,  35  N.  J.  L.  3.38; 
10  Am.  Rep.  243. 
'  Middleton  v.  Findla,  25  C.il.  76. 

*  Wells  V.  Day,  124  Mass.  38.  Un- 
less, of  course,  ho  contracted  with  the 
owner  for  an  entire  sum  for  the  whole 
service:  Robinsoa  v.  Green,  3  !Met. 
169. 


§221 


PRINCIPAL  AND   AGENT. 


388 


if  signed  by  the  owner,  though  not  signed  by  the  auction- 
eer/ The  statute  of  New  York  which  fixes  the  amount 
of  an  auctioneer's  fees,  in  the  absence  of  an  agreement  in 
writing,  refers  only  to  his  services  as  auctioneer.  He  is 
entitled,  in  addition,  to  his  disbursements  and  expenses, 
and  reasonable  compensation  for  extraordinary  services 
beyond  the  mere  selling  in  public  to  the  highest  bidder.- 
He  is  not  entitled  to  commissions  on  a  bid  not  complied 
with,'  nor  has  he  a  right  to  charge  a  fee  for  an  adjourn- 
ment of  a  sale;*  nor  can  he  recover  commissions  on  sales 
made  where  he  has  no  license  to  sell.* 

':  LUSTRATIONS.  —  A  leaso  of  real  estate  for  fifteen  years  was 
c  Ic  'iy  auction.  The  written  terms  of  the  lease  were  "the 
.:.,of  ;c  will  pay  the  auctioneer  his  fee  of  $10  per  year,  being 
$150  in  cash,  this  day."  At  the  foot  of  these  terms  Avas  a  writ- 
Incr  signirl  by  the  purchaser  at  the  time  of  the  sale,  stating  that 
he  iicid  loured  iho  real  estate  at  a  certain  sum  per  annum,  and 
agreed  to  cotuply  with  the  above  terms.  The  lease  was  made 
and  accepted  by  the  purchaser.  Held,  that  the  auctioneer 
might  maintain  an  action  in  liis  own  name  for  the  fees:  Muller 
V.  Maxwell,  2  Bosw.  355. 


^  Carpenter  v.  Le  Count,  93  N.  Y. 
562. 

'^  Russell  V.  Miner,  5  Lans.  537;  61 
Barb.  534. 


'  Girardey  v.  Stone,  24  La.  Ann.  286; 
Cochran  v.  Johnson,  2  McCord,  21. 

*  Ward  V.  James,  8  Hun,  526. 

*  Robinson  v.  Green,  3  Met.  159. 


389 


BROKERS   AND   FACTORS. 


§222 


Part  IV.  — BKOKERS   AND   FACTORS. 


§222. 
§  223. 
§224. 
§  225. 
§  22G. 
§227. 
§  228. 
§229. 
§230. 


CHAPTER  XIX. 

BROKERS  AND  FACTORS. 

Different  classes  of  brokers  and  authority. 

What  authority  implied  to  brokers  generally. 

What  authority  not  implied  to  brokers  generally. 

Broker's  authority  a  limited  one  —  His  duties  and  liabilities. 

Broker's  compensation. 

Factors  and  del  credere  agents. 

Authority  implied  to  factor. 

Authority  not  implied  to  factor. 

What  factor  bound  to  do  —  His  duties  and  liabilities. 


§  222.    Different  Classes  of  Brokers  and  Authority.— 

A  broker  is  an  agent  employed  to  make  bargains  and 
contracts  between  other  persons  in  matters  of  trade  or 
commerce.^  The  business  must  relate  to  property  or 
money.  An  agent  who  negotiates  a  personal  contract  for 
work  and  labor  is  not  a  broker.^  A  broker  is  a  mere  ne- 
gotiator between  the  parties;  he  is  not  intrusted  with  the 
possession  of  the  property,  and  is  not  authorized  to  buy  or 
sell  in  his  own  name.*  A  salaried  agent  who  does  not  act 
for  a  fee  or  rate  per  cent  is  not  a  broker.'*  Of  the  differ- 
ent classes  of  brokers  may  be  mentioned,  as  the  most 
frequent,  bill-brokers,  stock-brokers,  ship  and  insurance 
brokers,  pawn-brokers,  real  estate  brokers,  and  brokers 
simply  so  called,  i,  e.,  those  who  negotiate  sales  of  goods 

'  Evans  o:i  Agency,  4;  Story  on 
Agency,  sec.  28.  "A  broker  is  one 
who  makes  a  bargain  for  another  and 
receives  a  commission  for  so  doing,  as, 
for  inatance.  a  stock-broker  ":  Pott  v. 
Turner,  G  Bing.  70G,  per  Tindal,  C.  J.; 
Higgins  V.  Moore,  34  N.  Y.  417.  See 
cases  cited  in  Lawson's  Concordance, 
tit.  Broker;  Portland  v.  O'Neill,  1 
Or.  218;  Holt  v.  Green,  73  Pa.  St.  198; 
13  Am.   Rep.    737.     An   unlicensed 


broker  cannot  recover  compensation 
for  services:  Johnson  v.  Hillings,  103 
Pa.  St.  498;  49  Am.  Rep.  131. 

•■*  Milford  V.  Hughes,  10  Mces.  &  W. 
174.  Lut  see  Scott  v.  Cousins,  L.  R. 
4  Com.  P.  177;  Ex  parte  Cooke,  L.  R. 
4  Ch.  Div.  123. 

=>  Baring  v.  Corrie,  2  Barn.  &  Aid. 
137;  Hinckley  v.  Arey,  27  Me. 
362. 

♦  Portland  v.  O'Neill,  1  Or.  218. 


§  222 


PRINCIPAL   AND   AGENT. 


390 


and  mcrcliandiso  of  different  kinds.  Bill-brokers  pro- 
pose  and  conclude  bargains  between  merchants  and  others 
in  matters  of  bills  and  exchange;  in  other  words,  they 
negotiate  tho  purchase  and  sale  of  negotiable  paper;  also 
called  exchai.'ge  brokers  when  they  deal  in  foreign  bills 
of  exchange;  Insurance  Brokers  are  those  who  effect 
insurance  for  their  employers,  and  act  as  middlc-meu 
between  the  insurer  and  insured;  Merchandise  Brokers 
resemble  factors,  except  that  they  do  not  have  the  posses- 
sion or  control  of  the  goods  as  factors  do;  Pawn-brokers 
are  lenders  of  money  in  small  sums  on  the  security  of 
personal  property  left  with  them  in  pawn  or  pledge,  and 
they  receive  a  higher  rate  of  interest  than  is  usually  al- 
lowed for  the  use  of  money;  Real  Estate  Brokers  are 
those  who  negotiate  between  the  buyer  and  seller  of  real 
property,  cither  finding  a  purchaser  for  one  desirous  to  sell, 
or  vice  versa;  they  also  manage  estates,  lease  or  let  property, 
collect  rents,  and  negotiate  loans  on  bond  and  mortgage; 
Ship-brokers  attend  to  the  freighting  of  ships,  and  to 
their  sale  and  transfer;  Stock-brokers  are  those  whose 
business  it  is  to  purchase  or  sell,  on  their  client's  order 
or  request,  the  shares  of  stock  of  railroad  companies  and 
other  corporations,  and  the  bonds  of  such  companies,  or 
of  governments,  either  national,  state,  or  municipal. 
They  use  their  own  money  (except  that  a  "margin"  or 
percentage  of  the  price  is  required  from  the  purchaser  to 
secure  the  broker  against  loss  by  sudden  fluctuation  of 
the  market),  and  buy  in  their  own  names,  in  which  re- 
spect they  differ  from  other  classes  of  brokers. 

A  bill-broker  cannot  be  held  liable  for  bills  sold  by  him 
which  turn  out  to  be  worthless;*  he  is  not  answerable  either 
for  the  insolvency  of  a  purchaser.^    Being  intrusted  with 


^  Buddecke    v.   Alexander,   20  La.  real  estate,  for  loss  of  a  loan  negotiated 

Ann.  503.  by  the  broker  upon  a  mortgage  wliich 

^  Buddecko    v.    Alexander,   20  La.  proved  inauflScient  security  in  conse- 

Ann.  5(33.     In  an  Illinois  case  a  loan-  quenne  of  prior  encumbrances:  Sliip- 

broker  was  held  liable  to  a  lender  ou  herd  v.  Field,  70  111.  438. 


390 


391 


BROKERS   AND   FACTORS. 


§222 


the  possession  of  the  bills,  ho  may  receive  payment  of 
the  purchase-money.*  But  a  bill-broker  who  sells  a  note 
without  disclosing  his  principal,  which  turns  out  to  bo 
forged,  is  liable  for  the  sum  paid  by  the  purchaser,  even 
though  he  has  paid  it  over  to  his  principal."  A  bill- 
broker  is  not  a  person  known  to  the  law  with  certain  du- 
ties, but  his  employment  is  one  which  depends  entirely 
upon  the  course  of  dealing;  his  duties  may  vary  in  differ- 
ent parts  of  the  country,  and  their  extent  is  a  question  of 
fact  to  be  determined  by  the  usage  and  course  of  dealing  in 
the  particular  place.^  Note-brokers  are  liable  as  principals 
to  persons  dealing  with  them,  and  knowing  them  to  bo 
engaged  in  such  agency,  where  it  does  not  otherwise  ap- 
pear that  they  are  acting  as  agents,  or  if  they  aro,  that 
they  disclosed  the  name  of  their  principal,  or  that  credit 
was  given  to  the  principal.*  An  insurance  broker  has 
authority  to  adjust  losses,  and  to  receive  payment  of 
them;^  to  abandon  in  case  of  a  loss;*  to  arbitrate  a  dis- 
puted loss;"  to  make  the  contract  of  insurance  in  his  own 
name  and  sue  upon  it.®     But  an  insurance  broker,  em- 


^  Lentilhoa  v.  Vorwerck,  Hill  &  D. 
443. 

^  Morrison  v.  Currie,  4  Duer,  79; 
Canal  Bank  v.  Bank  of  Albany,  1  Hill, 
287;  Boll  v.  CaflFerty,  21  Ind.  411;  Du- 
mout  V.  Williamson,  18  Oliio  St.  515; 
98  Am.  Dec.  ISo;  seo  noto  i:i  53  Am. 
Dec.  COG;  Merriam  v.  Walcott,  3 
Allen,  258,  S3  Am.  Dec.  G9,  where  it  is 
said:  "  Tho  first  question  presented  by 
tliij  caso  is,  whether  a  person  who  pur- 
chases a  note  of  a  broker  for  cash,  and 
takes  the  noto  by  delivery,  can  re- 
cover back  tho  money  paid,  if  the 
maker's  signature  turns  out  to  be 
forged.  The  text-books  stiite  the  law 
to  be,  that  he  can  recover  it  back  on 
the  ground  of  an  implied  warranty 
that  the  note  is  in  reality  what  it  pur- 
ports to  be;  Bay  ley  on  Bills,  148; 
C'hitty  on  Bills,  10th  Am.  ed.,  245. 
The  English  cases  are  referred  to  in 
these  treatises.  The  recent  case  of 
Gurney  v.  Womersley,  4  El.  &  B.  132, 
asserts  the  same  doctrine.  It  has  been 
repeatedly  so  held  in  New  York: 
Markle  v.  Hatfield,  2  Johns.  455;  3 


Am.  Dec.  44G;  Herrick  v.  Whitney, 
15  Johns.  240;  Shaver  v.  Elilo,  16 
Johns.  201 ;  Murray  v.  Judah.  G  Cow. 
484;  Canal  Bank  v.  Bank  of  Albany, 
1  Hill,  287.  It  is  so  hold  in  llhodo 
lisland:  Aldrich  v.  Jackson,  5  R.  I. 
218;  also  in  Vermont:  Thrall  v.  New- 
ell, 19  Vt.  202;  47  Am.  Dec.  C82."  As 
to  the  rights,  duties,  and  lialjilitiesof  a 
bill-broker,  in  cases  dopciiding  upon 
particular  facts,  see  Arnold  r.  Clark, 
1  Sand.  491;  Clark  v.  Merchants' 
Bank,  I  Sand.  498. 

*  Foster  v.  Pearson,  1  Cromp.  M.  & 
R.  849;  5  Tyrw.  255. 

*  Thompson  v.  McCuUough,  31  Mo. 
224;  77  Am.  Dec.  644. 

^  Richardson  v.  Anderson,  1  Camp. 
43;  note  Bousfield  v.  Cresswcll,  2 
Camp.  545. 

"  Chesapeake  Ins.  Co.  v.  Stark,  6 
Cranch,  2G8. 

'  Goodson  V.  Brooke,  4  Camp.  163. 

^  Baring  v,  Corrie,  2  Barn.  &  Aid. 
137;  Rogers  v.  Traders'  Ins.  Co.,  6 
Paige,  583.  See  Freeman  v.  Fulton 
Ins.  Co.,  14  Abb.  Pr.  398. 


§  222 


PRINCIPAL    AND    AGENT. 


392 


ployed  by  the  insurer,  lias  no  authority  to  pay  losses  to 
the  insured  on  behalf  of  the  insurer,'  A  real  estate  bro'ier 
has  ordinarily  power  only  to  find  a  purchaser  or  negotiate 
a  purchase,  and  not  to  sign  a  contract.^  But  he  may  bo 
given  power  by  parol  to  make  a  contract  within  the  stat- 
ute of  frauds,"  but  not  a  deed.*  His  agency  ceases  when 
the  transaction  is  concluded.''  A  stock-broker  who  pur- 
chases stock  on  an  order  from  a  customer  must  hold  it  a 
reasonable  time,  and  not  sell  without  notice  to  him;"  he 
is  entitled  to  recover  from  his  customer  what  ho  has 
paid,'  but  he  has  no  right  to  buy  in  stock  to  cover  a  sale.* 
A  stock-broker,  a  member  of  an  exchange,  is  authorized 
to  purchase  according  to  the  usages  of  the  board."  The 
engagement  of  a  stock-broker,  under  an  agreement  with  a 
customer  to  buy  and  carry  stock,  is  not  to  procure  and 
furnish  stock  when  required,  but  to  purchase  and  hold  the 
number  of  shares  ordered,  subject  to  the  payment  of  the 
purchase  price.'"  A  broker  who  disposes  of  bank  stock 
for  another  is  the  agent  of  both  the  owner  and  the 
purchaser."  Stock-brokers  cannot  revoke  their  general 
agreement  to  buy,  hold,  and  sell  stocks  for  a  commission 
without  notice,  and  if  they  do  so  revoke,  they  arc  liable 
for  damages  sustained  by  their  employers  by  reason  of 
such  revocation.''  Where  a  speculator  in  stocks  is  in  debt 
to  his  broker  for  advances,  and  is  in  poor  credit,  the 


»  Bell  V.  AuWjo,  4  Doug.  48. 

*  Rutenherg  v.  Main,  47  Cal.  213; 
Rowc  r.  Stevens,  35  N.  Y.  Sup.  Ct. 
189;  (jlcntworth  v.  Luther,  21  Barb. 
145;  Duffy  v.  Ilobson,  40  Cal.  240;  G 
Am.  Kijp.  017;  Ryon  v.  McGee,  2 
Mack'jy,  17. 

^  Rutcnberg  v.  Main,  47  Cal.  213; 
Prinfijlo  ?>.  Spaulding,  53  Barb.  21. 

*  Blood  V.  Goodrich,  12  Wend.  525; 
27  Am.  Dec.  152. 

*  Wiilkcr  V.  Derby,  5  Biss.  134. 

0  Roscnatock  v.  Tormey,  32  Md.  169; 
3  Am.  Rop.  125;  Markham  v.  Jaudon, 
41  N.  Y.  235;  Cameron  v.  Durkheim, 
55  N.  Y.  425;  Baker  v.  Drake,  66  N.  Y. 
618;  23  Am.  Rop.  80. 

'  Duraut  v.  Burt,  98  Mass.  161. 


8  White  V.  Smith,  54  N.  Y.  522.  As 
to  the  dutiej  of  a  stock-broker,  when 
ho  ia  entitled  to  hia  commissions,  and 
the  rights  of  his  employer  as  to  notice, 
see  Durant  v.  Burt,  98  Mass.  101; 
Nourse  ?'.  Prime,  4  Johns.  Ch.  4tX); 
Brass  v.  Worth,  40  Barb.  048;  Sterling 
V.  Jaudon,  48  Barb.  459;  Knowlton  v. 
Fitch,  48  Barb.  593. 

'  Horton  v.  Morgan,  19  N.  Y.  170; 
75  Am.  Dec.  311.  See  note  in  75  Am. 
Dec.  313-316,  as  to  the  rights,  duties, 
and  liabilities  of  stock-brokers. 

10  Taussig  V.  Hart,  58  N.  Y.  425. 

"  Colvin  i\  Williams,  3  Har.  &  J. 
38;  5  Am.  Dec.  417. 

'-  White  V.  Smith,  6  Lans.  5;  54 
N.  Y.  522. 


392 


393 


BROKEKS   AND   FACTORS. 


§  223 


broker  may  refuse  to  obey  an  order  to  sell  and  convert  tho 
proceeds  into  other  stocks  thought  by  him  less  safe,  and, 
oven  though  such  stocks  go  up  afterwards,  the  broker  is 
not  liable  to  his  principal  for  refusing  to  obey  his  order/ 


§  223.    What  Authority  Implied  to  Brokers  Generally. 

—  A  broker  in  general  has  an  implied  authority  to  sign 
the  bought  and  sold  notes  and  bind  both  parties;^  or  to 
sell  by  sample  or  with  warranty,'  if  such  be  the  custom 
as  to  tho  thing  sold;^  to  bind  his  principal  to  any  price  at 
which  he  buys  or  sells;'  to  guarantee  the  payment  of  a 
security  sold;"  to  adjust  a  policy;^  to  pledge  stock  which 
he  has  bought  for  his  principal  with  money  advanced  by 
himself.*  When  a  contract  for  the  purchase  or  sale  of 
shares  has  been  entered  into  between  individuals  through 
their  respective  brokers,  or  with  the  intervention,  as  pur- 
chasers or  sellers,  of  jobbers,  members  of  the  stock  ex- 
change, the  lawful  usages  and  rules  of  the  stock  exchange 
arc  incorporated  into  and  become  part  and  parcel  of  all 
such  contracts,  and  the  rights  and  liabilities  of  individu- 
als, parties  to  any  such  contracts,  are  determined  by  tho 
operation  upon  the  contracts  of  these  rules  and  usages.'' 


*  Jonc3  r.  Gallagher,  3  Utah,  64. 
^Saludin    v.    Mitchell,   45    111.    79; 

Coililingtoa  v.  Goddanl,  10  Gray,  436; 
Partonr.  Crofts,  10  Coin.  B.,  N.  «.,  11. 
A  hioker  who  is  the  agent  of  both 
parties  m  signing  bought  and  sold 
notei  is  iu  all  other  respects  the  agent 
of  tlic  party  wlio  tirst  employed  him: 
Schlesiuger  v.  R.  K  Co.,  13  Mo.  App. 
471. 

^  Andrews  v.  Kneeland,  0  Cow.  354; 
Boorman  v.  Jenkins,  12^  Wend.  506; 
27  Am.  Dec.  158;  Waring  v.  Mason, 
IS  Wend.  425. 

*  Upton  V.  Suffolk  Co.  Mills,  11 
Cush.  58(5;  59  Am.  Dec.  103;  Smith  v. 
Tracy,  30  N.  Y.  79;  Brady  v.  Todd,  9 
Com.  B.,  N.  S.,  592. 

'•  Wilkinson  v.  Churchill,  1 14  Mass. 
184. 

«  Frcvall  v.  Fitch,  5  Whart.  325;  34 
Am.  Dec.  558. 


''  Richardson  v.  Anderson,  1  Camp. 
43;  note  Hartford  Ins.  Co.  v.  Smitli,  3 
Col.  422. 

•*  Wood  V.  Hayes,  15  Gray,  375. 

'  Lawson  on  Usages  and  Customs, 
sec.  144;  Young  r.  Cole,  3  Biiig.  N.  C. 
724;  Child  V.  Morley,  8  Term  Rep. 
010;  Bayliffe  v.  Butterworth,  1  Ex. 
420;  Tavlor  v.  Story,  2  Com.  B.,  N.  S., 
175;  Sutton  v.  Tatham,  10  Ad.  &  E. 
27;  Greaves  v.  Legg,  11  Ex.  042;  2 
Hurl.  &  N.  210;  Evans  <!,  ngency,  c. 
2,  sec.  2;  Robinson  «>.  M'  i'.  tt,  L.  K. 
7  H.  L.  802;  Maxted  v.  Faiiie,  L.  11.  4 
Ex.  210;  Taylor  v.  Stray,  2  Com.  B., 
N.  S.,  175;  Smith  r.  Lindo,  5  Coin.  B., 
N.  S.,  587;  Pidgcon  v.  Bursleni,  3  Ex. 
465;  Rosewarne  v.  Billing,  15  Com. 
B.,  N.  S.,  310;  Jessopp  r.  Lutwyche, 
10  Ex.  014;  Knight  r.  Chambers,  15 
Com.  B.  562;  Beeston  v.  Beeston,  1  L. 
R.  Ex.  Div.  13;  Bowring  v.  Shepherd, 


§224 


PRINCIPAL   AND   AGENT. 


394 


39! 


iLLrsTRATioNS. — B,  a  broker,  advised  A  to  sell  certain  nn- 
reRistcred  l)onds,  and  buy  certain  other  bonds.  A,  in  reply,  by 
letter,  said:  "I  am  most  anxious  to  get  my  money  in  registered 
bonds,"  authorized  B  to  sell  the  boiids  then  held  by  \i  for  him, 
"and  invest  the  amount  in  the  best  paying  and  surest  bonds 
that  you  know  of.  ....  As  these  bonds  arc  all  I  possess,  I  am 
naturally  always  anxious  about  them,  for  the  reason  t'i"t  if  lost 
or  stolen  I  could  recover  nothing.     You  will  please  t  the 

results  of  the  sale  in  tho  I.  bonds  (the  ones  recommoiiued),  or 
any  sure  road.     I  want  registered  bonds,  of  whieli  I  will  have 

no  trouble  in  drawing  tho  interest I  shall  feel  under 

many  obligations  if  you  will  kindly  make  such  sale  and  pur- 
chases of  bonds  as  your  good  sense  dictates."  It  was  agreed 
that  tho  bonds  referred  to  by  I>  were  first-mortgage  bonds.  B 
in  fact  bought  some  first-n)ortgago  and  some  second-mortpage 
bonds,  all  of  which  were  unregistered.  HriJy  that  if  ho  acted 
in  good  faith,  it  was  within  tho  scope  of  tho  authority  conferred 
upon  him  by  tho  letter  of  A:  Matthews  v.  Fuller,  123  Mass.  446. 

§  224.  What  Authority  not  Implied  to  Brokers  Gen- 
erally.— A  broker  has  no  implied  authority  to  buy  and 
sell  in  his  own  name,'  or  on  credit;*  to  recc'  "■■  pay- 
ment," unless  tho  principal  has  clothed  tho  br  with 
tho  possession  or  the  apparent  title  of  the  thin^..  sold;^ 


L.  R.  (i  Q.  B.  309;  Grissell  r.  Bristowe, 
L.  R.  4  Com.  B.  3G;  Coles  v.  Bristowe, 
L.  R.  4  Ch.  3;  Duncan  v.  Hill,  L.  K. 
C  Ex.  255;  L.  R.  8  Ex.  242. 

'Gallup  V.  Letl<!rer,  1  Hun,  282; 
Graham  v.  Duckwall,  8  Bush,  12; 
Saladin  v.  Mitchell,  45  111.  79;  Baring 
V.  Corrie,  2  Barn.  &  Aid.  143. 

■■'  Henderson  v.  Barnewell,  1  Younge 
&  J.  387;  Boorman  v.  Brown,  3  Q.  B. 
511;  Wiltshire  V.  Sims,  1  Camp.  258. 

*  Basse  tt  v.  Lederer,  1  Hun,  274; 
Higgins  V.  Moore,  34  N.  Y.  417; 
Evans  v.  Wain,  71  Pa.  St.  69;  Bar- 
ing V.  Corrie,  2  Barn.  &  Aid.  137; 
Butler  V.  Dorman,  G8  Mo.  298;  30 
Am.  Rep.  795;  Doubleday  v.  Kress, 
50  N.  Y.  410;  10  Am.  Rep.  502;  Sei- 
ple  V.  Irwin,  30  Pa.  St.  513;  Morris 
V.  Rudily,  20  N.  J.  Eq.  236;  Bryce 
V.  Brooks,  26  Wend.  367;  Dunn  v. 
Wright,  51  Barb.  244;  Railroad  Co. 
V.  Roberts,  4  Phila.  110;  Graham  v. 
Duckwall,  8  Bush,  12;  Parsons  v.  Mar- 
tin, 1 1  Gray,  111;  Deane  v.  luternat. 
Title  Co.,  47  Hun,  319. 


*  Clarke  r.  Meigs,  10  Bosw.  Srj; 
Bassett  r.  Lederer,  1  Hun,  274;  Lsn- 
tilhon??.  Vowerck,  Hill  &  D.  443;  Mc- 
Neil V.  Tenth  Nat.  Bank,  46  N.  Y. 
325,  where  it  la  said:  "  Tlic  true  point 
of  inquiry  in  this  case  is,  whether  the 
plaintiflf  did  confer  upon  his  brokers 
such  an  apparent  title  to  or  power  cf 
disposition  over  tho  shares  in  question 
as  will  thus  estop  him  from  asserting 
his  own  title,  as  against  parties  who 
took  bona  Jlde  through  tho  brokers. 
Simply  intrusting  the  possession  of  a 
chattel  to  another,  as  depositary, 
pledgee,  or  other  bailee,  or  even  un- 
der a  conditional  executory  contract  of 
sale,  is  clearly  insufficient  to  preclude 
the  real  owner  from  roclaiming  his 
property,  in  case  of  an  unauthorized 
disposition  of  it  by  tlie  person  so  in- 
trusted: Billiard  v.  Burgett,  40  N.  Y. 
314.  '  The  mere  possession  of  chattels, 
by  whatever  means  acquired,  if  (licre 
be  no  other  evidence  of  properti/,  or  au- 
tJiority  to  wU,  from  the  true  owner,  will 
not  enable  the   possessor  to  give  a 


395 


BROKrns    AND    FACTORS. 


§221 


to  tlclofjatc  hid  authority;'  to  rescind  tho  snlo;'  to  submit 
disputes  to  arbitration;'^  to  act  lor  both  parlies/  except  to 
sign  a  contract  within  tho  statute  of  frauds;*  to  sell  to 
himself."  A  broker  who  has  bouglit  stock  for  another 
with  money  advanced  by  himself,  and  holds  it  in  his 
own  name,  may,  so  long  as  ho  has  not  been  paid  or  ten- 
dered the  amount  of  hU  a<lvanccs,  pledge  it  as  a  security 
for  his  own  debt  to  a  third  person,  without  making  him- 
self liable  to  an  action  by  his  employer.'  The  order  of  a 
customer  to  a  broker  in  ijuy  stock  "on  a  sixty-days'  buy- 
er's option"  does  not  authorize  the  broker  to  buy  tho 
stock  himself,  and  hold  it  on  his  customer's  accovint  fur 
sixty  days.**  An  authority  to  a  broker  to  buy  and  load 
upon  a  vessel  a  cargo  of  produce  does  not,  by  implica- 
tion, and  in  the  absence  of  any  sufficient  custom,  give  to 
tho  agent  the  power  to  borrow,  upon  tho  credit  of  tho 
principal,  the  money  with  which  to  make  the  purchase." 
Evidence  that  a  parcel  of  land  has  doubled  in  value  from 
May  1,  1871,  to  May  1,  1872,  has  no  tendency  to  prove 
that  a  broker  was  not,  in  October,  1871,  given  autbority 
under  which  ho  could,  on  May  20,  1872,  sell  the  land 
for  tho  smaller  value.'"     If  a  broker  contracts,  under  the 


good  titlo':  Per  Denio,  J.,  in  Covill 
V.  Hill,  4  Dciiio,  323.  But  if  tho 
owner  intrasts  to  another  not  meruly 
tho  possession  of  tho  property,  1)ut 
also  written  evidence,  over  hia  own 
signature,  of  title  thereto,  and  of  an 
unconditional  power  of  disposition 
over  it,  the  case  is  vastly  different. 
There  can  bo  no  occasion  for  the  de- 
livery of  such  documents,  unless  it  is 
intended  that  they  shall  lie  \ised, 
either  at  tiio  pleasure  of  depositary, 
or  under  contingencies  to  arije.  If 
the  conditions  upon  which  this  appar- 
rent  right  of  control  is  to  be  exercised 
are  not  expressed  on  the  face  of  the 
instrument,  but  remain  in  conlldence 
b'itween  the  owner  and  the  deposi- 
tary, the  case  cannot  be  distinguished 
in  principle  from  that  of  an  agent  who 


'  iSeo  niitp.  Chapter  VI.,  Delegation 
of  Authority;  Hfiidorsion  r.  liuinvall, 
1  Youngo  &  J.  357;  Locke's  Appeal,  72 
Pa.  St.  4'.)1;  i:)  All.  Hep.  71(1;  Cock- 
ran  r.  Irlani,  2  Maulo  &  S.  301. 

;;  8aladin  v.  Mitclicll,  45  111.  79. 

•*  Ingruham  v.  VVliitmore,  75  111. 
24. 

*  See  post  ai  to  broker's  compensa- 
tion. 

"Evans  r.  \Ya\n,  71  Pa.  St.  GO; 
Hincldoy  v.  Arcy,  27  Me.  302;  Cod- 
dingto'i  V.  Goddard,  JO  Cray,  412. 

« Tower  v.  O'Neil,  Gii  Pa.  St.  3.')2; 
Solonion'j  V.  Peudur,  .34  L.  J.,  N.  S., 
95. 

'  Woo  1  V.  Hayes,  15  Gray,  .375. 

^  Pickering  v.  Demerritt,  100  Mass. 
410. 

"  Bank  of  tho  State  v.  Bugbec,  1 


receives  secret  instructions  qualifying    Abl).  App.  SO. 

or  restricting  an  apparently  absolute        '>*  Wilkinsoa  v.  Clmrchill,  114  Mags. 

power."  184. 


§225 


PRINCIPAL    AND   AGENT. 


39G 


rules  of  the  board  of  trade,  for  future  deliveries  of  pork 
and  lard  for  his  principal,  and  then  cancels  the  contract 
without  authority,  he  cannot  retain  the  margins  ad- 
vanced.* A  broker  cannot  sell  ou(  cotton  before  the  ma- 
turity of  his  principal's  contract,  merely  because  the  latter 
does  not  comply  with  a  demand  for  more  margin,  and  re- 
cover from  the  principal  for  the  loss  sustained  by  the 
sale;  at  least,  in  the  absence  of  proof  of  knowledge  on  the 
principal's  part  of  a  custom  so  authorizing.^ 

Illustrations. — A  broker  makes  a  contract  for  A  to  sell  and 
deliver  to  B  a  certain  quantity  of  wheat,  at  any  time,  during  a 
year  named,  which  A  may  select,  at  a  fixed  price,  and  agrees 
that  if,  by  a  rise  in  the  price  of  wheat,  more  margin  shall  be 
required,  he  will  not  sell  the  wheat,  but  will  draw  upon  A  for 
such  an  amount  as  is  necessary  to  carry  the  wheat.  Ilcld,  that 
the  broker  has  no  right  to  close  the  contract  without  drawing 
upon  A,  although  A  at  the  time  is  out  of  the  statc^  and  has 
made  no  provision  for  the  payment  of  the  draft,  of  which  fact 
the  broker  has  knowledge:  Foofe  v.  Smith,  1?  >  Mass.  92. 

§  225.  Broker's  Authority  a  Limited  One — His  Duties 
and  Liabilities.  —  A  broker,  from  the  very  nature  of  his 
employment,  has  only  a  limited  authority.  When  he  ap- 
plies to  a  vendor  to  negotiate  a  sale,  he  is  not  his  agent. 
He  does  not  become  so  until  the  vendor  enters  into  the 
afrreement  of  sale.  It  is  from  this  agreement  that  ho  de- 
rives his  authority,  and  it  must  necessarily  bo  limited  by 
its  terms  and  conditions.  He  is  then  the  special  agent  of 
the  vendor  to  act  in  conformity  with  the  contract  to 
which  his  principal  has  agreed,  but  no  further,  and  he 
cannot  be  regarded  as  his  agent,  unless  he  complies  with 
the  terms  of  his  special  authority  as  derived  from  the 
contract.  In  short,  a  broker  is  authorized  to  sign  only 
that  contract  into  which  the  vendor  has  entered,  not  an- 
other and  different  contract.  If  he  omits  to  include  in 
the  memorandum  special  exceptions  and  conditions  to 

*  Higgina  v.  McCrea,  23  Fed.  Rep.        '  Blakemore   v.   Heymaa,   23  Fed. 
782.  Rep.  643. 


39G 

of  pork 
contract 
gins  ad- 
'■  the  ma- 
:he  latter 
,  and  re- 
1  by  the 
e  on  the 


»  sell  and 
during  a 
id  agrees 
shall  be 
ion  A  for 
Md,  that 
drawing 
and  has 
lich  fact 
12. 

i  Duties 

5  of  his 
I  he  ap- 
i  agent, 
nto  the 
t  ho  de- 
ited  by 
,gO)it  of 
ract  to 
md  lie 
es  with 
)m   the 
n  only 
lot  an- 
lude  in 
ons  to 

23  Fed. 


out 


BROKERS   AND   FACTORS. 


§  225 


the  bargain,  he  signs  a  contract  which  ho  has  no  author- 
ity  to  make,  and  the  party  relying  upon  it  must  fail,  be- 
cause it  is  shown  that  the  broker  was  not  the  agent  of 
the  vendor  to  make  the  contract.'  The  principal  may 
give  the  agent  a  more  extensive  power  than  that  of  a 
mere  broker,  and  if  he  does,  his  acts  will  be  enforced  by 
the  court.*^  He  must  obey  his  principal's  orders.^  If  the 
orders  are  ambiguous,  he  may  adopt  that  construction 
which  he  bona  fide  believes  to  be  the  correct  one.*  It  is  the 
duty  of  the  broker  to  keep  accounts  of  his  dealings  with 
his  principal.^  A  broker  is  a  mere  "  go-between,"  and  is 
not  liable  for  a  premium  of  insurance,  unless  ho  acts  un- 
der a  del  credere  commission."  A  contract  for  the  pur- 
hase  of  stocks  to  be  delivered  within  a  specified  time, 
made  by  a  broker  in  pursuance  of  an  order  of  a  customer 
who  deposits  with  the  broker  a  part  of  the  price  of  the 
stocks  as  a  "margin,"  and  who  is  to  pay  or  receive  any 
difference  between  the  contract  price  and  the  market 
price  of  the  stocks  on  the  day  the  contract  matures,  if 
closed  by  the  broker,  is  not  illegal.^  When  a  stock-broker 
fills  an  order  for  the  purchase  of  stocks,  and  his  principal 
makes  default,  and  he  thereupon  resells  the  stocks  at  a 
loss,  it  is  necessary  for  him,  in  order  that  he  may  recover 
the  amount  of  such  loss  from  his  principal,  to  show  that 
the  stock  was  actually  purchased  by  himself,  or  by  an 
agent  under  his  direction,  at  its  fair  market  price,  on  the 
day  of  purchase,  and  that  he  actually  paid  the  purchase- 
money  therefor;  that  he  notified  his  principal  of  the  pur- 
chase, and  requested  him  to  receive  the  stock  and  pay  the 


'  Bir;elow,  C.  J.,  in  Coddington  v. 
Ooddard,  IGGray,  430. 

''  Ruteiiherg  v.  Main,  47  Cal.  213. 

'Neshitt  V.  Helser,  49  Mo.  383; 
Clark  V.  Ctiinming,  77  Ga.  64;  4  Am. 
St.  Rep.  72.  A  broker  purchasing 
grain  for  future  delivery  in  his  own 
name,  for  a  customer,  is  bound  to  obey 
ttie  latter's  orders  to  sell,  or  to  termi- 
nate the  agency  by  transferring  the 


contract:  Cothram  v.  Ellis,  107  III. 
413. 

*  Ireland  v.  Livingston,  L.  R.  5  H. 
L.  Cas.  395;  Bessent  v.  Harris,  63 
N.  C.  542. 

^  Clark  V.  Moody,  17  Mass.  145; 
Haas  V.  Damon,  9  Iowa,  589. 

"Touro  V.  Cassin,  1  Nott  &  McC. 
173;  9  Am.  Dec.  680. 

^  Jonea  v.  Ames,  135  Mass.  431. 


§225 


PRINCIPAL    AND   AGENT. 


398 


price  paid  for  it  with  reasonable  commissions;  that  at 
the  time  of  this  notice,  he  was  in  condition  to  deliver  the 
stock,  by  having  the  stock  or  other  proper  indicia  of  title 
actually  in  hand,  or  in  the  hands  of  his  agent;  that,  on 
the  failure  of  the  principal  to  receive  the  stock,  he,  after  a 
reasonable  time,  and  notice  to  that  effect  to  the  principal, 
directed  it  to  be  sold;  and  that  it  was  s.ld  by  his  agent, 
either  at  public  sale  in  market  overt,  or  at  a  sale  publicly 
and  fairly  made  at  the  stock  exchange  or  a  stock  board,  or 
a  boa:  d  of  brokers  where  such  stocks  are  usually  sold,  at 
a  fair  market  value,  on  the  day  of  sale.^ 

Illustrations. — A  manufacturer  m  the  interior  of  Massa- 
chusetts gave  an  order  to  brokers  in  Boston:  "Send  me  twenty- 
five  bags  saltpeter  at  your  earliest  convenience."  The  order 
could  not  be  filled  in  Boston  at  that  time,  and  the  brokers 
bought  the  saltpeter  in  New  York,  directing  it  to  be  delivered 
there  to  a  common  carrier  for  transportation,  consigned  to  them- 
selves to  a  town  near  the  factory,  and  advised  their  employer 
of  what  they  had  done  by  a  letter,  to  which  he  made  no  reply. 
They  had  bought  like  merchandise  for  hini  before  on  similar 
orders,  but  always  in  Boston,  and  had  forwarded  it  to  him  from 
Boston.  But  the  merchant  from  whom  they  bought  the  saltpeter 
had  no  knowledge  of  this  course  of  dealing.  He  delivered  it  to 
the  carrier  as  he  was  directed,  and  it  was  lost  in  course  of  trans- 
portation. On  being  advised  of  the  loss,  the  manufacturer  de- 
nied the  brokers'  authority  to  make  the  purchase  in  New  York. 
Held,  that  the  merchant  might  recover  from  the  manufacturer 
the  price  of  the  saltpeter;  Foster  v.  Rockwell,  104  Mass.  167. 
During  the  war  of  18G1-1865,  the  plaintiff  requested  a  broker, 
who  had  funds  in  his  hands  belonging  to  plaintiff,  to  invest  in 
certain  bonds.  A  small  amount  was  invested,  when  the  bonds 
began  to  advance  in  price  with  great  rapidity,  and  the  broker 
Hid  not  invest  the  balance.  He  wrote  to  the  plaintiff  frequently, 
asking  instructions,  but  received  no  reply.  The  money,  which 
was  confederate  treasury  notes,  remained  in  the  broker's  hands 
until,  at  the  close  of  the  war,  it  became  worthless.  Held,  that 
he  was  not  liable  to  plaintiff  for  the  loss:  Bernard  v.  Manry,  20 
Graft.  434.  A  employed  a  broker  to  purchase  certain  shares  of 
stock  upon  a  margin,  and  to  carry  them  for  him.  The  broker 
reported  that  he  had  made  the  purchase.  On  a  decline  in  value, 
A  instructed  the  broker  to  sell  the  shares;  the  broker  afterwards 

^  Roseostock  v.  Toriney,  32  Md.  1G9;  3  Am.  B«p.  125. 


399 


BROKERS   AND   FACTORS. 


§  226 


reported  that  he  had  done  so,  and  A  paid  him  the  difference 
between  the  purchase  price  and  the  sale  price,  together  with 
interest  and  commissions.  Held,  that  if  no  purchase  or  sale 
was  in  fact  made,  and  the  broker  simply  assumed  the  contract 
himself,  A  was  entitled  to  recover  from  the  broker  the  money 
paid  him,  unless  he  made  the  payment  with  knowledge  of  the 
facts:  Todd  v.  Bishop,  136  Mass.  386.  The  owner  of  land  cm- 
ploys  a  broker  to  sell  it,  and  the  broker  employs  an  agent  in  the 
place  where  the  land  is,  and  the  broker  honestly  believes  an  offer 
made  by  the  agent  to  be  a  good  one,  and  so  states  to  the  owner, 
who  accepts  the  offer  in  reliance  on  what  is  told  him.  Held, 
that  the  broker  is  not  liable  if  the  offer  turns  out  to  be  a  poor 
one,  he  having  used  reaeonable  care  in  the  matter:  Barnard  v. 
Coffin,  138  Mass.  37. 

§  226.  Broker's  Compensation. — A  broker's  compen- 
sation in  a  particular  case  is  ascertained  by  the  amount 
usually  paid  brokers  for  such  services.^  To  entitle  the 
broker  to  his  commission  on  the  sale  of  property,  he  must 
show  an  employment.''  A  real  estate  broker  cannot  claim 
compensation  for  introducing  vendor  and  vendee,  unless 
his  character  was  known  at  the  time."  He  is  not  entitled 
to  his  commission  for  the  purchase  of  an  estate  until  a 
contract  for  the  purchase,  binding  upon  all  parties,  is 
executed,  or  until  the  title  is  actually  transferred.*  If  he 
undertakes  to  find  a  purchaser  for  some  town  lots  within 
a  "short  time,"  he  becomes  entitled  to  commissions  if  he 
finds  a  purchaser  in  two  weeks,  although  during  the  time 
the  price  enhances,  the  broker  not  having  been  notified 
by  his  principal  of  a  withdrawal  or  of  a  change  of  terras.' 


'  Ruckmau  v.  Bergholz,  38  N.  J.  L. 
531;  Sinclair  v.  Galland,  8  Daly,  608; 
Glenn  v.  Salter,  50  Ga.  170. 

^  Sussdorf  V.  Schmidt,  55  N.  Y.  320; 
Pierce  v.  Thomas,  't  E.  D.  Smith,  354; 
Goodspeed  v.  Robinson,  1  Hilt.  423; 
Keys  ,.  Juiinsun,  68  Pa.  St.  42;  Har- 
per V.  Goodall,  10  Abb.  N.  C.  161;  62 
How.  Pr.  288;  Twelfth  Street  Market 
Co.  V.  Jackson,  102  Pa.  St.  269;  Earp 
f.  Cummins,  54  Pa.  St.  394;  93  Am. 
Dec.  718;  Jarvisw.  Schaefer,  105  N.  Y. 
289.  Leaving  with  the  broker  a  de- 
scription of  the  property,  with  a  re- 
quest to  sell  OQ  certain  terms,  ia  » 


sufficient  contract  of  employment: 
Long  V.  Herr,  10  Col.  380.  "Com- 
mission" means  a  compensation  for 
services  in  making  a  sale:  Wooley  v. 
Jones,  84  Ala.  88. 

*  Keener  v.  Harrod,  2  Md.  63;  56 
Am.  Dec.  706.  Merely  putting  a 
purchaser  on  the  track  of  property  is 
not  equivalent  to  presenting  him  to 
the  seller  so  as  to  entitle  the  broker  to 
commissions:  Sievers  v.  Griffin,  14 
111.  App.  63. 

♦  Kerfoot  v.  Steele,  113  111.  610. 
5  Smith  V.  Fairchild,  7  Col.  510. 


§226 


PRINCirAL   AND   AGENT. 


400 


It  is  sufficient  tliat  the  sale  or  contract  was  made  through 
his  efforts  or  agency/  even  tliough  the  owner  negotiates 
it  himself.^  "His  commission  is  earned  by  finding  a 
sufficient  purcliaser,  ready  and  willing  to  enter  into  a 
valid  contract  for  the  purchase  upon  the  terms  fixed  by 
the  owner,  and  having  introduced  such  a  one  to  the  owner 
as  a  purchaser,  ho  is  not  deprived  of  his  right  to  commis- 
sion by  the  owner  negotiating  the  contract  himself."^  A 
real  estate  broker  may  recover  his  commissions  if  he  first 
brings  the  property  to  the  purchaser's  notice,  though  he 
does  not  conduct  the  negotiation.^  So  where  two  brokers 
are  employed,  the  one  who  brings  the  minds  of  the  par- 
ties together  is  entitled  to  commissions,  though  the  other 
may  have  assisted  or  actually  negotiated  the  sale.^  Where 
two  brokers  are  employed  separately,  and  each  calls  the 
attention  of  the  same  purchaser  to  the  property,  only  the 
one  who  afterwards  succeeds  in  effecting  the  sale  is  en- 
titled to  commissions.*  An  agent  who  is  promised  a 
commission  for  finding  a  purchaser  does  not  lose  his 
right  to  it  because  another  agent  meanwhile  effects  a  sale.' 
If  an  agent  or  broker  is  the  means  of  bringing  the  parties 
together,  although  the  offer  which  is  accepted  be  made  by 
the  purchaser  to  the  principal  in  person,  and  the  agent 

V.  Henry,  30  N.  J.  L.  328;  Redfield  v. 
Tegg,  38  N.  Y.  212;  Bell  v.  Kaiser,  50 
Mo.  150;  Lyou  v.  Mitchell,  oG  N.  Y. 
235;  Barnard  v.  Monnot,  3  Kcvcs, 
203;  Mose.?  v.  Bierling,  31  N.  Y.  4G2; 
Jones  i\  Adler,  34  Md.  440;  Dnrkee  ?;. 
Vermont  Cent.  R.  R.  Co.,  2»  Vt.  1'.'7; 
Watson  V.  Brooks,  8  Saw.  316; 
Harrcll  v.  Ziinple-nan,  G6  Tex.  29'2; 
Hanna?'.  Collins,  09  Iowa,  51;  Wilson 
V.  Sturgis,  71  Cil.  220;  Buckingham 
V.  Harris,  10  Col.  445;  Williams  v. 
Leslie,  111  Ind.  70. 

*  Royster  v.  Mageveney,  9  Lea, 
148. 

"  Smith  V.  McGovern,  65  N.  Y.  574; 
Winans  v.  Jaaues,  10  Daly,  487. 

«  Dreyer  v.  llauch,  42  How.  Pr.  22; 
Maraceilar.  Odell,  3  Daly,  123. 

'  Fox  V.  Rouse,  47  Mich.  658. 


>  Sussdorf  V.  Schmidt,  55  N.  Y.  .321; 
Lloyd  V.  Matthews,  51  N.  Y.  124; 
Jacobs  V.  KolflF,  2  Hilt.  133;  '±  hornal 
V.  Pitt,  58  N.  Y.  083;  Veazie  v. 
Parker,  72  Me.  443. 

^  Sussdorf  V.  Schmidt,  55  N.  Y.  321 ; 
Martin  v.  Silliman,  53  N.  Y.  015; 
Bash  V.  Hill,  02  111.  210;  Morgan  v. 
Mason,  4  E.  D.  Smith,  030;  Chilton 
V.  Butler,  1  E.  D.  Smith,  150;  Tyler 
V.  Parr,  52  Mo.  249. 

"McClave  v.  Paine,  49  N.  Y.  501; 
10  Am.  Rep.  431;  Tiniberman  v. 
Craddock,  70  Mo.  638;  Cavender  v. 
Waddingham,  2  Mo.  App.  551 ;  Grant 
V.  Hardy,  33  Wis.  008;  Lane  v.  Al- 
bright, 49  Ind.  275;  Short  r.  Millard, 
68  III.  292;  Leeto  w.  Norton,  43  Conn. 
219;  Arrington  v.  Cary,  5  Baxt.  009; 
Haines  v.  Bequer,  9  Fhila.  51;  Uiads 


400 


401 


BROKERS    AND   FACTORS. 


§  22G 


G  N.  Y. 
Kcvcs, 
Y.  4G2; 

)urkce  v. 

Vt.  li'7; 
31 G; 


afterwards  draws  the  writings  and  receives  the  purchase- 
money,  he  is  entitled  to  his  commissions,'     Where  a  per- 
son desiring  a  loan  makes  an  application  in  writing,  upon 
which  is   an   indorsement   authorizing  a  single    hroker 
to  procure  the  loan,  and  the  hroker  leaves  copies  of  such 
application  with  a  number  of  persons,  one  of  whom,  ii^- 
duced  hy  such  application,  without  the  broker's  knowl- 
edge, lends    the   money,  the   broker   is  entitled   to   his 
commissions.'^    Where  the  owner  of  real  estate  employs 
several  brokers  to  effect  a  sale,  he  is  bound  to  pay  tlio 
one  who  does  in  fact  effect  the  sale,  and  cannot  exercise 
his  option.'     Where  a  single  broker  is  employed  to  sell 
real  property,  through  whom  a  buyer  is  introduced,  whieh 
is  followed  by  a  negotiation  resulting  in  a  sale,  the  owner 
and  buyer  cannot,  by  any  arrangement  between  them, 
disappoint  the  claim  of  such  agent    for  remuneration. 
But  where  several  brokers  are  openly  employed,  the  en- 
tire duty  of  the  seller  is  jierformed  by  remaining  neutral 
between  them,  and  he  has  the  right  to  make  the  sale  to 
a  buyer  produced  by  any  of  them,  without  being  called 
upon  to  decide  between  these  several  agents  as  to  which 
of  them  was  the  primary  cause  of  the  purchase.'*     A  real 
estate  broker  cannot  recover  commissions  where  he  re- 
ports an  offer  for  property  to  his  principal,  without  stat- 
ing who  makes  it,  and  the  same  property  is  afterwards 
sold  to  another  broker,  to  whom  a  commission  is  paid, 
for  the  same  price  and  to  the  same  purchaser,  unless  it 
appears  in  evidence  that   the  seller  knew  who  the  pur- 
cluiser  was,  and  of  the  sale  to  him,  or  that  notice  of  tliese 
facts  was  given  him  by  the  plaintiff  before  the  comple- 
tion of  the  contract  with  and  payment  of  commission,  to 
the  second  broker.®     In  general,  if  a  broker  introduces  a 
purchaser,  and  such  introduction  is  the  foundation  U[)on 


'  Shepherd  w.  Heciaen,29N.  J.  L..S34. 
^  Derrielisoii  v.  Quimby,  43  N.  J.  L. 
373. 
'  Eggleston  V.  Austin,  27  Kan.  245. 
Vol.  I.  — !M 


♦  Vreeland  v.  Vetterlein,  33  N.  J.  L. 
249. 

^  Tinges  v.  Moale,  25  Md.  480;  90 
Am.  Dec.  73. 


§  220 


PRINCIPAL  AND  AGENT. 


402 


which  the  negotiations  aro  conducted  and  the  sale  made, 
tlio  broker  will  be  entitled  to  his  commissions.  If,  however, 
by  special  contract  the  broker  is  not  to  receive  any  com- 
pensation unless  the  property  is  sold  at  a  stated  price,  he 
is  not  entitled  to  commissions  unless  the  property  is  sold 
at  that  price,  or  unless  ho  introduces  a  purchaser  who  is 
willing  to  buy,  and  was  prevented  from  making  the  sale 
by  the  fault  of  the  i^rincipal.*  If  a  real  estate  broker 
communicate  information  regarding  property  in  his  hands 
to  one  who  reports  it  to  a  friend,  who  subsequently  pur- 
chases it  from  the  owner  directlv,  the  broker  must  be 
regarded  as  the  procuring  cause  of  the  sale,  and  therefore 
entitled  to  his  commission,  even  though  he  may  have  had 
no  personal  intercourse  or  dealing  with  the  purchaser." 
The  owner  is  not  liable  to  commissions  to  the  broker  (in 
the  absence  of  a  special  contract),  though  he  tries  to  get 
a  purchaser,  if  he  nevertheless  fails.'  A  person  may 
employ  a  broker,  and  then  independently  of  him  a::d 
without  his  assistance  effect  a  sale.  The  broker  in  such 
case  will  not  be  entitled  to  commissions.*     But  his  com- 


>  Schwartze  v.  Yearly,  31  Md.  270. 

■■*  Lincoln  v.   McClatchie,   36  Conn. 
136. 

»  Sussdorf  V.  Schmitlt,  55  N.  Y.  321; 
McClavc  V.  Paine,  49  N.  Y.  561;  10 
Am.  Rep.  431;  Tombs  v.  Alexander, 
101  Mass.  255;  3  Am.  Rep.  350;  Gott- 
schalk  V.  Jcnningi,  1  La.  Ann.  5;  45 
Am.  Dec.  70,  where  it  is  said:  "The 
general  rule  of  law  as  to  commissions 
is,  that  the  whole  service  or  duty  must 
be  performed  before  the  right  to  any 
commission  attaches;  for  an  agent 
must  complete  the  thing  required  of 
hiin  before  he  is  entitled  to  charge  for 
it":  Kimberly  v.  Lupton,  29  Md.  512; 
Richards  v.  Jackson,  31  Md.  250;  1 
Am.  Rep.  49;  Walker  v.  Tirrel,  101 
Mass.  257;  3  Am.  Rep.  352;  Earp  v. 
Cummins,  54  Pa.  St.  394;  93  Am. 
Dec.  718.  A  broker  ii  not  entitled  to 
commissions  where  ho  affects  a  mere 
parol  contract  for  the  sale  of  laud 
which  is  repudiated  without  the  ven- 
dor's fault  before  being  reduced  to  writ- 
ing: Gilchrist  v.  Martin,  86  Teun.  583. 


*McClave  v.  Paine,  49  N.  Y.  5G1; 
10  Am.  Rep.  431;  Hungerford  v. 
Hicks,  39  Conn.  259;  Wylie  v.  IMarine 
Mut.  Bank,  61  N.  Y.  415;  Chandler 
V.  Sutton,  5  Daly,  112;  Bennett  v. 
Kidder,  5  Daly,  512;  Lane  v.  Albright, 
49  Ind.  275;  Vrcelund  v.  Vetterlciu, 
33  N.  J.  L.  247;  Schwartze  v.  Yearly, 
31  Md.  270;  White  v.  Twitchings,  20 
Hun,  503;  Stewart  v.  Murray,  92  Ind. 
543;  47  Am.  Rep.  167;  Dolan  v.  Scau- 
lan,  57  Cal.  261;  Darrow  v.  Harlow, 
21  Wis.  302;  94  Am.  Dec.  541.  When 
a  broker  opens  negotiations,  but  fail- 
ing to  bring  the  customer  to  terms 
abandons  them,  and  the  owner  after- 
wards eells  the  property  to  the  same 
customer,  the  broker  cannot  claim 
commissions:  Lipe  v.  Ludcwick,  14 
111.  App.  372.  One  who  has  put  land 
into  a  broker's  hands  to  sell  may  sell 
it  himself  without  necessarily  making 
himself  liable  to  the  broker  for  com- 
missions, if  the  broker  had  nothing  to 
do  with  the  sale  so  made:  Doonan  v. 
Ives,  73  Ga.  295.    A  broker's  commis- 


403 


BROKERS   AND   FACTORS. 


§  22G 


mission  is  earned  if  ho  produce  a  purchaser  ready  and 
willing  to  take  the  property  on  the  terms  fixed  by  his 
principal,  although  through  the  latter's  act  no  sale  is 
corapleted.*  And  it  is  not  affected  by  a  change  made  in 
the  contract  as  to  the  terms  of  payment  between  the  buyer 
and  seller.^  So,  if  he  find  a  purchaser  who  enters  into  a 
binding  contract  with  the  principal,  but  afterwards  refuses 
to  carry  it  out.'"'  So  if  the  broker  is  unable  to  complete 
the  bargain,  through  the  principal  taking  it  out  of  his 


gions  are  not  defeated  by  tbe  failure 
of  the  purchaser  to  perforin  hia  con- 
tract, nor  by  the  failure  of  the  vendor 
to  compel  him  to  do  so:  Parker  v. 
Walker,  8G  Tenn.  56«. 

'  Mooney  v.  Elder,  5G  N.  Y.  240; 
Doty  V.  Miller,  43  Barb.  529;  Cole- 
man V.  Meade,  13  Bush,  358  (see  Rock- 
well V.  Newton,  44  Conn.  333) ;  Pearson 
V.  Mason,  120  Mass.  53;  Love  v.  Mil- 
ler, 53  Ind.  294;  21  Am.  Rep.  192; 
Lara  v.  Hill,  15  Com.  B.,  N.  S.,  45; 
Lockwood  V.  Levick,  8  Com.  B.  603; 
Stewart  v.  Mather,  32  Wis.  344;  Bailey 
V.  Chapman,  41  Mo.  530;  Journeay  v. 
Tallman,  40  N.  Y.  Sup.  Ct.  43G;  Hart 
v.  Hoffman,  44  How.  Pr.  108;  Hague 
r.  O'Conner,  41  How.  Pr.  287;  Glent- 
worth  V.  Luthen,  21  Barb.  145;  Becbe 
V.  Ranger,  35  N.  Y.  Sup.  Ct.  452; 
Bach  V.  jSmerich,  35  N.  Y.  Sup.  Ct. 
548;  McGavock  v.  Woodlief,  20  How. 
221;  Holly  r.  •Gosling,  3  E.  D.  Smith, 
2G2;  Van  Lien  v.  Byrnes,  1  Hilt.  134; 
Moses  V.  Bierling,  31  N.  Y.  4G2;  Phe- 
lan  V.  Gardner,  43  Cal.  30G;  Pratt  v. 
Hotchkiss,  10  111.  App.  G03;  Finnerty 
<c.  Fritz,  5  Col.  174;  Fischer  v.  Bell, 
91  Ind.  243;  Fisk  v.  Honarie,  13 
Or.  15G.  "Where  the  vendor  is  satis- 
fied with  the  terms  made  by  himself, 
through  tho  broker  to  the  purchaser, 
and  no  valid  objection  can  be  stated 
in  any  form  to  tlie  contract,  it  would 
seem  to  be  clear  that  the  commis- 
sion of  tho  agent  was  due  and  ought 
to  be  paid.  It  would  be  a  novel 
principle  if  the  vendor  might  capri- 
ciously defeat  his  own  contract  with 
his  agent,  by  refusing  to  pay  him 
when  ho  had  done  all  he  was  bound  to 
do.  The  agent  might  well  undertake 
to  procure  the  purchaser,   but   this 


being  done,  his  labors  and  expense 
could  not  avail  bira,  as  he  could  not 
coerce  a  willingness  to  pay  the  com- 
mission which  the  vendor  had  agreed 
to  pay.  Such  a  state  of  things  could 
only  arise  from  an  express  understand- 
ing that  the  vendor  was  to  pay  noth- 
ing, uidcss  he  should  choose  to  make 
the  sale":  Kock  v.  Einmerling,  22 
How.  69,  per  Mr.  Justice  McLean; 
Gottschalk  v.  Jennings,  1  La.  Ann.  5; 
45  Am.  Dec.  70;  Vinton  v.  Baldwin, 
88  Ind.  104;  45  Am.  Rep.  447.  ihe 
owner  of  land  who  has  agreed  to  pay 
a  broker  commissions  for  finding  a 
purchaser  cannot  escape  liability  by 
giving  the  land  to  a  son  pending  tlio 
trade,  it  being  finally  consummated 
by  the  son  under  his  father's  direc- 
tion: Fox  V.  Byrnes,  52  N.  Y.  Sup. 
Ct.  150. 

*  Lawrence  v.  Atwood,  1  111.  App. 
217;  Bash  v.  Hill,  02  111.  210;  Green 
V.  Read,  3  Post.  &  F.  220;  UeynoUU 
V.  Tompkins,  23  W.  Va.  229;  Gorman 
V.  SchoUe,  13  Daly,  511. 

*  "When  the  broker  lias  effected  a 
bargain  and  sale  by  a  contract  which 
is  mutually  obligatory  on  the  vendor 
and  vendee,  he  is  entitled  to  his  com- 
mission, whether  his  employer  chooses 
to  comply  with  or  enforce  the  contract 
or  not^':  Love  v.  Miller,  53  Ind.  294; 
21  Am.  Rep.  192.  If  the  owner  of 
land  agrees  to  pay  a  broker  a  commis- 
sion, not  for  finding  a  purchaser  alone, 
but  for  making  an  actual  sale,  the 
broker  cannot  claim  his  commission 
until  tho  sale  is  made:  Hyams  v.  Mil- 
ler, 71  Ga.  008;  nor  on  a  contract  of 
sale  which,  because  of  its  incomplete- 
ness, cannot  bo  enforced  ^  Bradford  v. 
Meuard,  35  Minn.  197. 


§  226 


PRINCIPAL  AND   AGENT. 


404 


hands,  ho  is  entitled  to  a  2^'''o  rata  commission  for  the 
work  he  has  done.*  A  broker  employed  to  soil  goods  to 
arrive  becomes  entitled  to  his  commission  by  negotiating 
a  contract  for  the  purchase  of  the  goods,  notwithstanding 
the  sale  is  never  consummated  by  reason  of  the  non- 
arrival  of  the  goods.  Ho  is  not  bound  to  show  a  special 
custom  existing,  which  would  entitle  him  to  brokerage 
under  such  circumstances.  lie  is  entitled  to  his  compen- 
sation, because  he  has  done  all  lie  agreed  to  do.^  The 
purchaser  obtained  by  the  broker  must,  however,  be  such 
a  one  as  the  vendor  is  bound  to  accept,'  and  who  is  ready 
to  accede  to  the  principal's  terms;*  nor  can  the  broker 
recover  where  the  transaction  is  ilUgal.*^  A  broker  for 
the  sale  of  personal  property  cannot  recover  commissions 
until  the  sale  is  completed "  Defects  in  the  vendor's  title 
are  irrelevant;'  the  broker  is  entitled  to  his  commissions, 
though  the  purchaser  is  relieved  from  his  purchase  by 
the  court  on  account  of  a  defect  of  title;®  or  the  vendor 
cannot  make  a  perfect  title." 

The  broker  must  act  only  for  his  employer,  and  if  he 
is  employed  by  both,  without  the  knowledge  of  either,  he 

^  Martin  v.  Silliman,  53  N.  Y.  C15;  to  a  general  agreement:  Wyckoff  v. 

Prickctt  ?\  Badger,  I  Com.  B.,  N.  S.,  Bliss,  12  Daly,  3J4.    One  who  is  pro:n- 

25)0;  Durkee  v.  Vermont  Cent.  R.  It.  ised  compensation  if  he  will  procure 

Co.,  2'J  Vt.   127;  Chapin  v.  Bridges,  a  purchaser  for  property  on  certain 

110  Mass.  105;  Turner  v.  Webster,  24  terms  cannot  claim  compens:atin:i  for 

Kan.    S8;    30    Am.    Rep.    251.     One  effecting  a  sale  on  lower  term-,  lio 

employeil  to  find  a  customer  for  land  liavin;,',  moreover,  acted  in  pr.it  i:i  tiio 

does  not  lose  his  right  to  a  commis-  buyer's  interest:  Williams  v.  McGraw, 

sion  because  his  principal  refuses  to  52  Mich.  480. 

consummate  the    contract:    Goss    v.        ^  Augusta  Bank  v.  Cunningham,  75 

Stevens,  .32  Minn.  472.  Ga.  300.      A  broker  who  knowingly 

•^  Paulsen  V.  Dallett,  2  Daly,  40.  acts  for  parties  who  make  mere  bets 

^  Coleman  v.  Meade,  13  Bush,  .358.  or  wagers  on  tlie  future  state  of  tlie 

*  Fraser  v.  Wyckoff,  03  N.  Y.  445;  market  cannot  recover  his  losses  in 

Barnard    ?•.    Monnot,    3  Keyes,    2J3;  such  transactions:    McLean  v.  Stuve, 


McGavock  v.  WootUief,  20  How.  221; 
Darrow  v.  Harlow,  21  Wis.  302;  94 
Am.  Dec.  5*1;  Haydcn  v.  Grille,  26 
Mo.  App.  289;  Cassady  v.  Seeley,  09 
Iowa,  509;  Fisk  v.  Henarie,  13  Or. 
150.     But  he  does  not  lose  his  right 


15  Mo.  App.  317. 

^  Thomas  r.  Lincoln,  71  Ind.  41. 

'  Allen  V.  James,  7  Daly,  13. 

*  Smith  V.  Mooney,  14  Week.  Dig. 
237;  Doty?'.  Miller,  43  Barb.  529. 

9  Kna  n  v.  Wallace,  41  N.  Y.  477; 


to  his  commission  merely  because  the  Holly  v.  Gosling,  3  E.  D.  Smith,  20:?; 
principals  cannot  bo  brought  to  terms  Gonzales  v.  Broad,  57  Cal.  224;  Ham- 
ou  a  particular  point,  if  they  come    liu  v.  Scliulte,  34  Minn.  534. 


404 


405 


BROKERS   AND   FACTORS. 


i  226 


Ims  undertaken  an  inconsistent  employment,  and  can  re- 
cover commissions  for  his  services  from  neither/  unless  he 
is  a  mere  middle-man  to  bring  them  together;"  or  his 
double  employment  was  known  and  assented  to  by  both 
parties.^  The  intentional  concealment  from  his  principal, 
by  u  broker  employed  to  sell  real  estate,  of  important  iiud 


iRico  V.  Wood,  113  Mass.  133;  18 
Am.  lii'p.  451);  I'ugsley  -i'.  Murray,  4 
E.  L).  8 uitli,  '24');  .Scrilmer  v.  Collar, 

40  Mich.  375;  29  Am.  Rep.  541;  Cope- 
lui>l  r.  Morcautilo  Ins.  Co.,  G  Pick. 
]!I8;  Fairbrotlicr  r.  Simmons,  5  Barn. 
&  AM.  333;  Sic-^cl  v.  Ooulil,  7  Laiis. 
177;  Walker  t'.  Osgooil,  98  Mass.  348; 
93  Am.  Dec.  168;  Coleman  v.  Gar- 
ri^'iv:  ■,  18  Barb,  iid;  (ilcntwortli  v. 
Lutlior,  21  Barb.  145;  Raisin  i\  Clark, 

41  Mil.  158;  20  Am.  Rep.  GO;  Lynch 
r.  Fallon,  11  R.  I.  311;  23  Am.  Rep. 
458;  Bennett  «".  KiilJer,  5  Daly,  512; 
15. 11  V.  MLCoancll,  37  Ohio  St.  400; 
41  Am.  Rep.  529;  Meyer  v.  Hau- 
clictt,  39  Wis.  423.  In  Farnsworth 
'•.  Ilcmmer,  1  Allen,  494,  79  Am. 
Dec.  7."o,  the  rule  is  thus  stated; 
"Tl'.o  principle  on  which  rests  the 
wcll-Hcti-led  doctrine  that  a  man  can- 
not beco:.ic  the  purchaser  of  property 
for  liis  own  use  and  benefit  which  is 
i.iti'u  ;tc  I  to  him  to  sell  is  equally  ap- 
1  licaljlo  when  the  same  pei'son,  with- 
out t!ie  authority  or  consent  of  the 
piirtica  interestcil,  undertakes  to  act 
.".3  tlie  agent  of  both  vendor  and  pur- 
cli;'.ycr.  The  law  docs  not  allow  a  man 
to  a -sume  relationa  so  essentially  iu- 
oon  ilyteut  and  repugnant  to  each  other. 
The  I'.uty  of  au  agent  for  a  vendor  is 
to  sell  the  property  at  the  highest 
price;  of  t'.ie  agent  of  the  purchaser  to 
buy  it  for  the  lowest.  These  duties 
arc  ijo  utterly  irreconcilable  and  con- 
flicting that  they  cannot  be  jjcrformed 
Ly  tlie  same  person  without  great 
da:i,;rcr  that  the  rights  of  one  principal 
will  bo  sacrificed  to  promote  the  inter- 
est 3  (if  the  other,  or  that  neither  of 
thcni  will  enjoy  the  benefit  of  a  dis- 
creet nn  1  faithful  exercise  of  the  trust 
rqiosf;  1  in  the  agent.  As  it  cannot  bo 
sup;io^ed  that  a  vendor  and  j)urchaser 
would  employ  the  same  person  to  act 
as  their  agent  to  buy  and  sell  the  same 
property,  it  is  cleax  that  it  operates  aa 


a  sur])rise  on  both  parties,  and  is  a 
breach  of  the  trust  and  confidence  in- 
tended to  be  reposed  in  the  agent  by 
tl  em  respectively,  if  liis  intent  to  act 
as  agent  of  bolli  in  the  same  transac- 
tion is  concefdod  from  them.  It  is  of 
the  essence  of  his  contract  that  he  will 
use  his  best  skill  and  judgment  to 
promote  the  interest  of  his  employer. 
This  ho  cannot  do  where  he  acts  for 
two  persons  whose  interests  are  essen- 
tially adverse.  He  is  therefore  guilty 
of  a  breach  of  his  contract.  Nor  is 
this  all.  He  commits  a  fraud  on  his 
principals  in  undertaking,  without 
their  assent  or  knowledge,  to  act  as 
their  nmtual  agent,  because  he  con- 
ceals from  them  an  essential  fact,  en- 
tirely within  his  own  knowledge, 
which  he  was  bound  in  the  exercise  of 
good  faith  to  disclose  to  them. " 

^  Rupp  z\  Sampson,  IGGray,  401 ;  77 
Am.  Dec.  41G,  wiiere  it  was  said:  "  The 
interests  of  buyer  and  seller  arc  neces- 
sarily adverse,  and  it  would  oiierate  as 
a  surprise  on  the  confidence  of  both 
parties,  and  essentially  affect  their  re- 
spective interests,  if  one  person  sliould, 
without  their  knowledge,  ace  as  the 
agent  of  both.  Buttheplaiutifl"did  not 
act  in  any  such  capacity.  He  was  not 
an  agent  to  buy  or  sell,  but  only  acted 
as  a  middle-man  to  bring  the  parties  to- 
gether in  order  toenabljthem  to  make 
their  own  contracts.  He  stood  entirely 
indifierent  between  them,  antl  held  no 
such  relation  in  consequence  of  his 
agency  as  to  render  his  action  adverse 
to  the  interests  of  either  jtarty  ":  Fritz 
V.  Finnerty,  14  Am.  Law  Rev.  59S;  8ie- 
gel  V.  Gould,  7  Lans.  177;  Balheimer  i\ 
Reichardt,  55  How.  Pr.  414;  Herman 
V.  Martinean,  1  Wis.  151;  GO  Am.  Deo. 
368;  Stewart  v.  Mather,  32  Wis.  355. 

*  Rowe  V.  Stevens,  53  N.  Y.  G21;  35 
N.  Y.  Sup.  Ct.  189;  Siegel  v.  Gould,  7 
Lans.  177;  Bell  v.  McConnell,  37  Ohio 
St.  396;  41  Am.  Rep.  529. 


§  226 


PRINCIPAL  AND   AGENT. 


40G 


material  facts,  will  deprive  him  of  his  right  to  a  commis- 
sion, and  this  although  there  was  no  fraudulent  purpose.' 
An  agreement  hy  a  person  desiring  to  purchase  land,  to 
convey  a  part  of  it  to  the  seller's  broker,  cannot  bo  enforced 
by  the  broker,  one  of  tho  considerations  of  the  agreement 
being  that  he  would  put  such  person  in  communication 
with  the  seller.'^  Tho  fact  that  tho  agent  had  taken  out 
no  license  under  the  internal  revenue  laws  of  the  United 
States  will  not  affect  his  right  to  recover.' 

Illustrations.  —  Brokeus'  Claims  to  Comwtsstotcs  Sus- 
tained.—  A  person  seeing  by  a  card  on  a  house  that  it  was  for 
sale  went  to  the  agent  and  got  an  order  to  examine  the  place, 
but  concluded  the  price  was  too  high.  He  had  no  further 
communications  with  the  agent,  but  subsequently  renewed 
negotiations  with  a  friend  of  the  owner,  and  purchased  at  a  loss 
price.  Held,  that  there  was  evidence  that  tho  purchase  was 
made  through  the  agent's  intervention,  and  that  ho  was  enti- 
tled to  commissions:  Mnnsell  v.  Clements^  L.  11.  9  C.  P.  139. 
Defendants  purchased  certain  real  estate  through  the  instru- 
mentality of  plaintiff,  who  acted  as  broker  for  the  seller.  IIo 
claimed  commissions,  which  they  declined  to  pay,  but  prom- 
ised him  part  of  the  profits  when  they  sold.  He  advised  as  to 
the  best  mode  of  sale,  procured  maps  of  tho  property,  which  he 
displayed,  also  signs,  and  advertised  it.  A  purchaser,  attracted 
by  tho  advertisements  and  signs,  opened  negotiations  with  de- 
fendants, who  notified  the  plaintiff  to  do  nothing  further,  and 
that  they  would  pay  him  a  commission  if  the  sale  was  effected. 
The  sale  was  effected.  Held,  that  plaintiff  was  entitled  to 
commissions:  Sussdorf  v.  Schmidt,  55  N.  Y.  321.  A  broker 
had  been  employed  to  procure  a  loan;  ho  found  a  party  with 
the  money  ready,  who  consented  to  loan  upon  approval  of  the 
security  proposed.  Such  lender,  on  examination,  found  ihe 
property  encumbered,  and  refused  to  consummate  tho  transac- 
tion. Ileld,  that  the  broker  was  entitled  to  his  commissions: 
HoUv  v.  Gosling,  3  E.  D.  Smith,  2G2.  A  agreed  to  pay  B  a 
certain  sum  to  find  him  a  tenant  for  his  farm.  C  agreed  with 
the  same  B  to  pay  him  a  certain  sum  to  find  a  farm,  which 
he,  C,  could  hire,  and  by  the  mediation  of  B,  A  and  C  wore 
brought  together,  and  consummated  a  bargain  for  tho  letting 
and  hiring  of  a  farm.  Held,  that  the  fact  that  B  had  acted 
for  C  as  well  as  A  in  the  transaction  constituted  no  bar  to  a 


»  Pratt  V.  Patterson,  12  Phila.  460. 
'  Smith  V.  Townseud,  109  Mass.  500. 


^  Kuckmau  v.  Bergholz,  37  K.  J.  L. 
437. 


407 


BROKERS   AND   FACTORS. 


§  22G 


?ommis- 
urposc* 
land,  to 
nforccd 
I'cement 
lication 
ken  out 
United 


X-8     SUS- 

'  was  for 
10  place, 

further 
renewed 
at  a  less 
aso  was 
as  enti- 

P.  139. 
i  instru- 
er.  IIo 
t  prom- 
icd  as  to 
diich  he 
ttracted 
mih.  do- 
ler,  and 
ifFccted. 
itled  to 

broker 
•ty  with 
1  of  the 
md  ihe 
ransac- 
issions: 
ay  B  a 
ed  with 
,  whicli 
C  were 
letting 
d  acted 
)ar  to  a 

N.  J.  L. 


recovery  by  B  of  the  amount  agreed  to  be  paid  by  A:  Herman 
V.  Marlineau,  1  Wis.  151;  GO  Am.  Dec.  308.  A  agreed  with  B 
that  if  B  would  find  anyliody  that  would  trade  with  A  for  cer- 
tain land  owned  by  hiui,  he  would  pay  B  five  hundred  dollars. 
B  accordingly  introduced  to  A  a  perpon  with  whom  A  made 
a  written  agreement  for  the  sale  of  the  property.  Held,  that 
upon  the  execution  of  this  agreement  B  became  entitled  to  his 
commission,  though  the  sale  was  never  completed:  Pedrson  v. 
Mason,  120  Mass.  53.  By  the  terms  of  a  contract,  a  Ijroker  was 
to  receive  ton  per  cent  of  the  price  if  he  should  dispose  of  certain 
steamers  at  prices  and  conditions  to  be  agreed  on.  His  action 
ill  the  nmtter  directed  the  attention  of  tlic  purchasers  to  the 
vessels  he  had  for  sale,  and  led  to  the  negotiations  which  re- 
sulted in  the  purchase  of  the  vessel,  but  he  did  not  actually 
make  the  sale  and  transfer.  Ildd,  that  he  was  entitled  to  his 
comn)ission:  Lyon  v.  Mitchell,  30  N.  Y.  235;  93  Am.  Dec.  502. 
A  land  agent  advertised  a  farm  at  his  own  expense,  and  a 
neighbor,  seeing  the  advertisement,  directed  a  buyer  to  the  farm. 
Ilelil,  that  the  sale  was  really  secured  by  the  agent:  Anderson 
v.  Cox,  IG  Neb.  10.  A  broker  was  employed  to  surrender  stock 
and  interest  scrip,  and  procure  bonds  for  them,  and  in  so  doing 
expended  time  and  money.  Held,  that  it  was  to  be  presumed, 
from  the  fact  of  the  employment,  that  the  bonds  were  more 
valuable  to  the  owner  than  the  stock:  Chappell  v.  Cady,  10  Wis. 
111.  A  agreed  to  pay  to  B,  a  real  estate  broker,  a  certain  sum 
to  sell  his  mine  for  a  certain  price  within  a  certain  time.  B 
found  a  man  willing  and  ready  to  purchase,  but  A  refused  to 
sign  an  agreement  of  sale  required  by  the  purchaser,  where- 
upon the  purchaser  withdrew.  Held,  that  A's  refusal  to  sign 
the  agreement  was  equivalent  to  a  refusal  to  sell,  and  that  B 


was  entitled  to  his  commission:  Nellson  v.  Lee,  GO  Cal. 


55o. 


An  agent  employed  to  "find  a  purchaser"  for  land  found  one 
who  said  he  would  take  the  land,  but  the  principal  had  theii 
sold  to  another.  Held,  that  the  agent,  in  order  to  recover  for 
his  services,  must  show  that  his  purchaser  was  financially  re- 
sponsible: Iselin  V.  Griffith,  G2  Iowa,  GG8.  A  gives  B  until  a 
certain  time  to  "close  out"  A's  land,  or  to  find  a  customer, 
offering  him  a  certain  sum  if  ho  performs  the  service.  B  may 
recover  the  compensation  if  he  produces  the  customer  before 
that  date,  although  not  in  time  for  the  preparation  of  the  papers 
and  completion  of  the  sale  before  the  date  named:  0^ Connor  v. 
Scmple,  57  Wis.  243.  A  real  estate  broker,  having  contracted 
with  the  owner  of  a  farm  to  sell  it  at  a  specified  conimissiori, 
procured  a  buyer  and  brought  him  to  the  farm.  The  latter 
objecting  to  the  quantity  of  land  offered,  the  owner  agreed  to 
reserve  a  portion  and  sell  him  only  the  remainder,  whereupon 


§  22C 


PRINCIPAL  AND   AGENT. 


408 


tho  parties  repnircd  to  the  oflico  of  the  broker,  who  drew  up  tliu 
papcTH,  iiiid  did  other  things  in  aid  of  tho  vendor,  mid  tho  Kale 
was  ('oiiHuniniuted.  //(/(/,  tliixt  tho  broker  was  entitled  to  his 
oonuiiissioiiH  on  tlio  hmd  aetually  sold:  Wootln  v.  Stciihcns,  40 
Mo.  5,j,j.  In  un  action  to  recover  a  comnussion  on  tho  sale  of 
a  house  to  tiie  defendant,  there  was  evidence  that  the  plaintiff, 
who  was  not  a  real  estate  broker,  said  to  tho  defendant,  who 
was  seeking  a  house,  ''If  I  find  you  a  house,  you  must  pay  nie 
a  connnission,"  and  the  defendant  replied,  "I  would  as  soon 
pay  you  as  any  other  person";  that  the  plaintifl"  did  not  see 
the  defendant  again,  l)Ut  that,  in  consequence  of  information 
furnished  by  the  plaintiiF,  a  third  person  called  on  tho  defend- 
ant and  sold  him  a  house.  Held,  that  this  evidence  would 
support  a  verdict  for  the  plaintiff,  although  the  usage  of  brokers 
is,  that,  in  the  absence  of  special  agreement,  the  seller,  and  not 
the  purchaser,  pays  tho  commission,  and  although  the  plaintiff 
had  not  taken  out  an  internal  revenue  license  from  the  United 
States  as  a  real  estate  agent:  Pope  v.  Bcals,  108  Mass.  5G1.  A 
employed  B  to  find  purchasers  for  a  certain  number  of  shares 
of  stock  at  a  price  named,  and  agreed  to  pay  him  a  commission 
of  a  certain  per  cent  on  the  sale.  B  negotiated  with  C  for  the 
purchase  of  the  stock,  and  D  was  subsequently  consulted  with 
by  C,  and  later  by  B,  as  to  joining  in  tho  purchase.  D  sug- 
gested E  as  an  associate,  and  afterwards  called  his  attention  to 
the  matter.  While  these  negotiations  for  a  sale  were  pending, 
A  informed  B  that  ho  had  sold  the  stock  to  other  persons,  and 
could  not  sell  to  C  and  his  associates;  but  afterwards,  at  the 
request  of  B  and  C,  A  transferred  the  shares  to  C,  D,  and  E,  as 
a  sale  in  one  "block,"  and  at  a  lower  price  than  that  originally 
fixed  by  him,  though  B  had  nothing  to  do  with  Buch  reduction 
in  price.  Held,  in  an  action  by  B  against  A,  that  B  was  enti- 
tled to  recover  a  commission  on  the  shares  so  sold:  Dexter  v. 
Campbell,  137  Mass.  198.  A  bond  was  given  by  A  to  convey  a 
lot  of  land  at  a  price  named  per  square  foot.  The  bend  was 
assigned  to  B,  who  employed  C  to  find  a  purchaser  for  the  land, 
agreeing  to  pay  him  all  he  could  get  over  tho  price  unp  "d  in 
the  bond.  C  sold  the  land  at  a  higher  price  to  D  o  whom  A, 
at  the  request  of  B,  conveyed  the  land.     Ir  crought  by 

C  against  B  to  recover  tho  excess  over  the  aamed  in  ♦   e 

bond,  B  oflered  to  show  that  C,  at  the  time  liis  employment 
as  agent,  was  interested  in  the  land  as  owner  ui  part-  avner,  and 
did  not  disclose  this  fact  to  him,  and  contended  th>  !  this  con- 
cealment was  a  fraud  upon  him.  Held,  that  the  question  of 
such  ownership  was  immaterial:  Durgin  v.  Somers,  117  Mass. 
55.  A,  a  real  estate  agent,  was  applied  to  by  B,  an  owner  of 
land,  to  sell  it  for  him.     B  gave  to  A  a  written  description  of 


408 


400 


BROKERS   AND    FACTORS. 


§  220 


w  up  tlio 
I  tlio  Bale 
'<!  to  liis 
l>}u'na,  4(j 
10  sale  of 
plaintiff, 
ant,  who 
t  pay  nio 
as  Boon 
not  SCO 
jrnmtion 
;  tlefend- 
;o  would 
■  brokers 
and  not 
plaintiff 
)  United 
5G1.     A 
f  shares 
imission 
)  for  the 
;ed  with 

D  BUg- 

ntion  to 
tending, 
ns,  and 
,  at  the 
d  E,  as 
iginally 
duction 
as  enti- 
cxter  V. 
)nvey  a 
nd  was 
o  land, 
■rl   in 

loui  A, 
?ht  by 
in  t  e 
ynient 
?r,  and 
is  con- 
iion  of 
Mass. 
ner  of 
ion  of 


the  land,  and  stated  the  ])rico  at  two  thousand  and  fifty  dollars, 
lifty  dollars  of  whieh  sum  was  to  be  the  perquisite  of  A  for 
edeeting  a  sahi.  C  obtained  from  the  agent  a  copy  of  the  de- 
Hcriplion,  called  on  B,  and  asked  him  what  \\"  would  take  for 
the  land.  B  replied  two  thousand  dollars,  which  C  gave,  and 
received  a  conveyance.  Held,  that  the  owner  was  responsible 
to  the  agent  for  the  perquisite  of  fifty  dollars:  Alexander  v. 
Brccden,  14  B.  Mon.  125.  A  employed  B,  a  broker,  to  sell  cer- 
tain property.  B  communicated  to  him  the  name  of  C,  who 
offered  to  purchase,  but  at  a  price  less  than  A  asked.  A  rc- 
je;^teil  the  offer,  and  discharged  the  broker,  but  shortly  after, 
through  another  agent,  sold  the  property  to  C  for  the  price 
originally  odered  by  C.  Held,  that  B  was  entitled  to  his  com- 
pensation as  broker:  GotiMchnlk  v.  Jcnnuvjs,  1  La.  Ann.  5;  45 
Am.  Dec.  70.  W.  employed  C.  to  purchase  a  lot  for  him  upon 
certain  terms,  stipulating  that  the  compensation  of  the  latter 
was  to  be  deducted  from  the  purchase-money  going  to  tho 
vendor,  and  was  in  no  event  to  be  paid  by  W.  Held,  that  W. 
would  bo  liable,  nevertheless,  to  C  for  his  proper  fee,  in  case  of 
a  violation  of  the  contract  by  W.  in  refusing  to  take  the  prop- 
erty: Cavetider  v.  Waddlngham,  2  Mo.  Aj^p.  551. 

Illustuations  (Continued).  —  Brokt:rs'  Claims  not  Sus- 
T.MNKD.  —  A  agreed  to  pay  B  fifteen  hundred  dollars,  pro- 
vided he  effected  a  sale,  or  obtained  a  customer  who  would  pay 
seventeen  thousand  five  hundred  dollars  for  the  unsold  territory 
of  certain  patents,  and  ten  per  cent  on  any  less  sum  which  A 
might  agree  to  take.  B  procured  II.  &  S.  to  enter  into  a 
partnership  agreement  with  A  for  the  selling  of  the  patent 
rights,  tho  firm  agreeing  to  pay  A  fifteen  thousand  dollars 
for  his  interest  out  of  the  profits  of  the  concern.  Held,  that  B 
could  not  recover,  as  he  had  not  procured  any  absolute  [)ur- 
chaser:  Frnscr  v.  Wyckoff,  G3  N.  Y.  445.  A  broker  employed 
by  A  to  sell  his  house  cfiects  a  trade  by  whieh  A's  house  is 
bought  by  B,  who  sells  his  house  to  C,  the  purcliaso  pric(;  being 
dependent  in  each  case  on  each  other,  and  the  purcliase-money 
of  C,  which  is  the  same  as  that  of  B,  is  paid  directly  to  A, 
who  pays  the  broker  a  commission  for  selling  his  liouse.  Held, 
that  he  cannot  recover  likewise  of  C,  even  though  he  was 
employed  by  C  to  buy  a  house  for  him:  Follanshee  v.  (yRrilbj, 
lo5  Mass.  80.  A  person  employed  a  broker  to  find  a  purchaser 
for  certain  land,  promising  that  if  he  found  one  within  a  month 
able  and  willing  to  buy  at  a  certain  figure  he  would  pay  the 
broker  a  certain  sum.  Tho  broker  found  a  purchaser  within 
tlie  month,  but  before  they  found  him  the  principal  revoked 
the  agency:  Held,  that  the  broker  could  not  recover:  Brown  v. 


§  226 


PEINCIPAL  AND  AGENT. 


410 


Pfoor,  38  Cal.  550.  The  defendant,  being  owner  of  three  par- 
cels of  land,  employed  plaintiff,  a  real  estate  broker,  to  nego- 
tiate gales  thereof  at  a  specified  price  for  each.  Plaintiff  fouiul 
a  purchaser  for  one,  and  the  sale  was  efi'ected,  upon  whicli 
plaintiff  received  bis  commission.  Subsequently  defendant 
informed  the  purchaser  of  bis  desire  to  sell  one  of  the  other 
parcels,  and  a  contract  was  made  between  them,  plaintiff  tak- 
ing iio  part  in  this  affair.  Held,  ihat  ho  was  not  entitled  to  a 
commission  on  the  sale:  McClave  v.  Paine,  49  N.  Y.  5G1,  10 
Am.  Rep.  431.  II.,  a  real  estate  agent,  having  heard  that  K. 
desired  to  sell  certain  property,  went  to  the  oflico  of  K.  and  told 
him  that  in  case  ho  should  succeed  in  negotiating  a  sale,  ho 
should  expect  the  usual  commission  of  two  and  a  half  per  cent. 
Afterwards  II.  brought  K.  and  J.  together,  and  certain  papers 
were  executed,  whereby  they  contracted  for  the  sale  of  the 
property,  with  a  stipulation  that  if  either  party  should  fail  to 
comply  with  the  contract,  a  forfeiture  of  one  thousand  dollars 
shouhl  be  paid  by  the  party  in  default.  Afterwards  J.,  having 
failed  to  comply  with  the  contract,  gave  his  note  for  the  forfeit 
money.  Held,  that  II.  was  not  entitled  to  any  commissions: 
Kbnhcrly  v.  Henderson,  29  Md.  512.  An  agreement  to  sell  real 
estate  on  commissiorj  was  made  by  a  broker  with  an  owner.  On 
a  day  fixed  the  broker  stated  that  ho  could  do  nothing  with  the 
lots,  but  subsequently  informed  another  broker  that  the  property 
was  for  sale,  and  through  the  latter  a  sale  was  effected.  Held, 
that  the  employment  was  at  an  end,  when  the  information  of 
inability  to  procure  a  purchaser  was  given:  Hollcy  v.  Townnend, 
2  Hilt.  34.  An  agent  agreed  to  sell  a  farm  for  two  per  cent 
commission  on  a  certain  amount,  and  thirty  per  cent  on  all 
received  in  excess  of  that  amount.  Held,  that  he  was  not  en- 
titled to  commission  on  the  value  of  part  of  the  crop,  v/hicli  he 
knew  belonged  to  another,  and  which  was  deducted  from  the 
gross  amount  received:  P.^relt  v.  Johnson,  G4  Pa.  St.  223.  An 
action  is  brought  by  a  u;  ^ker  for  services  in  procuring  a  })ur- 
chaser  for  a  lot  of  land  at  a  certain  price.  Held,  that  evidence 
that  he  found  a  purchaser  who  agreed  to  take  the  land  at  a 
price,  provided  that  the  defendant  would  then  lease  the  same 
for  three  years  and  give  security  for  the  rent,  and  that  an  agroo- 
ment  was  drawn  up  to  that  effect  and  signed  by  the  defendant, 
but  that  the  purchaser  refused  to  sign  unless  the  defendant 
would  first  take  a  lease  and  give  security,  failed  to  show  that 
ho  procured  a  purchaser  who  agreed  to  buy  at  any  price:  Mas- 
ten  v.  Grifjing,  33  Cal.  111.  Plaintiff,  a  real  estate  broker, 
without  any  express  contract  of  employment  wit)i  defendant, 
introduced  to  him  a  person  who  purchasod  of  him  a  piece  of 
land.     Plaintiff  was  present  dur^'ng  the  negotiation  between  the 


410 


411 


BROKERS    AND   FACTORS. 


§220 


parties,  and  spoke  disparagingly  of  the  value  of  the  property, 
and  suggested  that  the  price  asked  was  too  large.  He  also  was 
present  with  the  parties  at  the  consummation  of  the  contract 
and  the  delivery  of  the  deed.  Tiie  sale  was  brought  about  by 
means  of  plaintiff,  and  but  for  him  the  parties  would  not  have 
come  together;  but  during  the  whole  transaction  defendant 
su])posed  plaintiff  was  acting  as  the  agent  of  the  jjurchaser, 
and  never  intended  to  employ  him  for  himself.  In  an  action 
to  recover  a  commission  on  the  sale,  held,  that  no  contract  of 
employment  was  implied  from  the  facts  in  the  case,  and  that 
plaintiff  was  not  entitled  to  recover:  Afwatcr  v.  Loctwood,  89 
Conn.  45.  At  the  time  of  making  the  sale  the  seller  told 
the  broker  who  had  negotiated  the  sale  that  he  must  get  his 
commissions  from  the  buyer,  and  there  was  no  evidence  that 
the  seller  ever  employed  the  broker.  Held,  that  the  seller  was 
not  bound  to  pay  the  broker,  as  he  had  not  chi^doyed  him: 
Goodspced  v.  Rohinson,  1  Ililt.  423.  A  contracted  with  brokers 
to  find  a  purchaser  for  his  land,  agreeing  to  give  tliem  as  com- 
mission all  that  the  land  brought  above  one  thousand  dollars. 
Without  their  consent  ho  sold  it  for  twelve  liundred  dollars  to 
a  purchaser  found  by  himself.  Held,  that  they  were  not  entitled 
to  any  commission:  Stewart  v.  Murray,  92  Ind.  54.'>;  47  Am. 
Rep.  1G7.  A  broker  whom  A  employed  to  sell  land  for  a  com- 
mission, and  advised  of  his  title  to  it,  and  that  he  "could  give  a 
warranty  deed  of  the  same,"  introduced  B  as  a  person  desirous 
of  buying  the  land;  and  13  then  bargained  with  A  for  its  pur- 
chase at  a  fixed  price,  but  before  completing  a  valid  contract 
discovered  a  defect  in  A's  title.  A  thereupon  agreed  with  B  to 
sell  the  land  -at  public  auction  under  a  power  by  the  duo  exe- 
cution of  which  a  valid  title  could  be  conveyed;  and  B  agreed 
to  buy  it  at  the  auction,  but  did  not  do  so,  and  it  was 
bought  at  the  auction  by  C  for  a  price  larger  than  that  fixed 
between  A  and  B.  Held,  that  A  was  ncvt  liable  to  the  broker 
for  commissions  or  services:  Tombs  v.  Alexander,  101  Mass. 
255;  3  Am.  Rep.  349.  A  employed  B,  a  broker,  to  sell  a  house. 
B  procured  of  C  an  offer  of  five  thousand  dollars,  which  B 
advised  A  not  to  accept.  A  afterwards  negotiated  a  sale 
thereof  to  C  at  five  thousand  three  hundred  dollars.  Held, 
that  B  was  not  entitled  to  any  commissions  on  the  sale,  A 
being  the  procuring  cause:  White  v.  TwitchitKj.^,  20  Ilun,  503. 
D.  employed  several  brokers  in  Baltimore  to  effect  for  him  a 
loan  of  ten  thcKisand  dollars  for  three  years  at  eight  per  cent, 
to  be  secured  by  a  mortgage  on  certain  real  estate.  One  of 
these,  G.,  discovered  a  person  able  and  willing  to  make  the 
loan,  and  notified  D.,  who  declined  to  accept,  stating  that  he 
had  already  perfected  a  loan  of  that  amount  on  the  same  prop- 


226 


PRINCIPAL   AND   AGENT. 


412 


erty,  and  at  the  same  rate,  for  one  year,  through  one  of  the 
other  agents  whom  he  had  employed,  and  had  paid  him  his 
full  com  missions.  It  was  a  usage  among  the  brokers  in  Balti- 
more, that  when  two  or  more  are  employed  to  negotiate  the 
same  transaction,  the  broker  who  first  succeeded  in  making 
such  negotiation  was  entitled  to  full  commissions,  and  the 
others  were  !iot  entitled  to  any.  Held,  that  G.  was  not  entitled 
to  recover  any  commissions:  Glenn  v.  Davidson,  37  Md.  3G5. 
The  defendant  employed  a  broker  to  sell  his  country  place, 
and  the  broker  introduced  R.,  who  had  a  mine  he  proposed  to 
exchange  for  it.  The  proposition  was  rejected.  A  year  and  a 
half  after,  R.  bought  the  place  of  defendant  as  agent  for  his 
wife.  Held,  that  defendant  was  not  liable  for  commissions  to 
the  broker:  Harris  v.  Burtnctt,  2  Daly,  189.  W.,  owning  cer- 
tain stock,  offered  to  pay  G.  "a  liberal  commission"  if  G.  would 
Bell  it,  but  named  no  price,  and  directed  G.  to  inform  him  if 
any  offer  was  received  for  it.  G.  procured  an  offer,  but  W. 
refused  it,  naming  a  higher  price.  G.  then  found  another 
party,  II.,  conversed  with  him  about  buying  the  stock,  and 
advised  \V.  to  meet  R.  at  a  certain  time  and  place  therefor. 
W.  met  R.,  and  sold  him  the  stock  at  the  higher  price.  Held, 
that  proof  of  these  facts  would  not  support  an  action  by  G. 
against  W.  for  the  commission:  Gillespie  v.  Wilder,  99  Mass. 
170.  The  owners  of  real  estate  expressly  refuse  to  employ 
the  plaintitT,  a  broker,  in  selling  their  property.  Held,  that 
the  mere  fact  that  the  plaintiff,  having  ascertained  the  price 
charged  for  the  property,  sent  a  purchaser,  to  whom  a  sale  was 
effected,  did  not  entitle  him  to  recover  commissions:  Pierce 
V.  Thomas,  4  E.  D.  Smith,  354.  A  broker  not  employed  by  the 
owner,  the  defendant,  offered  to  sell  to  one  whose  attention  had 
been  attracted  by  the  owner's  advertisement,  but  the  custoujer 
said  lie  would  see  the  owner;  afterwards  the  broker  was  em- 
ployed to  sell,  but  the  customer,  without  again  seeing  him, 
bought  of  the  owner.  Held,  that  the  broker  had  earned  no 
commission:  Cushman  v.  Gori,  1  Hilt.  356.  K.  employed  a 
broker  to  sell  land.  It  was  agreed  that  if  K.  should  sell  without 
the  broker's  assistance  the  latter  should  have  nothing.  After 
the  broker  had  found  a  customer,  K.  reported  that  he  had  made 
a  proposition  to  S.,  and  was  awaiting  an  answer.  The  broker 
agreed  to  wait.  S.  accepted  K.'s  proposition.  Held,  that  the 
broker  was  not  entitled  to  a  commission:  Robinson  y.  Kindlcy, 
36  Kan.  157.  A  broker,  hearing  that  a  company  was  about  to 
advertise  for  bids  for  piles,  procured  from  each  of  several  deal- 
ers in  piles  a  promise  that  if  he  secured  a  sale  he  should  have 
a  commission,  he  offering,  as  an  inducement,  to  act  for  each, 
and  saying  notliiug  about  the  company  or  the  bidding.    Bids 


413 


BROKERS    AND    FACTORS. 


§  22G 


wcro  advertised  for,  and  one  secured  a  contract.  Ilchl,  that  he 
owed  the  broker  nothing:  Murray  v.  Beard,  102  N.  Y.  505.  A 
broker  got  froni  a  manufacturer  an  agreenieni  to  soli  certain 
goods  at  prices  to  cover  commissions.  The  transaction  fell 
through,  the  br  jker's  customer  making  default.  Held,  that  the 
broker  had  no  claim  on  the  manufacturer  for  commissions: 
Colwdl  V.  Springfield  Iron  Co.,  24  Fed.  Rep.  631.  Defendant 
employed  plaintiff  to  sell  the  Old  South  Church  property. 
Plaintiff  talked  with  P.  about  buying  it  for  his  own  purposes, 
but  P.  abandoned  the  idea.  Afterwards,  a  society  was  formed 
for  the  purpose  of  preserving  the  property,  and  there  not  being 
money  enough  subscribed,  it  became  necessary  to  get  some 
responsible  person  to  sign  a  mortgage  note,  and  this  P.  did, 
taking  a  conveyance  to  himself,  and  then  giving  a  note  and 
mortgage,  and  making  a  declaration  of  trust.  Held,  that  P. 
Avas  not  a  purchaser  so  as  to  make  defendant  liable  to  plaintiff 
for  commissions:  Viaux  v.  Old  South  Society,  133  Mass.  1.  A 
promises  B  a  certain  sum  if  he  will  produce  a  purchaser  of  A's 
property  at  a  specified  price.  Held,  that  B  cannot  recover  on 
such  promise  without  producing  a  person  able  and  willing  to 
pay  such  price.  The  stipulation  as  to  price  is  not  waived  by 
A's  selling  the  property  fo'*  a  less  price  than  a  person  produced 
by  B,  unless  he  does  so  with  knowledge  that  such  person  is 
able  and  willing  to  pay  the  price  stipulated  in  the  contract 
between  A  and  B:  Mr  Arthur  v.  Slauson,  53  Wis.  41.  A  is 
employed  as  a  broker  to  sell  B's  house,  on  the  agreement  that 
he  will  inform  B  if  ho  sends  a  purchaser,  and  A  and  C  then 
agree  that  if  C  will  procure  a  purchaser,  he  shall  share  with  A 
in  the  commission.  C,  on  going  to  look  at  the  house,  tells  B 
that  no  broker  has  any  tiling  to  do  with  tlie  trade,  a.d  a  price 
is  named  on  that  understanding,  aiA  the  house  is  bought  by  a 
purchaser  procured  by  C.  A  and  C  are  partners  in  the  business 
of  effecting  a  sale  of  B's  house  to  such  purchaser.  Held,  that 
C's  fraud,  though  not  participated  in  by  A,  will  bar  an  action 
by  A  against  B  for  tn-T  commission,  prosecuted  for  the  joint 
benefit  and  at  the  joint  expense  of  A  and  C:  Thwlng  v.  Clif- 
ford, 136  I\Iass.  482.  S.  met  R.,  a  real  estate  broker,  on  the 
street,  and  upon  inquiry  by  the  latter  in  regard  to  a  certain 
house  owned  by  S.,  said  that  he  would  sell  it  so  as  to  net  him- 
self twenty  thousand  dollars,  and  that  if  R.  could  sell  it  for 
twenty  thousand  five  hundred  dollars,  he  might  have  the  five 
hundred  dollars.  Some  months  afterwards  S.  sold  the  prop- 
erty to  G.  for  nineteen  thousand  five  hundred  dollars,  who 
came  from  R.,  from  whom  he  had  learned  the  property  was  for 
sale.  Held,  that  R.  was  not  entitled  to  any  commissions:  Rees 
V.  Spruancc,  45  111.  308.     A  broker  was  appointed  to  sell  land 


§227 


PRINCIPAL  AND  AGENT. 


414 


on  certain  terms.  Ho  showed  the  land  to  a  person  who  nego- 
tiated wholly  with  the  owner,  and  bought  on  lower  terms,  the 
owner  not  knowing  that  the  buyer  had  had  any  communica- 
tion with  the  broker,  and  the  owner,  when  the  negotiations 
began,  having  notified  the  broker  that  his  authority  was  sus- 
pended. Held,  that  the  broker  could  not  recover  commissions: 
Blodgett  v.  Railroad  Co.,  63  Iowa,  606.  A  agrees  to  give  B  a 
commission  to  effect  a  sale  of  A's  land  within  a  specified  time, 
and  on  the  last  day  B  produces  one  Avho  will  buy  if  he  can  have 
a  reasonable  time  to  investigate  the  title,  which  time  A  refuses 
to  allow,  whereby  the  sale  falls  through.  Held,  that  B  cannot 
claim  commissions,  as  time  is  of  the  essence  of  the  contract: 
Watson  V.  Brooks,  11  Or.  271.  Defendant  agreed  to  pay  plain- 
tiff's a  certain  commission  for  selling  his  property  at  a  certain 
price.  II.,  the  purchaser,  refused,  in  the  first  place,  to  pay  the 
required  price,  but  afterwards  instructed  an  agent  to  buy,  and 
give  the  full  price  if  he  could  not  get  it  for  less.  The  agent 
bought  the  property  for  less  of  another  broker,  plaintiffs  having 
omitted  to  inform  defendant  that  H.  would  pay  the  full  price. 
Held,  that  plaintiffs  did  not  act  in  good  faith  by  such  omission, 
and  were  not  entitled  to  a  commission  for  effecting  a  sale:  Hen- 
derson V.  Vincent,  84  Ala.  99. 


§  227.  Factors  and  Del  Credere  Agents. — A  factor  is 
an  agent  for  the  sale  of  goods  in  his  possession  or  con- 
signed to  him.*    The  distinction  between  a  broker  and  a 


^  Wharton  on  Agency,  sec.  735; 
Evans  on  Agency,  3;  Story  on  Agency, 
sec.  33;  Burton  v.  Goodspeed,  (59 
111.  2.37;  Wliitficld  v.  Brand,  16 
Mees.  &  W.  288;  Edgerton  v.  Michels, 
6G  Wis.  124.  "The  diflference  be- 
tween a  factor  or  commission  merchant 
and  a  broker  is  stated  by  all  the  books 
to  be  this:  A  factor  may  buy  and  sell 
in  his  own  name,  and  ho  has  the  goods 
in  his  possession,  while  a  broker  as 
such  cannot  ordinarily  buy  or  sell  in 
his  own  name,  and  has  no  possession 
of  the  goods  sold.  Tlie  plaintiflFs  made 
the  sales  themselves,  in  their  own 
names,  at  their  own  store,  and  on 
commission,  and  had  possession  of  the 
goods  as  soon  as  the  sales  were  made, 
and  delivered  or  shipped  them  to 
their  customers.  Tliis  course  of  busi- 
ness clearly  constituted  them  commis- 
sion mercliauts  as  contradistinguished 
from  mere  brokers  or  agents  ":  Slack 
V.  Tucker,  23  Wall.  321.    In  Ward  v. 


Brandt,  11  Mart.  (La.)  331,  13  Am. 
Dec.  352,  it  is  said:  "  Factors  are  those 
who  are  appointed  to  transact  a  par- 
ticular business  in  the  name  of  an- 
other, and  not  in  their  own:  Curia 
Philipica,  Comercio  terrestre,  lib.  1,  cap. 
4,  n.  1.  Cfommission  business  is  tran- 
sacted in  this  city,  not  in  the  name  of 
the  principal,  but  in  the  name  of  the 
house  to  whom  the  property  is  trans- 
mitted for  sale.  They  dispose  of  it 
as  their  own,  take  bills  payable  to 
themselves  for  the  price,  and  when 
they  purchase,  it  is  they  who  state 
themselves  buyers,  not  the  house  in 
Philadelphia,  London,  or  Paris,  who 
may  have  commissioned  them.  The 
different  members  of  the  sentence, 
taken  together,  convince  us  that  the 
intention  of  the  parties  was  to  estab- 
lish a  commission  house  in  this  city  of 
the  ordinary  kind.  The  expression 
'as  factors'  does  not  prove  anything 
else  was  contemplated;  for  the  mean- 


414 


415 


BROKERS   AND   FACTORS. 


§227 


factor  was  early  pointed  out  by  the  judges  in  the  English 
case  of  Baring  v.  Corric}  Here  Chief  Justice  Abbott  said: 
"The  distinction  between  a  broker  and  a  factor  is  not 
merely  no'ninal,  for  they  differ  in  many  important  par- 
ticulars. A  factor  is  a  person  to  whom  goods  arc  con- 
signed for  sale  by  a  merchant  residing  abroad,  or  at  a 
distance  from  the  place  of  sale,  and  he  usually  sells  in 
iiis  own  name,  without  disclosing  that  of  his  principal. 
The  latter,  therefore,  with  full  knowledge  of  these  circum- 
stances, trusts  him  with  the  actual  possession  of  the  goods, 
and  gives  him  authority  to  sell  in  his  own  name.  But 
the  broker  is  in  a  different  situation, — he  is  not  trusted 
with  the  possession  of  the  goods,  and  he  ought  not  to  sell 
in  his  own  name."  To  the  same  effect  Mr.  Justice  IIol- 
royd  observed  in  the  same  case,  that  a  factor  "is  a  person 
to  whom  goods  are  sent  or  consigned,  and  he  has  not 
only  the  possession,  but,  in  consequence  of  its  being 
usual  to  advance  money  upon  them,  ho  has  also  a  special 
property  in  them,  and  a  general  lien  upon  them.  When, 
therefore,  he  sells  in  his  own  name,  it  is  within  the  scope 
of  his  authority,  and  it  may  be  right,  therefore,  that  the 
principal  should  be  bound  by  the  consequences  of  such 
sale,  —  amongst  which  the  right  of  setting  off  a  debt 
due  from  the  factor  is  one.  But  the  case  of  a  broker  is 
different;  he  has  not  the  possession  of  the  goods,  and  so 
the  vendee  cannot  be  deceived  by  that  circumstance;  and 
besides,  the  employing  of  a  person  to  sell  goods  as  a  broker 
does  not  authorize  him  to  sell  in  his  own  name.  If,  there- 
fore, he  sells  in  his  own  name,  he  acts  beyond  the  scope 
of  his  authority,  and  his  principal  is  not  bound."  An 
agent  for  collecting  debts  merely  is  not  a  factor  within 


ing  attached  to  the  word  'factor'  in 
common  parlance  is  quite  consistent 
with  the  other  terms  of  the  sentence 
as  wo  understand  them.  Our  law  de- 
fines merchants  those  persons  who  buy 
and  sell  merchandise  to  make  profit  by 
it:  Curia  Philipica,  lib.  1^  cap.  1,  n.  3. 


Commission  merchants  who  have  a 
house  established  in  New  Orleans,  and 
who  live  by  buying  and  selling  those 
objects  which  form  the  commerce  of 
this  place,  come  within  the  letter  of 
the  definition  just  given." 
>  2  Barn.  &  Aid.  143. 


§227 


PRINCIPAL   AND   AGENT. 


41G 


the  Virginia  statute  of  limitations.*  Where  a  person  cm- 
ploys  another  to  sell  goods  and  wares  at  a  distant  place, 
and  agrees  that  the  employee  shall  receive  a  certain  sum 
yearly,  and  a  stipulated  portion  of  the  profits  for  his  ser- 
vices; and  the  employee  is  to  select  and  rent  a  business 
house,  and  employ  clerks,  and  conduct  the  business;  and 
all  rents  and  expenses  are  to  be  paid  out  of  th  j  proceeds 
if  sufficient,  but  if  not,  then  by  the  employer,  —  the  per- 
son conducting  the  business  is  a  factor.'^  A  "commission 
merchant,"  as  the  term  is  used  in  the  Alabama  revenue 
law,  is  synonymous  with  "factor,"  and  means  one  who  re- 
ceives goods,  chattels,  or  merchandise  for  sale,  exchange, 
or  other  disposition,  and  who  is  to  receive  a  compensa- 
tion for  his  services,  to  be  paid  by  the  owner,  or  derived 
from  the  sale,  etc.,  of  the  goods.  One  who  "shipped  cot- 
ton for  diircrent  parties,  or  for  about  ten  or  twelve  differ- 
ent persons,  to  a  firm  in  Boston,  and  received  a  return 
commission  on  the  cotton  so  shipped,"  is  only  a  shipping 
and  forwarding  agent,  and  cannot  be  said  to  be  carrying 
on  the  business  of  a  commission  merchant.' 

When,  generally  for  an  additional  commission,  he  guar- 
antees to  his  principal  the  payment  of  the  buyer's  debt, 
he  is  said  to  be  a  del  credere  agv.nt.'*  Whether  a  del  credere 
agent  is  responsible  to  his  principal  in  the  first  instance, 
or  only  as  a  guarantor,  is  a  question  upon  which  there  is 
much  conflict  of  opinion.  Mr.  Evans  says  he  "is  not 
responsible  to  his  principal  in  the  first  instance,  though 
a  contrary  opinion  at  one  time  prevailed.""  And  Judge 
Story"  treats  him  as  "liable  to  the  principal,  if  the  buyer 

1  Hopkirk  v.  Bell,  4  Cranch,  1C4;  3  N.   Y.    579;  5  Sand.    397;    FieM    v. 

Cranch,  4o4.  Syms,  2  Robt.  35;  Johnson  v.  O'Hara, 

■^  Winiio  r.  Hammond,.  37  111.  99.  5  Leigh,  456. 

'  Perkins,  r.  State,  50  Ala.  154.     As  *  Story  on  Agency,  sec.  33;    In  re 

to  the  right.s,  duties,  and  liabilities  of  Nevill,  L.   R.   G  Ch.  App.  397.     See 

commission    merehants,    in  cases  de-  Sharp  v.  Emmet,  5  Whart.  288;   34 

pending  upon    peculiar  and  unusual  Am.  Dec.  554. 

circumstances,  see  Ansleyv.  Anderson,  ''Citing  Hornby  v.  Lacy,  6  Maule 

35  Ga.  8;  Smith  v.  iaulkner,  12  Gray,  &  S.  1C6. 

251;  Vallo  v.  Cerre,  30  Mo.  575;  88  *  Story  on  Agency,  sec.  33,  citing 

Am.  Dec.  101;  Dodge  v.  Wilbur,  10  Thompson  v.  Ferkius,  3  Mason,  232. 


416 


417 


BROKERS   AND   FACTORS. 


§227 


fails  to  pay,  or  is  incapable  of  paying;  but  he  is  not  per- 
sonally the  debtor."  But  Mr.  Freeman,  in  his  note  in 
58  Am.  Dec.  171,  says:  "The  American  cases,  however, 
follow  the  early  English  decisions,  and  consider  him  as 
absolutely  liable  to  pay  the  price  when  the  credit  has  ex- 
pired," which  seems  to  be  abetter  statement  of  the  weight 
of  authority.'     A  del  credere  commission  is  not  demand- 


l  Maule 


1  Wolff  V.  Koppel,  2  Denio,  3G8;  43 
Am.  Dec.  751;  L'artwright  v.  Groene, 
47  Barl).  9;  Swan  v.  Nesinith,  7  Pick. 
220;  19  Am.  Dec.  282;  Sherwooa  v. 
Stone,  14  N.  Y.  2l>7;  Leverick  v. 
Meigs,  1  Cow.  645;  Blakcly  v.  Jacob- 
sou,  9  Bosw.  140;  Heubach  v.  Moll- 
mann,  2  Ducr,  227;  Milliken  v.  Byerly, 
6  How.  Pr.  214.  His  agreement  to 
guarantee  may  bo  i)rovccl  by  pa- 
rol, not  being  within  the  statute  of 
frauds:  Swan  ?\  Nesmith,  supra;  Sher- 
wood V.  Stone,  supra.  Tlio  American 
editor  of  Evans  on  Agency,  page  3, 
cites  Thompson  v.  Perkins,  3  Mason, 
230,  and  Bradley  v.  Richardson,  23 
Vt.  720,  as  supporting  the  modern 
English  rule.  The  authorities  are 
exhaustively  reviewed  in  Lewis  v. 
Brehme,  33  Md.  412,  3  Am.  Rep.  190, 
per  Alvey,  J,,  as  follows:  "When- 
ever an  agent,  in  considerat'on  of 
additional  commission,  such  as  was 
agreed  to  be  allowed  in  this  case, 
guarantees  to  his  principal  the  pay- 
ment of  debts  that  become  due 
through  his  agency,  he  is  said  to 
act  under  a  del  credere  commission. 
Wliat,  then,  is  the  nature  and  extent 
of  tliis  guaranty  ?  In  Grove  v.  Dubois, 
1  Term  Rep.  112,  a  case  of  a  policy- 
broker,  Lonl  Mansfield  answered  this 
question  in  very  plain  and  unquali- 
tied  terms  when  he  said:  'It  is  an 
aljsoluto  engagement  to  the  principal 
from  the  broker,  and  makes  him  lia- 
l)lc3  in  the  first  instance.  There  is  no 
occasion  for  the  principal  to  commu- 
nicate with  the  underwriter,  though 
the  law  allows  the  principal, /or  hii 
henpfit,  to  resort  to  him  as  collateral 
security.  Bub  the  broker  is  liable  at 
all  events.'  In  this  Mr.  Justice  Buller 
concurred,  and  said  that  ho  had  known 
many  actions  to  have  been  brought 
against  brokers  with  commissioa  del 
credere,  and  that  he  had  never  heard 
Vol.  L— 27 


any  inquiry  made  in  such  cases, 
whether  there  had  been  a  previous 
demand  upon  the  underwriter,  and 
refusal;  and  he  declared  that  sucli 
was  not  the  practice,  —  thus  showing, 
according  to  the  opinions  of  these 
great  judges,  tliat  the  obligation  of 
such  undertaking  was  priinnry  and 
absolute  in  its  character,  and  that  tiie 
agent  was  roganled  as  standincr  in  the 
relation  to  his  principal  of  an  original 
debtor.  Ten  years  after  the  case  of 
Grove  v.  Dubois,  the  case  of  Macken- 
zie V.  Scott,  G  Brown  Pari.  C  280,  oc- 
curred in  the  house  of  lords  on  an 
appeal  from  the  court  of  sessions  in 
Scotland.  That  case  was  very  analo- 
gous in  its  circumstances  to  the  one- 
before  us.  There  a  factor,  under  a. 
commission  del  credere,  sold  goods  and 
took  accepted  bills  from  the  pur- 
chasers, which  he  indorsed  to  a 
banker  at  the  place  of  sale,  and  re- 
ceived the  banker's  bill  for  tho 
amount,  payable  to  his  (the  factor's) 
own  order,  on  a  house  in  London. 
This  banker's  1)111  the  factor  indorsed 
and  transmitted  to  his  principal,  who 
got  the  same  accepted.  Tho  accep- 
tors and  drawer  having  failed  bofora 
payment,  it  was  held,  according  to 
the  head-note  of  the  case,  that  the 
factor  was  answerable  for  tho  amount 
of  the  bill,  being  personally  liable, 
under  his  commission  del  credere,  to 
satisfy  his  principal  the  price  of  the 
goods  sold.  It  was  insisted  in  that 
case,  as  it  has  been  in  this,  that  the 
del  credere  obligation  extended  only 
to  guaranteeing  the  payment  of  the 
price  of  the  goods  by  the  vendee,  and 
that  the  remittance  of  the  money  by 
the  factor  was  a  transaction  entirely 
different  and  distinct.  But  if  the 
uniform  interpretation  of  that  case  be 
correct  (there  being  no  reasons  as- 
signed for  the  judgment  given),  the 


g  227 


PRINCIPAL   AND   AGENT. 


418 


able  when  the  sale  is  made  on  credit,  but  is  nevertheless 
paid  for  in  cash  in  consideration  of  a  deduction  of  a  cer- 


argiiment  in  that  respect  tlicl  not 
avail;  a  id  in  viow  of  tlio  law  aa  it 
liatl  bcuu  auiiouncijil  iii  Orovo  i'.  Du- 
bois, it  id  not  tlifliciilt  to  perceive 
\ipo!i  what  ground  tliat  decision  was 
bddod;  and  afterward,  in  1803,  the 
same   general   ])ropositiou   was   again 

Eaintedly  asserted  as  the  law  of 
ngland,  in  the  case  of  Houghton  t*. 
Matthews,  3  Bos.  &  V.  489.  By  these 
djcioions;  the  law  was  regarded  as 
settled  ill  England,  until  about  the 
year  1810;  and  all  the  text-writers 
and  authors  of  ele'iientary  treatises 
upon  the  subject  of  commercial  con- 
tracts before  that  time,  laid  it  down 
as  the  uuiiuestionablo  law  that  an 
agent,  actiat;  uuiler  a  commission  del 
credere,  wa.i  bound  to  his  principal  in 
tlie  first  instance,  and  as  an  original 
debtor.  Tlio  law  will  be  found  so 
stated  by  Livermore,  in  his  work  on 
Agency,  401),  410;  Paley  on  Agency, 
40;  Comyn  oa  Contracts,  vol.  1,  253; 
and  Chitty  in  his  work  on  common 
law,  vol.  3,  222.  But  it  is  said  that 
the  cases  to  wliich  wo  have  referred 
do  not  now  annouuco  the  law  as  ac- 
cepted in  England,  a. id  we  are  re- 
ferred to  the  case  of  Morris  v. 
Clcajby,  4  Maule  &  S.  5Go,  decided 
in  181 G,  and  the  cases  following  on 
its  authority,  to  show  how  the  rule 
has  been  qualified,  if  not  entirely 
changed.  It  is  true,  in  the  case  of 
Morris  i\  Cleasljy,  Lord  Eileuborough 
did  express  a  decided  dissent  from 
the  principle  announced  in  the  previ- 
ous decisions,  both  as  to  the  nature 
and  scope  of  the  del  credere  obliga- 
tion. Ho  said  that  the  guarantor,  in 
consideration  of  t'.ie  commission,  is 
only  to  answer  for  the  solvency  of 
the  vendee,  and  to  pay  the  money  if 
the  vendee  does  not;  and  that,  on  the 
failure  of  tlie  vendee,  the  agent  is  to 
stand  in  his  place  and  make  his  de- 
fault good,  thus  clearly  placing  the 
agent  in  the  position  of  mere  surety 
to  the  purchaser  of  the  goods.  And 
if  such  be  the  true  nature  and  charac- 
ter of  the  contract,  seeing  that  it  is 
entirely  collateral  and  secondary,  it  is 
difficult  to  perceive  how  it  can  escape 
the  operation  of  the  statute  of  frauds. 
Be  that,  however,  as  it  may,  the  de- 


cision of  Lord  Elleuborougli  was  sanc- 
tioned by  the  case  of  I'celo  v.  North- 
cote,  7  Taunt.  478,  and  also  impliealy 
Banctionc  I  by  the  case  of  Call  r. 
Comber,  7  Taunt.  558,  i.i  the  common 

filcas.  And  from  the  time  of  tlie  o 
ast  decisions  until  very  recently,  all 
the  treatises  on  commercial  contracts 
have  (stated  the  law  in  accordance  witli 
the  opinion  of  Lord  Elleuborougli, 
taking  the  doctrine  of  Lord  Manstield 
to  have  been  overruled.  It  is  so 
stated  in  Chitty  on  Contracts,  Rus- 
sell on  the  Law  Relating  to  Factors 
and  Brokers,  Smith's  Commercial 
Xiaw,  and  in  other  works  treating  of 
the  subject.  Nor  has  there  been  uni- 
formity of  decision  on  the  subject  in 
the  courts  of  this  country,  though  wo 
think  the  dec'  led  weight  of  authority 
is  in  support  of  the  doctrine  r.u- 
nounced  in  Grove  v.  Dubois.  In  the 
case  of  Thompson  v.  Perkins,  3  Ma- 
son, 232,  before  Judge  Story,  in 
1823,  the  principle  of  Grove  i\  Dubois 
was  repudiated  as  being  incorrect, 
and  that  of  Morris  v.  Clcasby  sanc- 
tioned, though  the  facts  of  the  case 
do  not  appear  to  have  required  a  dis- 
tinct ruling  upon  the  particular  qucs- 
tio.i  now  presented.  It  was  an  action 
of  aiiiiiimpsit  by  the  principal  against 
the  assignee  of  the  factor  del  credere 
who  had  sold  the  goods  of  his  princi- 
pal and  taken  negotiable  notes,  pay- 
able on  time,  in  his  own  name,  for  the 
amount  of  sales;  and  afterward,  and 
before  the  notes  became  due,  the  fac- 
tor failed,  and  assigned  the  notes  to 
his  assignee  for  the  benefit  of  his 
creditors,  and  the  assignee  afterwards 
receiving  the  money  due  on  the  notes, 
it  was  held  that  the  princijial  was  en- 
titled to  recover  the  money  so  received 
from  the  assignee,  subject  to  a  deduc- 
tion of  the  amount  of  the  lien  of  the 
factor  for  his  commissions  and  charges. 
Upon  such  state  of  facts,  it  is  clear 
the  right  to  recover  was  equally  the 
result  of  the  doctrine  of  Lord  Mans- 
field as  that  of  Lord  EUenborougli. 
All  the  cases  concede  it  to  be  the  ri^ht 
of  the  principal  to  forbid  payment  to 
the  agent,  and  to  maintain  an  action 
himself  against  the  buyer  to  recover 
the  price  of  the  goods,  or  to  pursue  his 


418 


419 


BROKERS   AND   FACTORS. 


§227 


tain  percentage.*    A  factor  under  a  del  crcdcrc  commissioii 
becomes  liable  to  his  principal  when  the  purchase-money 


goods,  or  tho  notes  taken  from  them, 
into  tho  hands  of  third  prirties,  pre- 
cisely as   if    no  del  credere    contract 
existed.     And  though  such  right  in 
tho  principal  would  seem  to  consist 
only  with  a  collateral  undertaking  by 
tho  agent,   yet,    in  the  contract  drl 
credere,  being  Miii  genvrM,  it  is  held  in 
no  wiso  to  change  the  original  and  in- 
dependent character  of    tho    agent's 
undertaking  to  his  principal.     In  the 
case  of  Swan  v.  Nesmith,  7  Pick.  2'JO, 
19    Am.    Dec.   232,   occurring  a  few 
years  after  tho  case  in  3  Mason,  tho 
supremo  court  of   Massachusetts  de- 
cided that  the  legal  effect  of  a  com- 
mission del  credere  was  to  make  tho 
agent  liable  at  all  events  for  tho  pro- 
ceeds of  tho  sale,  so  that  he  might  be 
charged  in  indehUatus  asmmpsit,  as  for 
goods  sold  to  him.     Tliere   tho  con- 
tract was  admitted  to  be  original,  and 
not  collateral,  and  therefore  not  within 
tho  statute  of  frauds;  and  the  neces- 
sary conclusion  is,  that  the  court  in- 
tended fully  to  sanction  tho  principle 
of  Grove  v.  Dubois,  to  which,  and  the 
case  of  Mackenzie  v.  Scott,  they  refer 
for  the  definition  of  tbe  nature  of  the 
commission  del  credere.     And  so  in 
New  York  the  same  principle  is   es- 
tablished, as  will  be  seen  by  reference 
to  Wolf  V.  Koppel,  5  Hdl,  458,  and 
same  case  on  appeal,  2  Donio,  3(58, 
and  Sherwood  v.  Stone,  14  N.  Y.  2(i7. 
The  two  last  cases,  being  in  the  court 
of    last    resort,    fully    approve    and 
adopt,  as  far  as  we  can  discover  from 
the  opinions  delivered,   the  principle 
of  the  cases  of  Grove  v.  Dubois,  and 
Mackenzie    v.    Scott.     Judge    Story, 
however,  in  his  work  on  agency,  sec- 
tion 215,  adopting   his   own  view  of 
the  law  as  found  in  Thompson  r.  Per- 
kins, supported  by  Morris  v.  Cleasby, 
and  the  cases  in  the  common  pleas, 
.says  that  the  true  engagement  of  the 
agent  del  credere  is  merely  to  pay  the 
debt,  if  it  is  not  punctually  discharged 
by  the  buyer;  that,  in  legal  effect,  he 
warrants  or  guarantees  the  debt,  and 
thus  he  stands  more  in  the  character 
of  a  surety  for  the  debt  than  as  a 
debtor.    And  the  principle  is  so  stated 


in  other  American  treatises.  But 
with  all  duo  deference  to  tho  high 
authority  of  Judge  Story,  wo  think 
the  decided  weight  of  authority  is 
against  his  position.  In  England,  the 
question  has  buen  recently  under  dis- 
cussion and  rc-examination,  tho  re- 
sult of  which  is  quite  at  variance  with 
the  doctrine  laid  down  in  Morris  v. 
Cleasby.  In  Coutourier  r.  Hastic,  8 
Ex.  30,  tho  action  was  brought  by 
the  principal  against  his  factor,  who, 
on  commission  del  credere,  had  sold  a 
cargo  of  corn,  and  the  purchaser  re- 
fusing to  comply  with  the  contract  on 
insufJicient  grounds,  and  afterward 
becoming  bankrupt,  the  question  was, 
whether  tho  factor  was  liable  for  tho 
non-fulfillment  of  tho  contract,  by 
reason  of  his  del  credere  commission, 
there  being  no  guaranty  in  writing; 
and  the  court  held  the  factor  liable, 
not  regarding  tho  undertaking  as  one 
simply  to  pay  the  debt  of  another, 
within  tho  fourth  section  of  the  stat- 
ute of  frauds;  and  tho  decision  in 
Wolf  V.  Koppel,  5  Hill,  458,  was  re- 
ferred to  and  adopted  as  containing 
sound  law  upon  tho  subject.  And  in 
the  more  recent  case  of  Wickhain  v. 
Wickham,  2  Kay  &  J.  478,  Sir  Wil- 
liam Pa;.,'e  Wood,  tlien  the  vice-chan- 
cellor, and  at  present  the  lord  chan- 
cellor of  England,  in  referring  to  the 
case  of  (.'outourier  v.  Hastie  as  author- 
ity, said:  '  When  I  look  at  the  whole 
of  that  case,  and  consider  the  reasons 
given  by  the  judges  in  delivering  their 
judgments,  though  given  very  cau- 
tiously and  guardedly,  I  cannot  but 
conclude  that  they  considered  that  an 
agent,  entering  into  contract  in  the 
nature  of  a  del  credere  agency,  en- 
tered in  effect  into  a  new  substantial 
agreement  with  the  persons  whose 
agency  he  undertook;  that  the  agree- 
ment so  entered  into  by  him  was  not 
a  sim^de  guaranty,  but  a  distinct  and 
positive  tmdertakiiKj  on  his  part,  on 
lohich  he  loould  become  primarily  liahlc. 
Otherwise,  I  cannot  see  how  the 
learned  judges  could  arrive  at  the 
conclusion  that  the  undertaking  was 
not  within    the    statute    of    frauds.' 


»  Kingston  v.  Wilson,  4  Wash.  310. 


§228 


nilNCIPAL   AND   AQENT. 


420 


is  duo;  as  between  him  and  his  principal,  ho  then,  in 
cflbct,  becomes  the  purchaser,  or  is  substituted  for  the 
purchaser,  and  is  bound  to  pay,  not  conditionally,  but 
absolutely,  in  the  first  instance/ 

Illustrations. — ^  A  cotton  broker  Bolicited  orders  for  a  firm 
of  cotton  buyers,  receiving  a  commission  of  a  fixed  sum  per 
bale  from  them,  and  looked  to  them,  and  tiot  to  the  cotton,  for 
its  payment;  each  party  paid  its  own  expenses.  In  pursu- 
ance of  an  order  procured  by  the  broker,  tlio  firm  obtained 
cotton,  and  sent  the  invoices  theniof  to  the  purchaser,  and  the 
bills  of  lading,  with  drafts  attached,  to  the  broker,  with  instruc- 
tions not  to  deliver  the  hills  of  lading  until  the  drafts  were  paid. 
Held,  that  the  broker  was  not  the  partner,  nor  the  general  agent 
or  factor,  of  the  firm  intrusted  with  the  goods  for  sale  within  the 
statute:  Stollcnwcrck  v.  Thatcher,  115  Mass.  224. 

§  228.  Authority  Implied  to  Factor. — A  factor  has  im- 
plied authority  to  sell  or  buy  in  his  own  namo,^  and  upon 


Snppoainj;  this  to  bo  the  correct  con- 
clusiou  tlcduciblo  from  the  present 
state  of  tlio  authorities,  of  which  wo 
have  no  tk)ubt,  the  contract  being  dis- 
tinct ami  positive,  rendcrini?  tlieiigjnt 
primarily  liable,  it  necessarily  follows 
that  the  agent  stands  in  no  such  reli- 
tiou  to  hn  principal  as  that  of  mere 
surety  for  the  price  of  tho  goods  sold. 
His  relation  to  his  principal  is  that  of 
debtor  as  well  as  agent,  and  being  so, 
the  legal  consequences  of  the  debtor 
relation  must  follow.  Indeed,  it  was 
conceded  in  tho  case  of  Leverick  v. 
Aloigs,  1  Cow.  G45,  where  the  liability 
of  such  an  agent  was  attempted  to  be 
restricted,  that  if  by  the  cn!.(agenient 
the  agent  became  a  debtor  absolutely, 
as  if  he  were  himself  the  purchaser, 
he  would  be  bound  for  the  remittaneo 
of  tho  money,  as  well  as  for  its  pay- 
ment by  tho  buyer.  '  This  arises  from 
tho  general  principle  that  tho  debtor 
is  bound  to  make  payment  to  his 
creditor,  and  consequently,  if  ho  re- 
mits a  bill,  which  turns  out  of  no 
avail,  it  is  no  payment.  It  does  not 
discharge  a  precedent  debt,  unless  it 
bo  so  expressly  agreed  between  tho 
parties':  1  Salk.  124;  2  Johns.  Cas. 
441;  Glenn  v.  Smith,  2  Gill  &  J.  493; 
20  Am.  Dec.  452;  or,  unless  the 
credi'^or   parts  with    tihe    bill,   or  ia 


guilty  of  laches,  to  the  prejudice  of 
tho  debtor,  ia  not  presenting  it  for 
acceptance  or  payment  in  duo  time. 
Of  ccurse  the  agent,  acting  under 
a  commission  d<:l  crvdcre,  where  tho 
gooils  have  been  sold  on  au  autiiorized 
credit,  cannot  be  required  to  account 
to  hi  J  principal  l)efore  tho  expiration 
of  the  credit  given  to  the  buyer. 
And  if  the  money  which  comes  into 
his  lumd.s  be  remitted  under  .special 
instruction  from  tlie  principal,  then 
it  will  bo  at  tho  ri.ik  of  the  lat- 
ter, provided  the  instructions  are  ob- 
served with  proper  caution  and  dili- 
gence on  the  part  of  tho  agent.  But 
in  this  case  it  is  not  pretended  that 
there  were  any  special  instructions  ia 
regard  to  the  manner  of  remitting 
the  money  received  by  defendant. 
Tho  remittance,  therefore,  was  at  his 
risk,  as  it  would  be  of  any  other 
debtor  remitting  funds  to  discharge  a 
debt  duo  by  him." 

'  Cartwright  v.  Greene,  47  Ba)b.  9. 

''  Graham  v.  Duckwall,  8  Hush,  12; 
Josliu  V.  Cowee,  52  N.  Y.  90;  Story 
on  Ecjuity,  sec.  33;  Toland  «'.  Murray, 
18  Johns.  24;  Murray  v.  Tolaml,  3 
Johns.  Ch.  5G9;  White  v.  Chouteau,  10 
Barb.  202;  Girard  v.  Taggart,  5  Scrg. 
&  R.  19;  9  Am.  Dec.  327;  La<ld  v. 
Arkell,  37  N.  Y.  Sup.  Ct.  35.    He  must 


420 


421 


BROKERS   AND    FACTORS. 


§220 


n  reasonable  credit/  unless  such  sale  is  contrary  to  usapo 
or  instructions,"  to  give  a  warranty/  to  receive  payment,' 
to  insure  the  goods  of  the  principal/  und  he  may  sue  in 
his  own  name.* 


§  229.  Authority  not  Implied  to  Factor. — A  factor  has 
no  implied  authority  to  barter  his  principal's  goods/  or 
to  pledge  them/  or  delegate  his  authority/  or  to  receive 


follow,  luiwcvcr,  the  orders  of  his  prin- 
(•ip;il;  (/(ittou  r.  Hillur,  .W  Miss.  7; 
Villi  Aleii  V.  Vaiiderpool,  0  Johns.  70; 
5  Am.  J)io.  192;  except  where  lio  h.ia 
(lr;i\vii  against  the  coiiHignincnt  first: 
C'otton  V.  lliller.  52  xMiss.  7;  Weed 
r.  Adams,  .'{7  Conn.  .378;  Brown  v. 
Mcdrau,  14  I'et.  471).  A  factor  who 
has  niailu  advances  to  his  consignor 
may  proceed  to  sell,  notwithstanding 
the  service  of  an  attachment  sued  out 
by  a  creditor  of  tho  consignor.  The 
altacliing  creditor  cannot  arrest  a  sale 
without  tendering  to  the  factor  tho 
amoimt  of  his  advances:  Baugh  v. 
KiiUi>atrick,  54  Pa.  St.  84;  DiJ  Am. 
IJej.  07.").  Where  a  factor  sells  Ins 
priacipars  goods  under  a  del  credere 
coniinissiou,  the  title  to  tho  unpaid 
piircliasc-nioney  is  in  tho  j)riiicipal, 
nr)t  i.i  the  factor:  Moore  v.  Hillalirand, 
,'!7  Hun,  4'Jl. 

'  (loodeuow  V.  Tyler,  7  Mass.  3C;  5 
Am.  Dec.  22;  Lclaiid  v.  Douglass,  1 
Wend.  41)0;  Robertson  v.  Livingston, 
5  (\)w.  47.'};  Van  Alen  v.  Vaaderpool, 
C  Johuj.  70;  5  Am.  Dec.  192;  Clark 
V.  Van  Northwick,  1  Tick.  343;  Hap- 
good  V.  Batcheller,  4  Met.  570;  Day- 
li.dit  Burner  Co.  v.  Odlin,  51  N.  H, 
o'J;  12  Am.  Rep.  45;  Ureely  v.  Bart- 
lett,  1  Me.  178;  10  Am.  D"c.  54;  But- 
ton r.  Cloodspeed,  61)  111.  238;  Byrne 
?'.  Schway,  G  B.  Mon.  201;  James  v. 
McCredie,  1  Bay,  2!)4;  1  Am.  Dec. 
017;  Forrestier  r.  Bordman,  1  Story, 
4.!;  Foster  v.  Waller,  75  111.  414; 
Ernest  v.  StoUer,  5  Dill.  438;  Mc- 
Coiiiiioo  V.  Curzen,  2  Call,  3.'J8;  I  Am, 
Doc.  511. 

'^  Pinkham  v.  Crocker,  77  Mc.  50.3. 
But  SCO  Durant  v.  Fish,  40  Iowa,  5.")9. 

^  Schuchardt  v.  Allen,  1  Witll.  359. 

*  Evans  on  Agency,  175;  White  v. 


Chouteau,  10  Barb.  202;  Thompson  v. 
Fargo,  03  N.  Y.  479;  Ladd  r.  Arkell, 
37  N.  Y.  Sup.  Ct.  35;  Craliam  v. 
Duckwall,  8  Bush,  12. 

*  Johnson  v.  Campbell,  120  Mass. 
449;  Do  Forest  v.  Fulton  Ins.  Co.,  1 
Hall,  8-1;  Leo  v.  Adsit,  37  N.  Y.  78; 
Shoenfeld  v.  Fleisher,  73  111.  404. 
But  not  in  a  mutual  company:  Wliito 
V.  Madison,  20  N.  Y.  117. 

*  Wharton  on  Agency,  sec.  755;  To- 
Iftndf.  Murray,  18.Johns.  21;  (rirard  r. 
Taggart,  5  Serg.  &  R.  27;  9  Am.  Dec. 
327;  Ladd  v.  Arkell,  39  N.  Y.  Sup.  <  't. 
35;  Consiilerant  v.  Brisbane,  22  N.  Y. 
389;  (iorum  v.  Carey,  1  Abb.  Pr.  285; 
Dows  V.  Rush,  28  Barb.  157;  Ilsloy  v. 
Merriam,  9  Cush.  242;  54  Am.  Dec. 
721;  Croover  v.  Warfield,  50<ta.  044; 
Grinnell  i\  Schmidt,  2  Sand.  700. 

'  Evans  on  Agency,  170;  Wheeler 
etc.  R.  R.  Co.  V.  Givan,  05  Mo.  89; 
Guerriero?'.  Peilo,  3  Barn.  &  Aid.  010; 
Potter?;.  Dennisou,  10  111.  590;  Victor 
etc.  Co.  V.  Heller,  44  Wis.  205. 

8  Wright  D.  Salomon,  19  Cal.  01;  79 
Am.  Dec.  190;  Bott  v.  McCoy,  20  Ala. 
578;  50  Am.  Dec.  223;  Bouito  r.  Mos- 
qucra,  2  Bosw.  401 ;  Rodriguez  r.  Heffe- 
man,  5  Johns.  Ch.  429;  L'rfpihart  v. 
Mclver,  4  Johns.  103;  Van  Amriiigo 
V.  Peabody,  1  Mason,  440;  Kelly  v. 
Smith,  1  Blackf.  290;  Voss  v.  Robert- 
son, 40  Ala.  483;  Evans  v.  Potter,  2 
Gall.  13;  McCreary  v.  (^aines,  55  Tex. 
485;  40  Am.  Rep.  818;  Kinder  r.  Sh  iw, 
2  Mass.  398;  Gray  v.  Agnew,  14  Am. 
Law  Rev.  457;  Bowie  v.  Napier,  1 
McCord,  1;  10  Am.  Dec.  611;  Kennedy 
V.  Strong,  14  Johns.  128;  Macky  v. 
Dillinger,  73  Pa.  St.  85;  Laussatt  v. 
Lippincott,  G  Serg.  &  R.  380;  9  Am. 
Dec.  440.  Allowed  now  in  .some  states 
by  statute:    See  Macky  v.  DiUiuger, 


'  Ante,  Chapter  VI.,  Delegation  of  Authority. 


§  230 


PRINCIPAL   AND  AGENT. 


422 


payment  except  in  the  usual  mode,*  or  to  compound  or 
ditjcluirgo  tlio  debt,^  or  to  accept  or  indorse  bills  on  bcluilt" 
of  his  principal,'  or  to  extend  the  credit,^  or  to  submit  a  dis- 
pute to  arbitration.'*  A  sale  by  a  factor  creates  a  contract 
])otvveen  the  purchaser  and  the  principal,  and  the  former 
may  pay  the  latter,  even  against  the  factor's  wishes.'  "  The 
general  rule  is,'  that  a  factor's  sale  creates  a  contract  be- 
tween the  owner  and  the  buyer;  and  where,  a  factor  hav- 
ing sold  upon  credit,  the  owner  or  principal  gives  notice 
of  his  interest  and  claim  to  the  buyer  before  payment, 
and  requires  him  not  to  pay  the  factor,  the  buyer  will  not 
be  justilied  in  afterwards  paying  the  factor.  And  this 
rule  applies  whether  the  factor  has  or  has  not  named  his 
principal  at  the  time  of  the  sale.®  There  are  exceptions 
to  this  rule,  as  where  the  factor  sells  in  his  own  name, 
being  himself  responsible  for  the  price  of  the  goods  sold, 
whether  collected  or  not;  or  where  he  sells  them  to  his 
own  creditor,  where  there  arc  mutual  dealings.  The  prin- 
cipal cannot,  in  those  cases,  interfere  to  the  prejudice  of 
the  party  dealing  with  the  factor,  without  any  knowledge 
of  his  agency;  and  only  the  balance,  if  any  be  due  to  the 
factor,  may  be  reclaimed  by  the  principal." 


§  230.    What  Factor  Bound  to  do  —  His  Duties  and 
Liabilities.  —  A  factor  is  bound  to  obey  the  instructions 


73  Pa.  St.  85;  Hutchinson  v.  Bours,  6 
Cal.  385;  Jennings  v.  Morrill,  20 
Wend.  1;  Cartwright  v.  Wilmerding, 
24  N.  Y.  521.  See  note  in  58  Am.  Dec. 
1G5.  Under  the  Missouri  statutes  a 
factor  is  not  authorized  to  pledge  the 
consignor's  goods  for  an  amount  be- 
yond the  sum  of  the  advances  and 
charges  thereon:  Steiger  v.  Third 
Bank,  2  McCrary,  494.  Where  a 
consignor  draws  a  sight  draft  upon 
his  consignee  before  the  latter  bus  sold 
the  goods  consigned,  a  pledge  by  the 
consignee  of  the  consignment,  to  secure 
a  loan  with  which  to  meet  the  draft, 
is  vali<l:  Boyce  v.  Commerce  Bank,  22 
Fed.  Rep.  53. 


*  Evans  on  Agency,  ]  76;  Wharton 
on  Agency,  sec.  741. 

*  Evans  on  Agency,  176. 

*  Evans  on  Agency,  176. 

*  Myers  v.  Eutriken,  6  W'atts  &  S. 
44;  40  Am.  Dec.  5.38;  Douglass  v.  Ber- 
nard, Anth.  278.  But  bo  may  alter 
the  form  of  tlie  security,  provided  it 
does  not  extend  or  impair  the  credit: 
Corliesw.  Gumming,  OCow.  181. 

*  Carnocbanw.  Gould,  1  Bail.  179;  19 
Am.  Dec.  669. 

"  Golden  V.  Levy,  1  Car.  Law  Rep. 
527;  6  Am.  Dec.  555. 

'  Kelley  v.  Munson,  7  Mass.  319;  5 
Am.  Dec.  47. 

•*  BuU.  N.  P.  130. 


423 


BROKKIIS   AND   FACTORS. 


230 


of  his  principiil  ns  to  tho  terras  on  which  ho  may  soil,'  or 
other  mutters.^  If,  however,  a  certiiiii  thin<;  is  loft  to  tho 
discretion  of  tho  factor,  it  is  not  u  breach  of  orders  to  dis- 
regard a  mere  wish  or  dcsiro  expressed  by  tho  principal.^ 
If  the  factor  is  given  discretion  in  the  matter,  lie  is  not 
responsible  for  a  loss  arising  from  an  error  of  judgment.^ 


'  Mann  v.  Laws,  117  Mans.  293; 
Scott  V.  Ro;,'er8,  31  N.  Y.  <)7();  Riiii- 
dlu  V.  Mooro,  3  Johns.  Van.  'Mi;  VVil- 
liiuiis  v.  Littlofiol  1,  12  Woiid.  Uii:); 
Copes  r.  I'liulpH,  24  La.  Ann.  502;  Day 
V.  Crawford,  1.'}  (Ja.  508;  Atkinson  v. 
Burton,  4  Uusli,  201);  Phillips  r.  Scott, 
4;j  Mo.  8(5;  07  Am.  Dec.  360;  Gray  v. 
Bass.  42  t!a.  270;  Blot  v.  Boiccau,  3 
N.  Y.  78;  51  Am.  Dec.  345;  Martield 
V.  Gooilhuo,  3  N.  Y.  02;  Lo  (Juou  v. 
Crouvuruuur,  1  Johns.  Cas.  437;  1  Am. 
Due.  121;  Urquhart  ?\  Mclver,  4 
Jdlins.  lO.'l;  Woudr'.  Adams,  37  Conn. 
378;  Milhunk  v.  Dennistoun,  21 
N.  Y.  380;  Bossont  v.  Harris,  03  N. 
C.  542;  Courcicr  v.  Hitter,  4  Wash. 
C.  C.  540;  Jcrvis  v.  Hoyt,  2  Hun,  037; 
Wilson  V.  Wilson,  20  Pa.  St.  304; 
Howatt  V.  Davis,  5  Munf.  34;  7  Am. 
Dec.  081;  Blis3  V.  Arnold,  8  Vt.  252; 
30  Am.  Doc.  407;  Johnson  r.  Wade,  2 
Baxt.  480;  Strong  v.  Stewart,  9  llei^k. 
137;  Maxwell  »>.  Audinwood,  15  Hun, 
111;  Marshall  v.  Williams,  2  Biss.  255; 
Hall  V.  Storrs,  7  Wis.  253;  Barksdalc 
V.  Brown,  1  Nott  &  McC.  517;  0  Am. 
Dec.  720;  Durant  r.  Fish,  40  Iowa, 
550.  See  George  r.  McNeill,  7  La.  124; 
20  Ain.  Dec.  408.  Goods  were  con- 
siifued  to  a  factor,  with  instructions  to 
sell  them  "on  arrival."  Tlic  factor 
did  not  sell  them  on  their  arrival,  and 
the  market  afterwards  declined.  Ildil, 
that  he  was  lialilo  for  damages:  Evans 
V.  Root,  7  N.  Y.  187;  57  Am.  Dec. 
512.  Said  tho  court:  "It  is  laid  down 
i;i  Paley  on  Agency,  edition  of  1822, 
l^age  4,  that  the  primary  ol)ligatioa  of 
au  agent  whose  authority  is  limited  by 
instructions  is  to  adhere  faithfully  to 
tho.^e  instructions,  for  if  he  iinMeces- 
sarily  exceed  his  commission  or  risk 
his  principal's  effects,  without  author- 
ity, he  renders  himself  responsible  tor 
the  consequence  of  his  act.  In  Run- 
dlo  V.  Moore,  3  Johns.  Cas.  30,  it  is 
said  that  'if  the  defendants  have,  as 
the  agents  or  factors  of  the  plaintifTs, 


through  mistake  or  design,  disobeyed 
tlieir  instructions,  they  are  undoubt- 
edly re.sponsiltlo.'  So  i'l  Parkicit  r. 
Alexander,  1  Johns.  C'h.  301,  it  u  laid 
down  tiuit  '  if  an  agent  dt'iiarts  from 
the  instructioii-t  of  liis  piinripai,  ho 
does  it  at  Ids  peril.'  In  Courcicr  v. 
Hitter,  4  Wash.  C.  C.  540,  it  was  held 
tliat  it  was  tlio  duty  of  an  agent  wlio 
was  instructed  to  make  sale  of  tho 
article  consigned  for  sale,  'iiiniiriiinltli/ 
on  arriv'd,  to  sell  immeiliattly  on  ar- 
rival, no  matter  at  what  loss.'  Sue 
also,  to  the  same  otl'ect.  Bell  r.  Palmer, 
6  Cow.  128,  where  an  a;^ent,  under 
similar  instruction.s,  was  held  lialdofor 
refusing  the  first  otl'er.  although  under 
the  market  price.  And  tiiis  is  a  rea- 
sonable doctrine,  for  if  a  loss  occur  by 
reason  of  au  implicit  obedience  to  tlio 
instructions  of  the  owner,  such  lojs 
falls  on  liim.  Consiilering  the  latenesj 
of  tho  season,  and  the  probability  of  a 
rapid  decline  ni  prices,  wo  can  well 
see  why  the  plaintiff  would  desire  a;i 
immediate  sale  of  the  Hour,  and  be 
willing  to  take  the  consequences  of 
such  deduction  from  tlie  market  price 
as  might  be  neces^iary  to  effuct  a  hjAc, 
rather  than  incur  tlie  <langor  of  delay. 
The  supremo  court,  in  reusing  a  new 
trial,  placed  tlieir  decision  ujiou  t!ie 
uncertain  nature  of  thu  instinctionj. 
But  it  seems  to  us  tliat  a  direction  '  to 
sell  on  arrival'  is  an  explicit  instruc- 
tion; and  the  dufenilant  seowiu  to  have 
so  understood  it,  in  his  lutter  of  t!;e 
25th  of  August.  It  is  sidtstantially 
like  the  instruction  in  the  ca.-ju.s  i  i  tl;e 
sixth  volume  of  Cowvn,  and  i;i  Wash- 
ington's circuit  court  report  i." 

■'  Shoentield  v.  Fleishur,  73  111.  404; 
De  Tastett  v.  Crousillat,  2  Wash. 
132. 

*  Harper  u  Kean,  11  Serg.  &  R.  2S0; 
Vianna  r.  Barclay,  3  Cow.  281;  La 
Fargo  r.  Kneel  md,  7  Cow.  4511 

*  Milbank  v.  Dennistoun,  21  N.  Y. 
386. 


§  230 


PRINCIPAL   AND   AGENT. 


424 


If  no  instructions  are  given  him  as  to  the  terms  or  time 
of  sale,  he  is  at  liberty  to  sell  at  such  time  and  on  sucli 
terms  as  his  best  discretion  prompts.^  But  if  factors  have 
made  advances  on  the  goods  in  their  hands,  the  princi- 
pal's orders  may  be  disobeyed,  and  th  jy  may  sell  at  a  time 
or  on  terms  which  they  may  deem  best  to  indemnify 
themselves.'^  Thus  a  factor  who  has  made  advances  on 
goods  may  sell  them  below  the  price  limited,  if  the  con- 
signor has  after  notice  refused  to  repay  the  advances.^ 
The  rule  is  stated  at  length  by  Mr,  Justice  Story  in  a  lead- 
ing case.'*  "  We  understand,"  says  he,  "  the  true  doctrine 
on  the  subject  to  be  this:  Whenever  a  consignment  is 
made  to  a  factor  for  sale,  the  consignor  has  a  right,  gen- 
erally, to  control  the  sale  thereof,  according  to  his  own 
pleasure,  from  time  to  time,  if  no  advances  have  been 
made,  or  liabilities  incurred  on  account  thereof,  and  the 
factor  is  bound  to  obey  his  orders.  This  arises  from  the 
ordinary  relation  of  principal  and  agent.  If,  however, 
the  factor  makes  advances  or  incurs  liabilities  on  account 
of  the  consignment,  by  which  he  acquires  a  special  prop- 
erty therein,  then  the  factor  has  a  right  to  sell  so  much 
of  the  consignment  as  may  be  necessary  to  reimburse 
such  advances,  or  meet  such  liabilities,  unless  there  is 
some  existing  pgreement  between  himself  and  the  con- 
signor, which  controls  or  varies  this  right.  Thus,  for 
example,  if  contemporaneous  with  the  consignment,  and 
advances  or  liabilities,  there  are  orders  given  by  the  con- 
signor which  are  assented  to  by  the  factor,  that  the  goods 
shall  not  be  sold  until  a  fixed  *ime,  in  such  a  case  the 
consignment  is  presumed  to  be  received  by  the  factor 
subject  to  such  orders;  and  he  is  not  at  liberty  to  sell  tlie 


»  Marfield  v.  Goodhue,  3  N.  Y.  62; 
Given  r.  Leiioine,  .'iS  Mo.  110. 

•^  Browu  V.  McUidu,  14  Pet.  479; 
Feild  V.  Farrington,  10  Wall.  141. 
He  has  entire  discretion  as  to  time, 
price,  and  place  of  sale,  and  is  not 
even  limited  by  positive  instructions 


where  he  has  made  advances  upon 
consignments,  and  the  disposal  thereof 
becomes  necessary  to  protect  liiiiisclf 
against  loss:  Phillips  t'.  fejcott,  43  Mo. 
8G;  97  Am.  Dec.  3(J9. 

3  Parker  v.  Brancker,  22  Pick.  40. 

*  Brown  t'.  McGrau,  14  Pet.  479. 


424 


425 


BROKERS    AND   FACTORS. 


§  230 


goods  to  reimburse  his  advances  or  liabilities  until  after 
that  time  has  elapsed.  The  same  rule  will  apply  to  orders 
not  to  sell  below  a  fixed  price,  unless,  indeed,  the  con- 
signor shall,  after  due  notice  and  request,  refuse  to  pro- 
vide any  other  means  to  reimburse  the  factors.  And  in 
no  case  will  the  factor  be  at  liberty  to  sell  the  consign- 
ment contrary  to  the  orders  of  the  consignor,  although  he 
has  made  advances  or  incurred  liabilities  thereon,  if  the 
consignor  stands  ready  and  offers  to  reimburse  and  dis- 
charge such  advances  and  liabilities.  On  the  other  hand, 
where  the  consignment  is  made  generally,  without  any 
specific  orders  as  to  the  time  or  mode  of  sale,  and  the 
factor  makes  advances  or  incurs  liabilities  on  the  footing 
of  such  consignment,  there  the  legal  presumption  is,  that 
the  factor  is  intended  to  be  clothod  with  the  ordinary 
rights  of  factors  to  sell,  in  the  exercise  of  a  sound  discre- 
tion, at  such  time  and  in  such  mode  as  the  usage  of  trade 
and  his  general  duty  require;  and  to  reimburse  himself 
for  his  advances  and  liabilities  out  of  the  proceeds  of  the 
sale;  and  the  consignor  has  no  right,  by  any  subsequent 
orders  given  aftc  advances  have  been  made  or  liabilities 
incurred  by  the  lactor,  to  suspend  or  control  this  right  of 
sale,  except  so  far  as  respects  the  surplus  of  the  con- 
signment not  necessary  for  the  reimbursement  of  such 
advances  or  liabilities.  Of  fonrr.e  this  right  of  the 
factor  to  sell  to  reimburse  himsct  for  his  advances  and 
liabilities  applies  with  stronger  force  to  cases  where 
the  consignor  is  insolvent,  and  where,  therefore,  the 
consignment  constitutes  the  only  fund  for  indemnity." 
The  principal  cannot  revoke  the  factor's  authority  to 
sell  the  goods  in  his  hands,  after  advances  have  been 
made  by  him,  except  as  to  the  surplus  of  goods  in  his 
hands  after  liquidating  the  advances.*     In  New  York  and 

'Howard  v.  Smith,  56  Mo.  314;  etc.  R.  Co.,  2  111.  App.  ISO;  Benny  v. 
Bell  r.  naiinah,  3  Baxt.  47;  Mooney  v.  Rhodes,  18  Mo.  147;  59  Am.  Dec. 
Jiuadcr,  45  Ind.  115;  Nelaou  v.  Chicago    293. 


§  230 


TRINCIPAL   AND   AGENT. 


426 


some  other  states  the  rule  in  the  federal  courts  has  been 
thought  too  lax,  and  it  is  held  that  the  factor  must  obey 
the  principal's  orders,  although  he  has  made  subsequent 
advances,  unless  the  principal,  after  a  reasonable  notice, 
fails  to  repay  the  advances.^  And  the  factor  may  dis- 
regard instructions  as  to  time  or  terms  of  sale,  where  an 
emergency  has  arisen  which  requires  that  they  be  sold  at 
once  or  there  will  be  a  great  loss,  or  where  the  goods  are 
of  a  perishable  nature,  and  not  in  a  condition  longer  to 
kecp.'^ 


'  Marlield  v.  Goodhue,  3  N.  Y.  62; 
Blot  V.  Boicoau,  3  N.  Y.  78;  51  Am. 
Dec.  345;  Wilson  v.  Little,  2  N.  Y. 
4i3;  51  Am.  Dec.  307;  Hiiulei'.  Smith, 
GLan.s.  4G4;  Wlielau  v.  Lynch,  05  Barb. 
327;  L^pham  V.  Lafavour,  11  Met.  174; 
Frothinghain  v.  Everton,  12  N.  H. 
239;  Weed  v.  Adams,  37  Coun.  378; 
Stall  V.  Meek,  70  Pa.  St.  181;  Whit- 
ney-c.  Wynian,  24  Md.  131;  Ward  v. 
Bledrfoe,  32  Tex.  251;  Mooney  ii  Mus 
ser,  45  Iiid.  115. 

-  McCoIlough's  Commercial  Diction- 
ary, tit.  Factors;  Wharton  on  Agency, 
sec.  75'J.  See  Foster?".  Smith,  2  Cold. 
474;  88  Am.  Dec.  G04;  Cliapman  v. 
Walton,  10  Bing.  57;  Forrestier  v. 
B>)rdMian,  1  Story,  43;  Ward  v.  Bled- 
soe, 32  Tex.  251;"  Weed  ?•.  Adams,  37 
Coun.  378;  Ilowlaudr.  Davis,  40  Mich. 
545;  Bnttcrfield  I'.  Stei)hcjns,  55)  Iowa, 
5%;  Blair  v.  Childs,  10  Heisk,  199; 
Jdslin  r.  Cowee,  52  N.  Y.  95,  where  it 
is  .said:  "It  is  the  duty  of  a  factor  to 
<lo  his  utmost  to  protect  his  principal 
from  loss,  and  in  extraordinary  emer- 
gencies he  is  authorized  to  assume  ex- 
traordinary powers,  even  to  the  extent 
of  deviating  from  the  general  instruc- 
tions of  his  principal."  In  Greeuleaf  v. 
Moody,  13  Allen,  303,  the  court  said: 
"The  ordinary  rule  is  clear,  that  fac- 
tors must  obey  the  instructions  of 
their  principal;  that  they  may  not 
compromise  debts  without  authority; 
that  they  nuist,  under  a  change  of 
circumstances,  advise  the  consignor, 
and  await  hia  directions;  and  that 
they  must  conform  to  the  usages  of 
trade  presumed  to  be  known  to  both 
])arties,  or  to  tlic  course  pursued  by 
them  and  approved  by  the  owner  in 


former  instances.  But  whai  is  their 
duty  in  novel,  critical,  and  unforeseen 
emergencies?  To  answer  this  ques- 
tion, we  may  refer  to  an  ojtinion  of 
Mr.  Justice  Story  in  a  suit  relative  to 
the  conduct  of  a  supercargo  who  had 
totally  departed  from  the  instructions 
of  the  shipper,  which  is  so  apposite 
that  we  adoi)t  its  principles  and  the 
substance  of  its  language.  In  circu  u- 
stancea  of  necessity  or  great  urgeu'  v , 
it  is  only  necess"ry  that  the  agen. 
should  act  bona  Jide  and  with  reason- 
able discretion.  '  What,  then,  was  it 
the  duty  of  the  supercargo  to  do  in 
such  a  case  of  ur.  expected  occurrence, 
not  within  the  contemplation  of  the 
instructions?'  'Now,  I  t:die  it  to  be 
clear,  that  if,  by  some  sudden  emer- 
gency, or  supervening  necessity,  or 
other  unexpected  event,  it  becomes 
impossible  for  the  supercargo  to  com- 
j)ly  with  the  exact  terms  of  his  instruc- 
tions, or  a  literal  compliance  therewith 
would  frustrate  the  objects  of  the 
owner  and  sacrifice  his  interests,  it 
becomes  the  duty  of  the  supercargo, 
under  such  circumstances,  to  do  the 
best  he  can,  in  the  exercise  of  a  .sound 
discretion.'  'He  becomes,  in  such  a 
case,  an  agent  from  necessity  for  tiic 
owner.'  'In  all  voyages  of  this  soit 
there  is  .an  implied  authority  to  act  for 
the  interest  and.  bencHt  of  ihe  owner 
in  all  cases  of  ui  foreseen  necessity  and 
emergency,  created  by  operation  and 
intendment  of  law ':  Forrestier  )'. 
Bordman,  1  Story,  43,  51.  A  justi- 
tication  founded  upon  necessary  de- 
parture from  the  ordinary  customs 
of  trade  or  from  actual  instructions 
must  undoubtedly  be  construed  with 


427 


BROKERS    AND    FACTORS. 


§  230 


Tho  factor  must  use  diligence  to  ascertain  the  pur- 
chaser's solvency,^  and  must  sell  within  a  reasonahle  time 
where  no  limit  has  been  set;"  he  is  hound  to  accouut' 
and  to  remit  to  his  principal  when  instructed  to  do  so;^ 
he  is  bound  to  sell  at  the  best  price  he  can  obtain;'*  and 
to  use  the  best  diligence  generally."  He  must  act  in  good 
faith  towards  his  principal/  He  cannot  become  the  pur- 
chaser of  his  principal's  goods  for  himself,*  or  act  as  agent 
for  both  seller  and  buyer."  If  a  factor  has  orders  to  sell 
for  cash,  and  sells  and  delivers  to  a  person  in  good  credit, 
and  the  next  day  sends  in  his  bill,  which  the  purchaser 
does  not  pay,  having  in  the  mean  time  become  insane, 
the  factor  does  not  thereby  become  liable  to  the  princi- 


considei-ablo  strictness.  Tho  agent 
cannot  be  allowed  lightly  or  imacl- 
viisedly  to  assume  a  latitude  of  dis- 
crt:tic)U  not  conferred  upon  him  by 
express  authority,  or  by  those  usages 
of  trade  which  both  parties  are  pre- 
suuicil  to  have  known  and  coutein- 
■•ilated.  But  the  interests  of  commerce 
1  quire,  and  the  eiu  ^hteued  principles 
of  connnercial  law  bestow,  a  discretion 
wliich  enables  the  factor  to  protect 
hid  principal  from  the  irreparable  in- 
jury which  would  be  lialtlo  to  arise  in 
tho  absence  of  authority  to  act  under 
critical  circumstances,  unexpectedly 
occurring,  which  do  not  a(.  mit  of  de- 
lay, for  the  purposes  of  comMunicaciou 
and  consultation.  And  tho  factor,  so 
phu;cd,  who  acts  prudently  and  in 
g(jod  faith,  as  the  owner  himself,  be- 
ing a  wise  man,  would  have  been  likely 
to  do  if  personally  present,  iinds  hi  i 
protection  in  the  sincerity  and  sounc 
discretion  of  his  conduct,  and  is  not 
answerable  for  conseciucnces.  although 
subsequent  events  may  demonstrate 
that  his  principal  would  have  been  the 
gainer  by  a  <litferent  course  from  the 
one  he  has  conscientiously  and  dis 
erectly  adopted. " 

'  Van  xVlen  r.  Vanderpool,  6  Johns. 
69;  5  Am.  Dec.  192. 

"  Porter  t.  Blood,  ."j  Pick.  54. 

^  Clark  r.  Moody,  17  Mass.  145;  Ter- 
williger  v.  teals,  0  Lans.  403;  Keigh- 
ler  V.  Savage  Mfg.  Co.,  12  Md.  383;  71 
Am.  Dec.  (iOO. 


*  Clark  f.  Moody,  17  :\Iasa.  145;  For- 
dyce  V.  Pcper,  lU  Fed.  Hep.  51G.  If 
a  factor  in  Alabama  neglects  for  two 
years  to  render  to  his  principal  hero 
an  account  of  sales,  he  is  lialilo  for 
the  neglect,  altliough  no  demand  was 
ever  made:  Langley  v.  Sturt.jvant,  7 
Pick.  214.  If  a  factor  at  New  Or- 
leans adjust  his  accounts  in  Boston, 
and  pi'omisc  to  pay  tho  balance  as 
soon  as  b.c  can  negotiate  exchange  on 
New  Orleans,  he  thereby  waives  the 
privilege,  if  he  had  any,  of  paying  it 
in  New  Orleans:  Jellison  v.  Lafouta, 
19  Pick.  244. 

*  Merle  i'.  Hascall,  10  Mo.  400;  Ward 
V.  Bledsoe,  32  Tex.  251;  Bigelow  v. 
Walker,  24  Vt.  149;  58  Am.  Dec. 
150. 

"  Folsom  V.  Mussey,  8  Me.  400;  23 
Am.  Dec.  522;  Atkinson  r.  Burton,  4 
Bush,  29,);  Leverick  i-.  N!eigs,  1  Cow. 
(545;  Plillips  V.  Moir,  (id  111.  l.w; 
Ernest  v.  .StoUer,  5  IJ  11.  438;  Mc- 
Cants  i\  Wells,  3  S.  C.  ^'ilill;  Francis 
V.  Cas'.lemau,  4  Bibl),  282;  }.)eslder  v. 
Beern,  32  111.  308;  83  Am.  Dec.  271; 
Chandler  v.  Hogle.  58  111.  40;  Foster 
V.  V»  aller,  75  111.  404. 

'  Baljcock  0.  Orbison,  25  Ind.  75; 
Clarke  v.  Tipping,  9  Beav.  284;  i.vaus 
V.  Potter,  2  Gall.  12 

®  The  principal  nay  repudiate  or 
afErm  such  a  transaction  at  hi.^  elec- 
tion: Wadsworth  t-.  'iay,  118  Ma.sa. 
44. 

*  Benaley  v.  Moon,  7  III.  App.  415. 


§230 


PRINCIPAL   AND   AGENT. 


428 


pal,  his  course  being  according  to  the  usage  of  commis- 
sion merchants.'  A  factor  is  only  required  to  act  with 
reasonable  diligence  and  care  in  his  employment.  The 
known  usages  of  trade  and  busincbs  enter  into  his  em- 
ploj'mont,  and  if  he  conducts  his  business  according  to 
such  usages,  he  will  bo  exonerated  from  all  responsibility.- 
A  factor  or  other  agent  who  is  guilty  of  fraud  or  gross 
negligence  in  the  conduct  of  his  principal's  business  for- 
feits all  claim  to  commission  or  other  compensation  for 
his  services.^  In  Greehj  v.  Bartlett*  the  rules  regarding 
the  duties  of  factors  were  stated  by  Mellen,  C.  J.,  thus: 
"The  relation  subsisting  between  principal  and  factor  is 
such  as  necessarily  to  require  great  confidence  on  one 
part,  and  great  care,  attention,  and  fidelity  on  the  other. 
Without  all  these  it  is  impossible  that  the  extensive  con- 
cerns of  the  commercial  part  of  the  world  can  be  managed 
with  advantage,  or  even  preserved  from  confusion.  Hence 
the  importance  of  continuing  in  their  full  force  those  legal 
principles  which  have  been  established  for  the  protection 
of  the  rig 'its  of  both  parties,  and  of  third  persons  who 
may  bo  engaged  with  such  factor  in  the  transaction  of 
commercial  business.  Some  of  these  general  principles 
may  be  stated.  By  the  law  merchant  a  factor  may  sell 
the  goods  of  nis  principal  on  a  reasonable  credit,  unless 
he  is  restrained  from  so  loing  either  by  his  instructions 
or  by  the  use  of  the  trade  to  which  the  transaction  re- 
lates.  A  sale  made  under  such  circumstances  is  at  the 
risk  of  the  principal,  and  if  a  loss  happens  he  must  bear 
it.  But  he  is  not  authorized  to  give  credit  except  to  such 
persons  as  prudent  peonle  would  trust  with  their  own 
property.  He  may  receive  securities  in  liis  own  name 
for  goods  sold  without  subjecting  himself  to  liability 
merely  by  so  doing.     But  he  must  deliver  such  securi- 

*  Clark  V.  Van  Northwick,  1  Pick.        ^  Fordyce  r.  Peper,   16  Fed.  Rep. 
343.  516. 

=  Phillipa  V.  Moir,  69  lU.  155.  ♦  1  Mc.  172;  10  Am.  Dec.  54. 


428 


429 


BROKERS   AND   FACTORS. 


230 


)f  commis- 

0  act  with 
lent.  The 
to  his  em- 
cording  to 
onsibility.- 
i<l  or  gross 
isiness  for- 
isation  for 

regarding 

1  J.,  thus: 
d  factor  is 
ce  on  one 

the  other, 
nsive  con- 
e  managed 
n.    Hence 
those  legal 
protection 
irsons  Avho 
saction  of 
principles 
r  nia}'  sell 
dit,  unless 
istructions 
action  re- 
is  at  the 
must  bear 
pt  to  such 
their  own 
>wn  name 
)   liability 
:'h  sccuri- 

6   Fed.  Rep. 
ec.  64. 


ties  to  his  principal  if  ho  demand  them,  or  in  case  of  loss 
he  will  be  answerable  as  for  a  breach  of  trust,  though  in 
such  case  the  principal  should  pay  him  his  usual  commis- 
sions. If  through  carelessness  or  want  of  proper  exam- 
ination and  inquiry  he  give  credit  to  a  man  who  is 
insolvent,  should  a  loss  happen  he  must  indemnify  tho 
principal.  And  if  a  debt  be  lost  by  the  inattention  of 
the  factor  in  omitting  to  collect  it  when  in  his  power  to 
do  so,  iio  will  bo  liable  for  it.  Pie  must  bo  honest  and 
faithful,  and  must  give  his  principal  all  necessary  or  r.so- 
ful  information  respecting  the  concerns  of  his  agency." 
A  factor  who  takes  notes  in  his  own  name  for  goods  of 
his  principal  sold,  and  uses  them  himself,  will  be  liable 
to  the  principal  for  their  sum  if  tho  purchaser  becomes 
insolvent  before  they  are  paid.^  So  a  broker  or  factor 
cannot  dispute  his  principal's  title.^  He  is  not  bound  to 
insure  unless  so  instructed.' 

Illustrations.  —  A  debtor  delivered  merchandise  to  his  cred- 
iior  to  sell,  and  appropriate  the  proceeds  to  his  debt.  The 
creditor  did  not  sell  for  nearly  six  years,  during  which  time  the 
goods  were  much  depreciated  in  value.  Held,  that  the  creditor 
was  liable,  as  a  factor,  for  negligence  in  not  selling  before:  Por- 
ter V.  Blood,  5  Pick.  54.  A  factor  agreed  with  his  principal 
to  purchase  for  him  fifty  thousand  bushels  of  wheat,  in  con- 
sideration that  the  latter  would  immediately  forward  to  him 
by  express  ten  thousand  dollars,  and  the  residue  to  pay  for 
such  purchase  in  four  or  five  days,  and  the  principal  wholly 
failed  to  forward  the  money,  though  the  factor  had  im- 
mediately purchased  twenty  thousand  bushels  of  tho  wheat. 
Ildd,  that  the  factor  was  under  no  obligation  to  purchase  the 
residue  of  the  fifty  thousand  bushels:  Rice  v.  Montgomery,  4 
Biss.  75.  Commission  merchants,  to  whom  a  manufacturing 
company  gent  goods  in  their  brown  state  to  be  sold,  sent  tlicm 
to  a  printing  establishment,  had  them  printed,  and  tl)en  sold 
them.     Held,  that  if  the   printing  was  advantageous   to   the 


'  Myers  v.  Entrikcn,  6  Watta  &  S. 
44;  40  Am.  Dec.  538;  Morris  v.  Wal- 
lace, .3  Pa.  St.  319;  45  Am.  Dec.  C42. 

•^  Marvin  I'.  Ellwoocl,  11  Paige,  3Go; 
Barnardr.  Kobbe.  54  N.  Y.  51G;  Jones 
V.   Dwyer,   15  East,   2l;    Roberts  v. 


Ogilby,  9  Price,  2C9;  Ross  v.  Curtiss, 
31  N.  Y.  GOG;  Kieran  v.  Sandars,  6 
Ad.  &  E.  515. 

^  .-Etua  las.  Co.  v.  Jackson.  10  B. 
Mon.  242;  SchaefTor  r.  Kirk,  4!)  111. 
251;  Crosbie  v.  WcDoual,  13  Ves.  148. 


230 


PRINCIPAL   AND   AGENT. 


4G0 


manufacturing  company,  they  should  have  the  benefit;  but  if 
the  printing  caused  a  loss,  the  manufacturing  company  should 
be  credited  with  the  value  of  the  goods  in  their  brown  state: 
Vandyke  v.  Brown,  8  N,  J.  Eq.  657.  A  factor  having  sold 
cotton  of  his  principal  contrary  to  instructions,  and  being  di- 
rected to  ship  to  L.,  concealed  the  fact  of  the  sale,  and  procured 
other  cotton  of  a  similar  quality,  which  he  shipped  in  the  name 
of  his  principal  to  L.,  where  it  was  sold  and  the  proceeds  re- 
ceived by  the  planter.  Held,  that  the  principal  was  entitled  to 
recover  the  difference  between  the  price  in  L.  and  the  price  his 
cotton  was  sold  at:  '^ustill  v.  Craicford,  7  Ala.  335.  H.,  a  com- 
mission merchant  .a  Chicago,  under  instructions  from  S.,  in 
Osceola,  sold  for  S.  five  thousand  bushels  of  oats  upon  a  time 
contract,  and  negligently  failed  to  require  a  margin  in  accord- 
ance with  the  rules  of  the  hoard  of  trade,  or  to  notify  S.  of  his 
right  to  demand  such  margin,  and  also  neglected  to  advise  S. 
that  he  had  sold  the  oats  to  parties  who  were  operating  a  cor- 
ner, which,  to  be  successful,  required  to  be  maintained  for  thirty- 
two  days  longer.  Held,  that,  upon  the  failure  of  the  buyers, 
whereby  S.  lost  the  benefit  of  the  contract,  he  was  entitled  to 
recover  from  H.  the  amount  of  such  loss:  Howe  v.  Sutherland, 
39  Iowa,  484.  A.,  having  property  consigned  to  him  for  sale  on 
commission,  placed  it  in  the  hands  of  W.  for  storage,  but  after- 
wards sold  it  to  N.  Held,  that  \V.  could  not  thereupon  retain 
the  property  as  security  for  a  debt  due  to  him  from  A.:  Wcsling 
v.  Noonan,  31  Miss.  59V).  B.  consigned  to  H.,  as  his  factor,  a 
certain  number  of  barrels  of  flour,  and  drew  on  him  for  the 
amount  due.  The  draft  was  discounted  by  a  bank  on  the  faith 
of  the  bill  of  lading  issued  upon  the  shipment  of  the  flour.  This 
bill  was  annexed  to  the  draft,  as  a  collateral  security,  and  was 
thus  transferred  to  the  bank,  but  was  not  indorsed  or  formally 
assigned,  11.  having  refused  to  accept  the  draft.  Held,  that  H. 
was  not  at  liberty  to  appropriate  the  flour  or  its  proceeds  to  his 
.own  use.  They  were  the  property  of  the  bank  for  the  purpose 
of  meeting  the  dishonored  draft:  Davenport  Nat.  Bank  v.  Ho- 
meycr,  45  ]\Io.  145;  100  Am.  Dec.  363.  A  factor  receives  cotton 
without  specific  instructions  with  regard  to  the  time  of  sale, 
and  advances  thereon,  and  sells  at  a  profit  of  ten  per  cent,  to 
the  consignor.  The  factor  is  not  liable  in  damages  to  the  con- 
signor or  a  subsequent  rise  in  the  market,  though  some  time 
after  th-  first  instructions  he  had  received  orders  from  his 
consignor  not  to  sell,  and  replied,  '"Your  wishes  with  regard 
to  the  cotton  are  noted":  Brown  x.  McGrau,  14  Pet.  479.  A 
authorized  a  factor  to  purchase  goods  on  a  particular  credit, 
which  ne  did.  Held,  that  A  was  liable  directly  to  the  vendor 
of  the  goods  for  the  purchase-money:  Edwards  v.  Benham,  2 


431 


BROKERS   AND   FACTORS. 


§  230 


Stew.  &  P.  147.  The  commission  merchant  of  a  general 
owner,  having  a  certain  amount  of  wheat  under  the  care  of  a 
warehouseman,  innocently  gives  an  order  for  the  delivery  of  a 
larger  quantity  of  wheat  to  a  vendee,  which  order  was  filled  by 
the  warehouseman  from  a  different  lot  of  wheat  belonging  to 
another  person.  Held,  that  by  accepting  the  money  for  such 
wheat,  tlie  commission  merchant  adopted  as  his  own  the  act  of 
the  warehouseman,  and  was  liable  to  the  person  whose  wheat 
was  used  for  the  price  of  the  same  in  an  action  for  money  had 
and  received  to  his  use:  Cobb  v.  Dows,  10  N.  Y.  'Soo.  A 
factor  sold  goods  to  J.  F.  on  a  credit  of  six  months,  taking  a 
note  payable  to  himself,  including  in  it  a  debt  owing  to  himself, 
and  afterwards  released  to  J.  F.,  and  came  in  under  the  assign- 
ment. Held,  that  by  these  acts  he  made  the  debt  his  own: 
Brown  v.  Arrott,  6  Watts  &  S.  402.  Th(^  owner  of  hay  in  Maine 
consigned  it  to  New  Orleans  to  be  sold  during  the  Ilebellion. 
The  military  authorities  of  f'O  United  States  bought  a  portion, 
agreeing  to  pay  for  it  in  cash,  and  seized  the  remaindur;  and 
afterwards  refused  to  pay  for  any  of  it  except  in  government 
certificates  of  indebtedness,  bearing  interest,  to  be  taken  at  par. 
The  consignees,  acting  in  good  ftiith  and  according  to  their  best 
judgment  and  the  usual  custom  of  factors  at  New  Orleans  at 
that  time,  but  without  noticu  lo  the  owner,  accepted  these  cer- 
tificates of  indebtedness,  and  shortly  afterwards  sold  the  same 
at  ninety-three  cents  on  the  dollar,  which  was  then  their  market 
value  there.  The  owner  was  ignorant  of  this  custom.  IFcId, 
that  the  factors  were  not  liable  to  the  owner  fo-  the  discount  of 
seven  per  cent  made  in  selling  the  certificates  of  indebtedness: 
Grcenleaf  v.  Moody,  13  Allen,  8G3.  A  commission  merchant 
wrote  to  a  manufacturer  of  goods  requesting  a  consignment  of 
his  goods  invoiced  at  the  lowest  rates,  stating  what  the  charges 
would  be,  promising  to  pay  the  return  freight,  if  satisfactory 
prices  could  not  be  obtained,  and  to  be  responsible  for  any 
neglect  by  him  to  deal  with  the  goods  according  to  the  manufac- 
turer's orders.  The  manufacturer  replied,  in  a  letter  accom- 
panying the  shipment  of  goods,  that  he  had  invoiced  the  goods 
at  the  lowest  selling  prices,  and  that  the  small  shipment  "then 
made  will  be  duplicated  if  prices  obtained  warrant."  The  in- 
voico  contained  no  direction  to  sell  the  goods  at  the  invoiced 
prices.  The  consignee  sold  for  a  less  price.  The  consignor 
wrote  him  that  the  price  obtained  was  not  satisfactory,  but 
made  no  claim  that  any  order  had  been  violated,  and  afterwards 
brought  an  action  to  recover  the  difference  between  the  invoice 
price  and  that  for  which  the  goods  were  sold,  in  which  the  dec- 
laration contained  no  averment  that  the  consignee  had  acted 
unfaithfully  or  injudiciously.     Held,  that  the  action  could  not 


230 


PRINCIPAL   AND   AGENT. 


432 


be  maintained:  Mann  v.  Laws,  117  Mass.  293.  A  agreed  to  take 
B's  sewing-machines  on  consignment  to  sell,  to  make  prompt 
returns,  to  remit  cash  for  all  disposed  of  except  on  lease  or  on 
monthly  installments,  and  to  pay  for  those  in  three,  six,  and 
nine  months,  by  note,  secured,  if  required,  by  the  leases  or  in- 
stallment accounts.  The  agreement  stated  that  A  did  not  ex- 
pect the  privilege  of  returning  machines.  Held,  that  A  became 
personally  liable  for  all  machines  received:  Wheeler  and  Wilson 
Mfg.  Co.  V.  Laus,  62  Wis.  635. 


433 


SCOPE    OF   Tins    PART. 


§231 


Paet  v.  — master  and   SERVANT. 


CHAPTER  XX. 

SCOPE  OF  THIS   PART. 
§  2.31.     Who  aro  servants. 

§  231.     Scope  of  This  Part— Who  are  Servants.  — In  a 

general  sense,  a  servant  is  one  who  is  l)y  contract  or  by 
operation  of  law  subject  to  the  authority  or  control  of  an- 
other. Tested  by  this  definition,  the  title  of  tlii.s  division 
of  agency  might  properly  be  the  main  title  of  the  general 
title,  for  in  this  broad  .sense  all  employees  of  every  kind, 
all  persons  employed  by  another,  —  attorneys,  brokers, 
commission  merchants,  factors,  special  and  general  agents 
of  every  kind,  —  might  and  ought  to  be  considered  under 
this  head.  But  in  the  previous  chapters  of  this  title  most 
of  those  relations  have  been  treated  of,  and  the  present 
and  subsequent  chapters  arc  restricted  to  servants  of  a 
diflx3rent  kind,  that  is  to  say,  in  the  nomenclature  of 
the  older  writers,  menial  servants,  or  better  perhaps  in 
this  day  and  country,  domestic  or  hired  servants.*  This 
will  include  apprentices,  domestic  servants,  and  workmen 
and  laborers  of  every  kind  and  description."  Prima  facie, 
one  found  doing  service  for  another  is  in  his  employ.  If 
the  fact  is  otherwise,  it  must  be  made  to  ai)pear.'' 

_'  See   Ex   parte    Meason,    5    Binn.  kinds  of  agents  and  cinployets  are  dis- 

174;  Boniface  v.  Scott,   3  Serg.  &  11.  cussed  i:i  the  title  Agency,  and  this 

3tV.';  Burgess  v.  Carpenter,  2  S.  C.  7;  includes  the  master's  liability  for  liia 

IGAm.  Rep.  643.  servants' conC/y(rt.f. 

*  The  general  rules  relating  to  all  *  Perry  v.  Ford,  17  Mo.  App.  212. 
Vol.  I. -28 


§  232 


PRINCirAL   AND   AOENT. 


434 


CHAPTER  XXI. 


APPRENTICES. 

§  232,  Who  aro  apprentices  —  llow  bonnd. 

§  233.  Contract  is  personal  —  Aasignnieut  —  Removal  out  of  state. 

§  234.  Duties  of  master  to  apprentice. 

§  235.  Right  of  master  to  discharge  apprentice. 

§  236.  Right  of  master  to  apprentice's  earnings  —  Exception. 

§  237.  Rights  of  parent  or  guardian. 

§  238.  Liabilities  of  parent  or  guardian. 

§  239.  What  is,  and  what  will  excuse,  breach  of  covenant  for  faithful  servicj. 

§  232.    Who  are  Apprentices— How  Bound. — An  ap- 

prentice  is  a  person — usually  a  minor — who  is  bound  to 
another  for  a  fixed  period  to  learn  a  trade  or  calling.' 
The  apprentice,  being  an  infant,  must  be  bound  by  his 
parent  or  guardian.^  Any  person  who  is  legally  compe- 
tent to  carry  on  a  trade  or  business  may  take  an  appren- 
tice.^ The  contract  of  apprenticeship  must  be  in  writing, 
and  if  certain  forms  are  prescribed  by  statute  those  forms 
must  be  followed.'*  A  deed  of  indenture  is,  if  defective, 
in  some  states  void;  °  in  others  only  voidable."    The  in- 


*  In     Georgia,    indentures    of    ap- 

Erenticeship  during  minority  do  not 
ecomc  void  on  arrival  of  the  female 
apprentice  at  eighteen  years  of  age,  as 
being  in  restraint  of  her  right  of  mar- 
riage at  that  age;  her  majority  under 
the  law  being  at  twenty-one:  Dent  v. 
Cock,  65  Ga.  400.  But  a  person  over 
twenty-one  may  bind  himself  as  an 
apprentice:  Commonwealth  v.  Stur- 
geon, 2  Browne,  208. 

»In  re  McDowle,  8  Johns.  328; 
Handy  v.  Brown,  1  Cranch  C.  C.  610; 
Phelps  V.  Culver.  6  Vt.  430;  Peters  v. 
Lord,  18  Conn.  337;  Blunt  u.  Melcher, 
2  Mass.  228;  Bull  v.  FoUett,  5  Cow. 
170;  Mead  v.  Billings,  10  Johns.  99. 
Not  by  the  mother,  if  the  father  be 
living:  Commonwealth  v.  Crommie,  8 
Watts  &  S.  339;  but  aliter,  if  father 
bo  dead  or  incapable:  People  v.  Gates, 
43  N.  Y.  40.    Contra,  that  the  infant 


may  bind  himself:  Woodruff  v.  Logan, 
0  Ark.  276;  42  Am.  Dec.  C95;  and  see 
Harney  v.   Owen,  4  Blackf.  337;   30 
Am.  Dec.  662;  Walker  v.  Chambers 
5  llarr.  (Del.)  311. 

"  Wood  on  l.Iaster  and  Servant,  sec.  40. 

*In  re  McDowle,  8  Johns.  .328; 
Peters  v.  Lord,  18  Conn.  337;  Hall  v. 
Rowley,  2  Root,  161 ;  Squire  v.  Whip- 
ple, 1  Vt.  69;  Huntington  v.  Oxford, 
4  Day,  189;  Reidell  v.  Morse,  19  Pick. 
358;  Whitmore  v.  Whitcomb,  43  Me. 
458;  Tague  v.  Hayward,  25  Ind.  427; 
Morrill  v.  Kennedy,  22  Ark.  324; 
Bolton  V.  Miller,  6  Ind.  262;  People  v. 
Gates,  39  How.  Pr.  74. 

^  Guthrie  v.  Murphy,  4  Watts,  80; 
Austin  V.  McCluney,  6  Strob.  104; 
Chaudet  v.  Stone,  4  Bush,  210;  Butler 
V.  Hubbard,  5  Pick.  250. 

®  Hamilton  v.  Eaton,  6  Cow.  658; 
Luby  V.  Cox,  2  Harr  (Del.)  184. 


435 


APPRENTICES. 


g§  233,  234 


fant  must  join  in  tho  indenture,  else  ho  will  not  be  bound 
after  ho  reaches  tho  age  of  fourteen;*  and  if  his  joining 
in  the  indenture  is  required  by  statute,  he  will  not  bo 
bound  at  all  if  he  does  not  so  join;''  and  the  assent  of  the 
infant  to  tho  contract  must  be  clearly  shown.^ 

§  233.  Contract  is  Personal — Assignment — Removal 
out  of  State. — Tho  contract  is  personal,  and  cannot  be 
transferred  by  the  master  to  another,*  except  with  the 
consent  of  the  infant."  An  apprentice  cannot  bo  bound 
to  more  than  one  person  at  once;®  nor  is  tho  apprentice 
bound  to  go  with  the  master  and  serve  him  in  another 
state  or  country/  But  if  he  goes  willingly,  tho  service 
continujs.* 

§  234.  Duties  of  Master  to  Apprentice. — The  master 
is  bound  to  perform  tho  obligations  ho  has  assumed  in 
the  indenture.  Ho  is  bound  to  teach  him  the  trade  or 
calling  to  learn  which  the  apprentice  has  been  bound," 
to  treat  him  humanely,'"  to  supply  him  with  proper  food 
and  clothing."  Ho  has  no  right  to  make  the  apprentice 
work  on  Sunday.'^  The  master  may  show  that  by  the 
contract  the  duty  of  supplying  the  apprentice  with  food 


1  Hudson  V.  Worden,  39  Vt.  382; 
R.  V.  Kcppelo,  2  Dall.  197. 

■^  Iviiis  V.  Norcross,  3  N.  J.  L.  977. 

•'  Harper  r.  Gilbert,  5  Cush.  417. 

♦  Campbell  v.  Cooper,  34  N.  H.  49; 
Tucker  v.  Magce,  18  Ala.  99;  Ayer  v. 
Cluiso,  19  Pick.  550;  Versailles  v. 
Hall,  5  La.  281;  25  Am.  Dec.  178. 

MVilliams  V.  Finch,  2  Barb.  208; 
Niokersou  v.  Howard,  19  Johns.  113; 
Lobdell  r.  Allen,  9  Gray,  377. 

« Thorpe  v.  Rankin,  19  N.  J.  L.  36; 
38  Am.  Dec.  531. 

^  Negro  Gusty  v.  Diggs,  2  Cranch 
C.  C.  210;  Coffin  v.  Bassett,  2  Pick. 
357;  Dyer  v.  Hunt,  5  N.  H.  401;  Vick- 
erco  V.  Pierce,  12  Me.  315;  Randall  v. 
Rotch,  12  Pick.  107;  Walters  v.  Mor- 
row,  1  Houst.  527. 


sLobdell  v.  Allen,  9  Gray,  377; 
Olney  v.  Myers,  3  111.  311;  Burden  v. 
Skinner,  3  Day,  126.  See  Nickerson 
V.  Easton,  12  Pick.  110. 

*  Wood  on  Master  and  Servant,  sec. 
49;  R.  V.  Peck,  1  Salk.  GO. 

'"McGrath  v.  Herndon,  4  T.  B. 
Mon.  480. 

^'  Wood  on  Master  and  Servant,  sec. 
49.  A  master  having  notice  of  the 
sickness  of  his  apprentice  at  tho  house 
of  a  brother  of  the  latter,  held,  to  be 
liable  for  the  brother's  necessary  ex- 
penses and  trouble  incurred  thereby, 
although  a  removal  would  have  been 
hazardous:  Rice  v.  Breheny,  2  Houst. 
74. 

1^  Commonwealth  v.  St.  Gv  ..a.ns, 
1  Browue,  24. 


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43G 


and  clothing'  lias  been  {issuiiicd  hy  the  fatlior  or  punrdiaii;' 
or  that  (he  apprentice  cannot  or  will  not  ](>ai'n.'"  'j'lie 
apprentice  cannot  recover  for  extra  work,  even  where  (he 
work  was  (lone  upon  the  master'^  express  j)roniise  to  pay 
for  it.'  The  master  may  recover  against  a  third  person 
wlio  has  negligently  injured  the  ap])rentice.'* 

§  235.     Right  of  Master  to  Discharge  Apprentice.  —  lie 

has  no  right  to  dismiss  the  apprentice  for  miscon<luct,''  nr 
dishonesty,"  or  because  he  lias  become  incapaciled  for 
labor  by  accident,  sickness,  or  disease' 

"  .?36.  Right  of  Master  to  Apprentice's  Earnings — 
Euo'jption. — All  the  earnings  of  the  apprentice  during  the 
U.xn.  belong  to  the  master.**     To  this  rule,  however,  there 


•Wooilcin'MastcraiulSurvaut,snc.49. 

'  llaviiidiid  (".  Miutou,  L.  R.  I  Ex. 
244;  Wri-ht  r.  Brown,  5  MJ.  37; 
Claucy  r.  OviTinaii,  1  IK^v.  &  B.  40i>; 
Bai-'cr?'.  Caldwell,  2  Dana,  131. 

»  Bailey  v. 
Am.  Due.  43. 


King,  1  Whart.   113;  20 


*Amus  r.  Union  R.  R.  Co.,  117 
Mass.  r.H;  in  Am.  Rep.  42G, 

^'  riiillii..s  r.  I'lift,  4  Hurl.  &  N,  1G8; 
Wise  r.  Wilson,  1  Car.  &  K.  GGJ, 
Lord  Dcmiiaii,  (.'.  J.,  sayiug:  "A  p-jr- 
8011  liaa  a  rijj;ht  to  dismiss  a  serva:it 
for  mi.seoiidiu't,  Imt  ho  has  no  rif^ht  to 
turn  away  an  appi-cutico  because  ho 
misbehaves." 

«  Poweivi  V.  Ware,  2  Pick.  4  ^2. 

''  Wood  du  Master  iind  Servant,  sec. 
49;  R.  r.  Owen,  1  Strange,  99. 

''.Tallies  r.  Lo  Roy,  G  Johns.  274; 
Bowes  r.  Tibbcts,  7  Mc.  4o7;  Maujey 
V.  Goodwin,  3  N.  H.  272;  Bailey  r. 
King,  1  Whirt.  113;  29  Am.  Dee.  42. 
If  a  master  ^^ould  recover  from  a 
third  iii.T-ion  tlio  value  of  services  ren- 
dcrcil  hiiu  by  the  master'.s  apprentice, 
a  valid  contract  of  apprentice?!ii[» 
must  be  shown:  Barton  v.  Ford,  o5 
Hun,  32.  Ill  Hardwell  v.  Purrington, 
107  M;>s<.  427,  the  court  say:  "With 
regard  to  the  defendant's  offer  to  prove 
that  ho  had  paid  tho  boy  for  his  labor, 
we  think  tliiit  at  that  utage  of  the  case 
it  was  rightfully  rejected.  It  was  not 
oflfercd  in  couuection,  aa  wo  iiuJerstaud 


tho  report,  with  any  evidence  tending 
to  show  that  tl;e  i)lainlitf  hid  alian- 
doned  any  of  his  rigiits,  <"•  Ii:i  I  been 
wanting  in  ilue  i!:id  reasoiialile  exer- 
tion and  diligcnco  to  reclaim  tlic  ap- 
prentice. If  he  hail  not  lost  hiiri^,'iik 
to  tho  service!  of  the  apjireuticj  by 
any  fault  of  his  own,  tlio  fact  tliiit  a 
stranger,  who  had  tlie  benefit  of  tliom, 
had  paid  a  party  who  ha  1  no  light  to 
tlio  payiiic:it,  wo,:ld  bo  ii.i;natiTial. 
Tlicro  might  be  circuinstaaee.s  from 
whieli  the  jury  miglit  very  prep'  rly 
infer  that  the  jilaintdl'  had  abaadoned 
tho  rigiit  to  bold  the  apprentice.  Tlie 
propriety  of  such  an  iiifcrr'nej  would 
depend  on  what  tlic  plaintUF  knew,  or 
had  tlic  ineana  o:i  reasonable  impiiry 
of  knowing,  a.j  to  where  th;  apprentice 
was  and  what  he  was  doing.  If  the 
plaintilf  knowingly  suli'cre  1  the  ap- 
prentico  to  make  and  [kji  form  con- 
tracts for  .service,  or  if  tlio  pliinlitf 
knowing  where  ho  coul  I  be  found 
made  no  etTorts  or  neglected  opportu- 
nities to  rcclaitn  him  and  iml  I  him  to 
his  service,  ho  could  not  maintain  his 
action;  in  other  words,  his  ridiinpii.^h- 
meiit  of  all  right  to  hold  tiie  appren- 
tice under  the  indenture  ctaild  hu 
proved  by  circumstantial  evidence. 
Mere  payment  by  the  defendant  to 
the  apprentice  without  the  knowledgo 
or  default  of  the  plaintiff,  would  not 
affect  the  cpicstiou." 


4CG 


437 


Al'Pn  ENTICES. 


are  two  exceptions,  viz.:  1.  Wlicic  tho  carnincjs  arc  with 
the  consent  of  the  master  and  contrary  or  in((nisis- 
tent  with  the  covenants  of  the  indenture;'  2.  Where  the 
carnin<];s  are  of  an  extraordiiniry  character,  and  have  not 
interfered  with  the  master's  rights.^ 

§  237.  Rights  of  Parent  or  Guardian.  — The  parent  or 
guardian  may  sue  for  any  breach  of  covenants  in  tho 
indenture.^ 

g  238.  Liabilities  of  Parent  or  Guardian. — The  parent 
or  guardian  is  bound  personally  to  tho  covenants  made 
by  liim  in  tho  indenture.'*  Strict  proof,  however,  of  an 
intention  to  bind  tho  parent  or  guardian  must  be  shown.'' 


§  239.  What  is,  and  What  will  Excuse,  Breach  of 
Covenant  for  Faithful  Service. — It  is  a  breach  of  (he  cove- 
nant for  faithful  service  for  the  apprentice  to  a])S(Mit  him- 
self from  the  service,  unless  the  absence  iS  a  trifling  or 
temporary  one."  Tho  following  will  excuse  a  breach  of 
the  covenant  for  faithful  service  by  justifying  the  ai)pren- 
tico  leaving;  viz.,  that  the  term  has  expired  by  elUuxion 
of  time,  or  by  consent  of  the  parties;^  that  the  masters 
being  partners,  tho  partnership  has  been  dissolved,^  or 
one  of  tho  partners  has  died;''  that  tho  master  behaved  to 
the  apprentice  immorally  or  cruelly;'''  that  the  master  has 

'  BardwcU  v.  rurrington,  107  Mass.         «  Cuming  v.   Hill,  .'}  Barn.  &  Aid. 

427;  Kelly  V.  Siirout,  "J7  Maas.   KJO;  59. 

]M:iiiclit'.stor   V.    Smith,    12   Pick.    115;         '  ITookn  r.  rorkins,  I'.u.l).  21 ;  I'ow- 

Uaiidall  r.  Rotoli,  12  Pick.  107.  er:s  r.  Ware,  2  Pick.  -1.")!. 

-  Mason  f,  Tho  lilairoau,  2  Cranch,         "lliattr.  (rilmur,  (I  Iiv<l.  4";). 
2-10.  0  R.   ,;.  Pock,  1   Siilk.   (Ml;  Baxter  v. 

^LohdcU    V.    Allen,   9    Gray,    381;  Burtield,  2  Straiiue,  l-JCfi. 
Bak'lir.  Smith,  12  N.  H.  4.37.  '"Commonwealth  r.  St.  Ccniians,  1 

*  Wood  on  Master  and  Servant,  sec.  Browne,    24;     Warner    r.     Smitli,     8 

52.  Conn.  14;  Cannon  v.  l)avi.-i,  I   Cruieji 

'^  Blunt  V.    Mclchcr,   2  Mass.    228;  C.  C.  457;  McGratli  i:  Hern  K.n,  1  T. 

Berry  v.  Wallace,  Wright,  057;  Wood-  B.  Mon.  480;  Collir>  v.  iJasNeU,  2  Pick, 

ruifr.  Corry,  3N.  J.  L.  540;  Holbrook  357;  Commonwealth  v.  Conrow,  2  i'a. 

V.  BuUard,  10  Pick.  68.  St.  402. 


239 


PRINCIPAL  AND  AGENT. 


438 


changed  his  business/  or  has  become  physically  or  men- 
tally incompetent  to  conduct  it  any  longer,  or  has  died.^ 
A  master  who  takes  an  apprentice  for  the  purpose  of  in- 
structing him  in  any  particular  act  or  trade  has  no  right 
to  require  services  from  him  as  a  menial  or  house-ser- 
vant.' 

Illustrations. — A  apprenticed  himself  to  B  to  learn  a  cor 
tain  trade,  but  also  to  do  "euch  other  chores  and  labor  when 
requirod,  as  would  become  necessary  to  B."  Held,  tliat  a  re 
quest  by  B  that  A  should  go  into  the  cellar  under  the  shop,  sad 
open  and  repair  a  drain  that  the  water  might  run  off,  was  rea 
Bonablo  under  the  contract:  McPeck  v.  Moore,  51  Vt.  269. 

1  Wood  on  Master  and  Servant,  sec.    52;  Hennessey  v.  Dcland,   1 10  Mass. 
52;  Ellen  o.  Tonp,  6  Ex.  424.  145. 

'  Wood  on  Master  and  Servant,  sec       '  Com.  v.  Hemperly,  4  Fa.  L.  J.  440, 


438 

or  mcn- 
as  died.^ 
so  of  ill- 
no  right 
ouse-ser- 


arn  a  ccr- 
bor  when 
hat  a  re- 
shop,  a  nd 
was  rea- 
69. 

110  Mass. 

I.  L.  J.  440. 


439       CONTRACTS   BETWEEN    MASTER   AND   SERVANT.      §  240 


CHAPTER  XXII. 

CONTRACTS  BETWEEN,  AND  RIGHTS  AND  DUTIES  OF,  PIASTER 

AND  SERVANT. 

§  240.  Contract  of  service  —  Need  not  be  in  writing. 

§  241.  Services  renilereJ  —  When  promise  to  pay  implied. 

§  242.  Services  of  intruiler  without  request. 

§  24.'J.  Scrvioe-t  rendered  through  duress  or  fraud. 

§  244.  llk'gal  or  immoral  service. 

8  24.5.  Re.juest  implies  promise  to  jiay. 

§  24G.  Exceptions  —  Request  without  benefit  to  party. 

§  247.  Scrvicf  s  rendered  in  expectation  of  bequest  or  legacy. 

g  24S.  rresumptiou  that  services  are  for  hire. 

§249.  Exception — Near  relatives. 

§  2d0.  Contract  for  certain  term,  or  certain  thing,  an  entire  contract. 

8  2ol.  Abandonment  of  contract  —  No  recovery  for  time  served. 

§  252.  Exceptions  —  Where  quantum  meruit  recoverable. 

§  253.  Hours  of  labor. 

§  254.  Extra  hours  —  Compensation  not  recoverable  for  working  extr;*  houra 

—  Exceptions. 

§  253.  Work  performed  on  Sunday. 

§  25G.  Right  to  v^rder  servant  to  diflferent  employmeat — Compensatioo. 

8  257.  Increased  duties  —  Extra  compensation. 

§258.  Contract  is  personal — Delegation. 

§  259.  Lost  time. 

§  2G0.  General  hiring  —  Prima  fade  for  what  term. 

§  2G1.  Continuance  of  service  after  expiration  of  term  —  Presumption. 

§  2G2.  Regulations  of  master. 

§  2G3.  Duty  to  keep  master's  secrets, 

§  264.  Master  must  provide  work. 

§  205.  Board  of  servant. 

§  2G6.  Compensation  of  servant  —  Measure. 

§  2G7.  Master  may  recoup  damages. 

§  2G8.  Right  of  master  to  servant's  earnings. 

§  2G9.  Right  to  discharge  servant  —  By  contract. 

§  270.  Right  to  discharge  servant  —  By  law  in  absence  of  special  contract. 

§  271.  Valid  grounds  for  dismissal. 

§  272.  Involuntary  breaches  by  servant. 

§  273.  Discharged  servant  must  leave  peaceably. 

§  274.  Servant  may  recover  wages  to  time  of  dismissal. 

§  275,  Servant  occupying  master's  house  —  When  and  when  not  tenant. 

§276.  Wrongful  discharge  of  servant  —  Remedies. 

§  277.  Servant  bound  to  seek  other  employment. 


^§210, --i  I 


rnixcirAL  and  agent. 


4-10 


S  'J7S. 
^  '2, 'J. 

S  Ls  ». 

t?  'JS-J. 

§  v's;{. 

§;:S(j. 

S  '-  w . 


W  liver  l>y  sorv;iiit  of  wrnn'^fiil  (lUch.-irgo. 

W'ii  v<  r  liy  iiia.-t.fr  nf  Lruiicli  ur  forluitiirc. 

C.i  i^iM  wliich  will  justify  8(!rv;iiit  in  iil):ui(loriiiig  service. 

l)'s-iiliitio;i  (if  c'ontraut—  liy  tj.xipir.ilio'i  of  lii:u;  or  <'(i:i.scnt  of  pnrtics. 

1  >i .  ( .hit  ioii  of  contract— Wlicii  .siMvicu  liny  l)u  <li.s.solvctl  by  eiihor  party. 

j)i.<  oliiMoii  of  coiitr.ict— Dis.soliitoii  oi  11  Ttii:  rjliip. 

l)i-.^ol,itiori  <if  eoiitr.irt — .  l};i!ikriii>t(y  of  iinLitor. 

1  i.Hiilutioii  of  foiitru't  —  Ali^uilomiieiit  of  «i  rvant. 

iJis  olutioii  of  contract —  I^i.siiii.s.sul  liy  luajtor. 

Di  i.<iiliuioii  of  coiitniL't — -  L5y  ilcaUi  or  disaUility. 

K':'.!k  !  of  matter  — Iiijurioi  to  .servant  \>y  thinl  pcr:ion. 

l^ilici.i';  rervan^  from  employmuut. 

C(hiioi;iaLionj  aino:!''  workmen. 


>;  SdO.     Contract  of  Service — Need  net  bo  in  V7iklii:/j. 

—  To  ('(Mi^lilule  tlio  relation  of  master  and  servant  llic 
contract  need  not  bo  in  Avriting,  except  where  re({uire(l 
to  Lie  Ijy  the  statnto  of  frauil  An  infant's  contrad  tn 
swerve  ti  railroad  coniptuiy  us  tuiplo^'eo  is  valid  jis  betv;eeii 
hiiiiseir  and  llie  company;  and  v.'ant  of  the  prcvions  con- 
sent of  I  lie  piU'cnt  does  not  avoid  it.  It  remains  good 
until  either  the  parent  or  his  minor  child  jmts  an  end 
to  it.' 


g  211.  Services  Eendered — \7hen  Proriso  to  Pay  Im- 
plied.—  The  mere  fact  thtit  services  arc  rendered  for  an- 
other do(>s  not  raise  an  implied  promise  by  the  latter  to 
pay  for  tlieni."  The  test  always  is,  Did  the  plaintiff  ex- 
jiect  pay  for  them,  and  did  the  defendant  expect  to  jiay  f'U- 
them?'  If  the  services  arc  rendered  without  any  exjiec- 
tation  of  compensation,  and  arc  accepted  with  tliat  under- 
standing, no  promise  to  pay  can  bo  implied.'  Where  one 
has  employed  another  to  manufacture  articles  at  an  agreed 

I  Nashvill !  (to.  11.  R.  Co.  ?•.  Elliott,  man,  '2  Donio,   140;  Air;iilo  r.  Sunol, 

1  CoM.  Oil;  7;>  Am.  Dec.  500.  Jt  Cal.  40-J;  Fraylor  r.  Sonora  M.  Co., 

-  Vv'ooil  <Ki  , Master  ami  Sjrvant,  sec.  17  Cal.   r.Ui;  raiiner  r.   ll.iVLrliill.  '••'^ 

G-2;  Rya:i  i:  Lvmh.  9  Mo.  App.  IS.  Mass.  4S7;  Ryan  r.  Dayton,  'Jj  Conn. 

•'Nimmo    V.' Walker,    14  La.   Ann.  IbS;  (>.")  Am.  Doc.  .%0. 

CSl;  Spri/ue  v.   Waldo,   33  Vt.    139;  *  Morris    r.    L.iriios.    35    Mo.    4I'J; 

Cliiaiqny  r.  Dolicre,  37  111.  237;  V.'at-  Jamcj  v.  ODri:icoIl,  '2  R.iv,  lOI ;  1  Am. 

ki:i:i  r.  Riclimoml  College,  41  Mo.  302;  Dee.  C:]2;   llertzo^'  r.  llertzn^'.  2".)  Pa. 

Morris  v.  Barui'.s  35  Mo.  412;  Ilarfc  v.  St.  405;  Zurraliu  i\  Ditsou,  117  Mass. 

Hess,  41  Mo.  441;  Robiusou  v.  Cush-  553. 


411   CONTRACTS  BETWEEN  MASTER  AND  SERVANT. 


212 


price,  out  of  materials  to  bo  furnished  by  the  former,  tlio 
fact  lluit  ho  hinirielf,  without  request,  assists  iu  the  manu- 
facture, will  not  raise  an  implied  promise  on  the  part  of 
the  oUier  party  to  pay  for  such  services.'  "If  the  person 
for  whom  tlie  services  are  rendered  has  reason  to  expect 
or  to  believe  that  the  person  expects  to  be  paid  for  hid 
liibor,  and  does  nothing  to  disabuse  him  of  this  expecta- 
tion, but  allows  him  to  go  on  rendering  important  ser- 
vices for  him,  the  law  will  imply  a  promise  to  pay  him 
vv'hat  such  services  are  reasonably  worth."-  A  promise 
to  pay  reasonable  expenses  of  keeping  and  repairing  a 
boat  found  adrift  on  the  water  is  implied  when  the  owner 
of  the  l)oat  takes  it  from  the  person  who  found  it.^ 

Ii.nsTRATioNS.  —  B.,  while  a  minor,  entered  tlic  service  of  S. 
as  a  meml)cr  of  his  family,  with  the  understanding  that  slic 
\v;is  not  to  have  pay  for  such  service;  but  suhsequontly  slio  ex- 
prcssed  dissatisfaction  to  H.  that  she  was  not  receiving  pay 
for  her  services,  whereupon  S.  told  her  "  he  would  pay  her  for 
her  work."  Jffld,  that  this  constituted  an  understanding  or 
agreement  cf  hiring,  and  that  B.  was  entitled  to  recover  the 
reasonable;  value  of  services  thereafter  rendered,  notwithstand- 
ing the  agreement  under  which  the  services  were  originally  be- 
gun: Bcnnctl  v.  Stephens,  8  Or.  444. 

§  242.  Services  of  Intruder  without  Request.  —  Ser- 
vices rendered  by  an  intruder  and  without  his  recpiest 
cannot  be  recovered  for."*  If  one  voluntarily  puts  re}'airs 
to  the  house  or  fences  of  another,  without  consulting  the 
owner,  ho  cannot  afterwards  charge  him  therefor.'"'  So  a 
workman  employed  to  do  a  particular  job,  who  adds  extra 


'  Liiigc  r.  Kaiser,  34  Mich.  317. 

-  W'dod  (111  Master  and  Servant,  sec. 
C'2:  Trustees  v.  Allen,  14  Mass.  17r>; 
Cliiniiiuy  r.  Deliere,  37  111.  '-'•57; 
]I;mily  v.  Clark,  4  lltiust.  IG;  Christie 
V.  S.iwycr,  44  N.  11.  2.IS;  De  \Vo\i  v. 
Cliica'^o,  20  111.  443;  Goodwin  v. 
Un'um  Screw  Co.,  34  N.  il.  37S;  Low 
V.  n.  R.  Co.,  45  N.  II.  .'570. 

^  ( 'liaso  «'.  Corcoran.  lOli  Mass.  28G. 

*  Bartholomew  i'.  Jackson,  20  Johns. 
28;    II    Am.   Dec.   237;    Caldwell  v. 


Eneas,  2  Mill  Const.  348;  12  Am.  Dec; 
l)!Sl ;  rinchon  /•.  Dolanuy,  2  Ycatcy.  'J2. 
Allen  i:  Kichniond  College,  41  .Mo. 
302;  Levee  Commissioners  r.  Harris, 
20  La.  Ann.  201;  Watson  r.  Ledoiix.  8 
La.  Ann.  OS;  Dunbar  v.  Williams,  10 
Johns.  240;  Fox  r.  Sloo,  10  La.  Ann. 
11;  Morris  r.  Barnes,  35  Mo.  412; 
Hazlip  i\  Leggett,  G  Smedes  k  M. 
320. 

''Caldwell  V.  Eneas,  2  Mill  Const. 
348;  12  Am.  Dec.  (iSl. 


§243 


PRINCIPAL  AND   AQFNT. 


442 


work  without  consulting  his  employer,  cannot  recover 
tliort'for.'  But  where  A,  supposing  himself  entitled  to  an 
estate  of  which  possession  had  been  taken  under  an  in- 
quisition of  escheat,  proceeded  to  an  investigation,  in  the 
course  of  which  he  proved  the  title  of  B,  who  had  taken 
no  steps  in  the  matter,  and  that  his  own  claim  was  defect- 
ive, it  was  licld  that  A  should  bo  reimbursed  for  his 
expenses  in  the  investigation,  and  that  ho  bo  allowed  for 
his  services  ten  per  cent  on  the  amount  of  tho  estate  re- 
covered.'^ 


§  243.    Services  Rendered  through  Duress  or  Fraud.  — 

"Where  one  is  induced  to  render  services  to  another  either 
by  duress'  or  fraud,^  ho  may  recover  their  value,  though 
when  he  rendered  them  there  was  no  intention  to  pay  for 
them.  If  either  servant  or  master  is  induced  to  enter  the 
contract  by  tho  fraud  or  misrepresentation  of  the  other, 
—  tho  falsity  of  the  representation  not  being  ascer- 
tainable by  tho  exercise  of  ordinary  prudence,  —  he  is 
not  bound.^  But  if  ho  proceeds  after  discovering  it,  he 
waives  tho  fraud,  and  is  bound  to  perform."  Where  a  con- 
tract was  made  that  A  should  serve  in  the  army  two  years 
as  substitute  for  B,  and  the  substitute  was  accepted  and 
the  service  actually  performed,  it  was  held  no  defense  in 
a  suit  brought  for  thr  service  money  to  set  up  that  tho 
substitute  deceived  tho  officers  of  government  as  to  his 
name,  age,  etc.,  by  misrepresentation.' 

Illustrations.  —  A,  fraudulently  representing  himself  to  be 
owner  of  land,  induced  B  to  labor  on  it  in  expectation  of  be- 
coming a  joint  owner.  Held,  that  on  discovering  the  fraud  ho 
might  sue  for  and  recover  pay  for  his  labor:  Richard  v.  Stanton, 
IG  Wend.  25.    A  was  tho  lessee  of  a  state  prison,  and  employed 


'  Hort  V.  Norton.  1  McCord,  22. 

^  City  Council  v.  Uagcnneyer,  Riley 
Ch.  117. 

'  Peter  ?•.  Steel,  3  Yeatcs,  250;  Jar- 
rot  V.  Jarrot,  2  CAlm.  20;  Black  v, 
Mcaux,  4  Dana,  I8S. 


*  Rickard  r.  Stanton,  16  Wend.  25. 

*  Selway  v.  Fogg,  5  Mees.  &  W.  83; 
Hupe  V.  Phelps,  2  Stark.  480. 

«  Campbell  v.  Fleming,  1  Ad.  &  E. 
40;  Selway  v.  Fogg,  5  Mees.  &  W.  83. 
'  Servis  v.  Cooper,  33  N.  J.  La  C8. 


443       CONTRACTS    BETWEEN    MASTER   AND   SERVANT.       S  244 


the  prisoners  to  work  for  him,  under  a  contract  with  the  state, 
among  them  B.  After  his  release  B  proved  tliat  he  Jiad  heeii 
illegally  committed  to  prison,  and  sued  A  for  the  value  of  his 
services.  JMd,  that  he  could  recover:  Patterson  v.  Crawford,  12 
Ind.  241.  A  induced  a  woman  to  marry  him.  She  lived  with 
him  until  she  foimd  that  ho  was  already  married,  and  then  left 
him  and  brought  an  action  for  her  services.  Held,  that  she 
could  recover:  llirjfjins  v.  lireen,  9  Mo.  497.  A  woman  had 
lived  with  a  man  as  his  wife,  both  believing  such  relation  to 
exist,  and  upon  his  death  it  appeared  that  the  marriage  be- 
tween them  \yas  void.  Held,  that  there  was  no  implied  promise 
raised  entitling  her  to  recover  for  her  services:  Crupscy  v. 
Su-ccncy,  27  Barb.  310;  7  Abb.  Pr.  129. 

§  244.  Illegal  or  Immoral  Service.— No  action  lies  for 
services  rendered  in  peddling  goods  for  another  without 
license,  in  violation  of  law.'  A  recovery  for  services  per- 
formed  in  aid  of  prostitution,  as  mistress  of  a  brothel, 
is  not  permissible.^'  A  marker  at  an  illicit  billiard-table, 
who  keeps  the  games  and  receives  the  money  betted  by 
the  players,  is  not  entitled  to  recover  wages  from  the 
owner  of  tho  table,  the  contract  being  unlawful.^  One 
cannot  recover  for  his  personal  services,  portions  of  which 
were  rendered  in  an  employment  of  selling  liquors  unlaw- 
fully, the  contract  of  service  being  an  entirety;  but  ho  is 
not  prevented  from  recovering  for  his  services  contracted 
to  be  rendered  in  a  lawful  employment,  merely  because, 
during  tho  term  of  his  employment,  he  occasionally  as- 
sisted his  employer  in  such  unlawful  business  gratuitously, 
not  expecting  or  seeking  any  compensation  therefor.^  A 
j)arty  who  sues  to  recover  for  servicesTendcrcd  under  an 
unconstitutional  law  cannot  recover.^  But  the  legislature 
may  ratify  such  service,"  and  authorize  the  payment  of  a 
claim  created  under  an  unconstitutional  law,  though  by 
the  constitution  it  has  no  power  to  authorize  the  payment 
of  any  claim  created  without  express  authority  of  law.^ 

'  Stewartaon  v.  Lothrop,  12  Gray,  ^  Meagher  v.  Storey  County,  5  Nev. 

52.  244. 

'^  Williama  v.  Guarde,  34  Mich.  82.  «  Id. 

2  Badgley  v.  Beale,  3  Watts,  263.  '  Miller  v.  Dunn,  72  Cal.  402;  1  Am. 

*  Goodwin  v.  Clark,  65  Me.  280.  St.  Rep.  67. 


§§  215-217 


rniNCIPAL   AND   AOKXT. 


11 


>5  245.  Request  Implies  Promise  to  Pay.  — A  re  .pK  -i 
l»y  one  of  anotlicr  to  do  auytliiiij;  lor  liiin  iiii|ilic.->  im 
jigrc'i'inent  to  ])ay  him  what  tho  services  arc  rraronahly 
■worth.' 


§  246.  Exceptions — r«equest  v^itliout  Benefit  to  Parly. 
—  But  a  naked  refjnesl  i-  not  huliiiii  i»(  to  niukc  a  li;iliil!;y 
if  tho  .servu.'e  i.s  not  for  his  Itonelit,'-  or  Un'rc  is  no  b  j,,;! 
liability  on  hini  to  liaM-  tho  hihor  performe;!.  Uiit  (it' 
course  if  the  terms  of  the  rcciuest  inii)ly  a  j)ronii.-('  to 
pay,  the  liability  attaches.'' 


g  247.  Services  Rendered  in  Expectation  of  Ecqucst 
or  Lc{JO;Cy.  -Where  a  )»aily  renders  services  for  anoilur 
in  the  hojie  of  a  leijacy,  and  in  «ole  reliance  upon  th<>  p'r- 
son's  ^'enrro.-ily,  without  any  contract,  expi'css  or  inipHi  I, 
ihni  eouipen-ation  should  be  provided  for  hi'.u  by  will  nr 
otherwise,  and  the  party  for  whom  the  services  wci'e  r(!i- 
dcred  dies  without  niakin;^  su(di  provision,  no  a<'lion  11'  -. 
r.il  where  from  the  circumstances  of  the  case  it  i,^  i)iii;ii- 
fest  that  it  v.-as  understood  by  both  parties  tiiat  comp;  ii- 
sation  should  bo  made  l-y  will,  and  none  is  nuide,  an  a(  lion 
lies  to  recover  tho  value  of  such  services.'*  Services  in 
the  way  of  assiduous  nursing  and  attention  to  a  ]>oari!;  r, 
if  performed  with  the  intention  of  char;;ini]f  addiiion;;:ly 
for  them,  furnish  aground  of  action.  But  it  is  othei\vi:M> 
if  they  were  rendered  without  any  such  intention,  and 


>  Viin  Arir.aii  r.  Byington,  SS  111.  443; 
Woekso.  Jloluios,  ll'Ciisli. 'Jl.');  James 
r.  liixby,  11  Mas.<.  34;  Dougherty  v. 
Wliitclie.ul,  31  Mo.  *J55;  Lewis  r. 
Trickoy,  'JO  Uarb.  3S7;  Weston  v. 
Davids "'-'4  Ml'.  374;  Beall  r.  Van  Bib- 
ber, li)  La.  Ann.  434.  A,  vliou  a 
young  girl,  entered  B's  hor>'..:,  a  stran- 
ger to  her,  as  a  ser\:':iC  for  a  lixeil 
period.  For  several  years  after  the 
expiration  of  that  period  she  contin- 
ued to  work  for  B  without  receiving 
other    coui],JCUsatiou    than   a    home, 


board,  and  clothing.  J/ilJ,  that  a 
promise  to  i)ay  what  lu  r  services 
were  reasonably  worth  wa^  ii'ij.li  d: 
McMillan  r.  Page,  71  Wis.  ('•')'). 

■  Smith  r.  Watson,  14  Vt.  \V:,-2\  Wil- 
liams v.  JSrickell,  37  Miss.  CS'J;  7')  .\:ii. 
Dec.  88;  Norris  r.  Dodge,  -.'3  liid.  11)1; 
Boyd  r.  Wappington,  4  Watts  'JtT; 
Batehelder  v.  McKenui'y,  .'iil  'SU\  i.dj. 

3  White  V.  Mastin,  38  Ali.  147. 

*  Wt)od  on  Master  and  Nervaiit,  see. 
72;  iMurtiu  v.  Wright,  13  Wend.  4G0; 
28  Am.  Dec.  4GS. 


444 


415       CONTHACTS   BKTWRKN    MASTF.U   AM)   SKUVAN'T.      §  210 


lies    ;ill 
tilliililv 


i ; 1 1 1 i  li :  y 

in    1",'„1 

liut    i<( 

iiii.-c  to 


Dcqucst 

ilUtil  ll'T 

iiii|ili<  1, 

/    will  n\- 

cri'  i<  n- 
ioM  li'  -^. 

ina;  li- 
'Oiii]K  ;i- 

;;(■!  i'lii 
ires    ill 
i(>;n'i:'.  r, 
joiii'.lly 

KM'V,  i^o 

on,  ami 


■./,    Hint    a 

Sl'I'Vii  l-'-i 

iv.i!.li..l: 

■X'.-J;  Wil- 

!:  7.")  A  ill. 

:!  hid.  I'.M; 

atts    -tT; 

;i  Mc.  ;„-..'.. 

147. 
rv.iut,  -iH'. 
Vend.  4ti0; 


iDcrcly  with  tho  Ijopo  niul  oxpoctation  of  being  rewarded 
lor  tlifiii  in  the  bourdor's  will.' 

ii  248.  Presumption  that  Services  are  for  Fire.  — Sir- 
vices  rendore'd  by  one  person  lor  another  are  pic-umcd  to 
liave  been  I'or  liire,  an<l  not  gratuitous,  and  this  jtresuinii- 
lion  can  (»nly  be  rebutted  by  evideneo  of  a  eniitrary  <  x- 
press  or  iiiij)lied  understanding.''  Whoro  a  per.-on  serves 
ill  the  eai»aeity  of  a  domestic  servant,  and  no  demand  for 
payment  of  wages  is  niado  by  him  for  a  eonsideiid)le 
jicriod  afti'r  such  servico  has  terminated,  the  presumption 
i^  either  that  tho  wages  have  been  paid,  or  that  the  ser- 
vice was  gratuitous.  This  is  a  presumption  of  fact,  and 
may  bo  rebutted.' 

^  249.  Exception — Near  Relatives.  —  An  exception  to 
this  rule  arises  where  tho  parties  are  mend)ers  of  the 
same  family  or  near  relatives.*  in  this  case  tlie  law  will 
not  imply  a  promise  to  pay  for  services  rendered,  even 
though  tlierc  may  bo  a  moral  obligation  t<>  pay;  but 
clear  and  satisfactory  evidence  must  bo  given  of  an  actual 


'  Kenii.'ird  r.  Wliitooii,  1  lloust.  I'ti. 
-  jjiiw.soii  (III  l'ro.siiiii[)tivu  10viduiu;o, 

1\.       lint  Viicri!  il  HCTVlCO  for  till!  1)UI10- 

ti!  lif  tlio  public  is  loiiuired  l»y  law, 
a:i'l  no  provisinu  for  it.i  iiayiiient  is 
innK',  it,  is  reg;irde<l  iM  gratiiitoUH,  iiiid 
iiii  tliiiu  fur  coiiiiieiis.ition  can  l)u  cn- 
f' rocil:  AiidcMoa  ?'.  Board  of  Conimitj- 
siniUT.S,  'J.")  Uliio  St.  1.'}. 
'  MuCoiiucira  Appeal,   97    Pa.    St. 

*  Lawsou  on  Presninptivo  Evidence, 
7t;  lure  Scott,  1  Kcdf.  234;  Williams 
f.  llutcliinson,  3  N.  Y.  312;  53  Am. 
iJic.  301;  IJowen  ?'.  Bo  wen,  2  Bradf. 
.'<a.i;  llouck  V.  Houck,  99  Pa.  St.  552; 
Carpenter  r.  WcUcr,  15  Hun,  134; 
Adaiuii  c.  Adams,  23  Ind.  50.  In  Wil- 
liams r.  Hutchinson,  3  N.  Y.  312,  53 
Am.  Dee.  301,  the  court  say:  "A  con- 
tract or  promise  to  pay  as  a  matter  of 
fact  requires  affirmative  proof  to  cs- 
taliliili  it.  Under  certain  circum- 
stances, when  one  man  labors  for 
another,  a  presumption  of  fact  will 


arise  that  tlio  person  for  whom  lio 
latjors  will  pay  him  t!iu  valiiu  of  hid 
KiTviccs.  It  is  a  coiuliisioii  to  ^^hil:}l 
the  mind  readily  coiiic;  from  a  k;iov\l- 
c.Iljo  of  the  circuin.staiircs  of  tlur  jnr- 
ticular  case  and  tlie  ordinary  dual  ii;.ij 
hotwecn  man  ami  man.  Ihit  ulicrt 
tho  services  are  rcidirccl  liut\viu!i 
memhors  of  the  same  family,  no  .such 
presumption  will  arise.  Wi;  lind 
other  motives  than  the  desire  of  j^ain 
which  may  prompt  the  exchange  of 
mutual  Itenetits  hetwein  theui,  and 
hence  no  right  of  actitm  will  accntc  to 
either  party,  althcm^h  th(;  Hervices  or 
benelits  received  may  be  very  valuable. 
And  this  does  not  so  mi;ch  depend 
upon  an  implied  contract  that  the  ser- 
vices are  to  be  gratuitous,  as  up')u  tho 
absence  of  any  contract  or  iiromiso 
that  a  reward  should  be  paid.  So  far, 
then,  as  it  depends  upon  any  presump- 
tion of  fact,  tho  difficulty  is  as  great  C)r 
greater  in  the  case  of  an  iufant  than 
an  adult." 


249 


PRINCirAL   AND   AGENT. 


440 


promise  by  tho  defendant  to  pay  for  such  sorvJccs,  or  that 
the  ciroiiinstnnccs  are  so  strong  as  to  show  an  intention 
on  liis  part  to  do  so.'  TIjus  a  daughter  who  continues  to 
reside  in  her  father's  family  after  coming  of  ago  may 
recover  what  her  services  to  liim  arc  reasonably  worth,  it 
there  is  a  mutual  understanding  that  she  shall  be  paid  for 
such  services.''  The  relationship  of  father-in-law  and  son- 
in-law  is  not  of  itself  sufiicient  to  rebut  the  presumption 
of  liability  for  services  rendered  by  one  to  tho  othor.^ 

Illustuations.  —  A  mother,  being  id,  sent  for  her  dauglitcr, 
who  had  a  family,  to  conio  and  care  for  her.  The  dauglitir 
left  her  home  and  lived  with  and  took  care  of  her  mother  for 
more  than  three  years,  deceased  frequently  romarkiiif^  th.at  she 
should  bo  well  rewarded.  Held,  that  i)laintifr  could  recover 
the  value  of  her  services:  Marhcy  v.  lircu-ntcr,  17  Ilun,  Hi. 
The  plaintifT,  after  ho  came  of  ago,  lived  with  and  worked  lur 
his  father,  tho  defendant,  who  said  ho  would  reward  him  well 
and  provide  for  him  in  his  will.  Held,  that  the  plaintiff  coultl 
not  recover  compensation  for  his  services  during  the  lifetime  of 
his  father;  Patterson  v.  Patterson,  13  Johns.  379.  A  sister  ro 
sided  in  her  brother's  family,  performed  tho  usual  duties  of  a 
housekeeper,  and  in  return  received  clothing  and  a  homo  for 
eight  years.  No  account  was  kept,  and  no  agreement  was  made 
that  she  should  receive  wages.  Held,  that  the  law  would  not 
imply  a  contract  for  services  rendered:  Ayres  v.  Hull,  5  Kan. 
419.  A  girl,  upon  the  death  of  her  mother,  was  turned  away 
from  home  by  her  father  at  the  age  of  fourteen,  and  at  the  sug- 
gestion of  her  aunt  and  her  grandmother,  she  went  to  live  with 
an  uncle  and  aunt,  with  whom  she  remained  until  she  was 
twenty-five  years  of  age,  when  she  married.  She  subsequently 
brought  suit  against  the  uncle  for  work  and  labor.  No  express 
contract  to  pay  her  was  asserted,  and  it  appeared  that  she  was 
kindly  treated  and  provided  for  in  a  better  manner  than  slv) 
would  have  been  if  she  had  merely  received  ordinary  wages. 
Held,  that  she  was  not  entitled  to  recover  for  her  services:  Hays 
V.  McConnell,  42  Ind.  285.  A  laborer,  hired  for  a  certain  time 
and  for  a  certain  price,  intermarried  with  his  employer's  daugh- 
ter, who  was  a  member  of  her  father's  family,  and  continued  to 
work  for  his  wife's  father  for  several  years,  the  wife  in  the 

>  Duffey  V.  Duffey,  44  Pa.  St.  399;  Guild,  15  Pick,  129;  Fitch  v.  Peck- 
Bash  V.  Bash,  9  Pa.  St.  260;  Andrus  ham,  16  Vt.  150. 
V.   Foster,    17  Vt.   556;   Ridgway  v.        *  Green  v.  Roberts,  47  Barb.  521. 
English,   22  N.   J.  L.  409;  Guild  v.        *  Amey's  Appeal,  49  Pa.  St.  126. 


440 


4  17       CONTRACTS   BETWEEN   MASTER  AND   SERVANT.      §  250 


,  or  that 
itcntion 
iuucs  to 
igo  inny 
vortli,  it 
paid  fur 
ind  Kun- 
Limptioii 
lior.'* 

lauglitcr, 
(lauglitir 
other  for 
that  she 
1   recover 

iiun,  n;. 

jrked  for 
him  Will 
LifT  could 
ifctime  »i{ 
sister  ro- 
ities  of  a 
liotno  for 
vas  made 
ould  not 
J,  5  Kan. 
ed  away 

tho  SUR- 
live  with 

she  was 
loqucntly 
0  express 

she  was 
than  slvi 
y  wages. 
es:  Hays 

ain  time 
's  daugh- 
tinued  to 
:e  in  the 

h  V.  Peck- 

irb.  521. 
St.  126. 


moanwhilo  remaining  with  hor  father  and  rendering  flcrviccs 
for  him,  and  ho  furnisliing  her  and  tho  children  who  were  tho 
ifisu(!  of  l»er  marriage  with  food  and  clotliing.  There  was  no 
agreement  made  in  regard  to  tlio  services  of  tlie  daugliter,  or 
the  food  and  clothing  of  herself  and  her  children,  or  tlu;  ner- 
vices  of  her  hushand.  Held,  that  tho  father  was  not  liahle  for 
the  services  of  liis  daughter;  that  ho  could  not  claim  compensa- 
tion for  the  food  and  clothing  of  herself  and  children,  and  that 
he  was  hound  to  pay  her  husband  what  his  services  were  na- 
Honahly  worth  after  tho  time  for  which  ho  had  heen  engaged 
had  expired:  Corojcr  v.  Van  Acrnum,  43  Barb.  G02.  A  woman 
of  twenty-fivo  years  of  ago  lives  for  six  years  with  her  step- 
mother, from  whom  her  father  had  been  d'vorced,  working  as  a 
dressmaker,  and  giving  somo  of  licr  earnings  >)  her  step-mother, 
and  doing  some  of  tho  household  work.  Ildd^  that  she  cannot 
recover  from  her  step-mother  for  Bcrviccs  rendered:  FclrUvj  v. 
Fcifing,  Mich.,  1889. 

^  250.  Contract  for  Certain  Term  or  Certain  Thirg 
an  Entire  Contract. — A  contract  to  work  a  certain  term 
or  to  do  a  certain  thing  for  a  certain  sum,  either  payable 
in  block  or  in  installments,  is  an  entire  contract,  and  unless 
the  full  term  is  served  or  the  thing  is  completed,  tho  ser- 
vant can  recover  nothing.*  A  contract  to  teach  a  school 
for  ten  months  at  a  given  rate  per  month  is  entire,  and 
no  part  of  tho  consideration  is  payable,  or  can  bo  recov- 
ered, before  tho  end  of  the  term."  An  artist  who  has 
agreed  to  paint  likenesses  for  a  certain  price  cannot  recover 
till  ho  has  completed  them.'  But  this  is  a  mero  presump- 
tion which  may  be  rebutted  by  any  evidence  showing  a 
different  arrangement  between  the  parties.*    Where  the 

for  any  definite  time,  and  at  a  fixed 
price,  the  complete  performance  of 
which  is  a  condition  precedent  to  a 
right  to  compensation.  It  is  but  a 
stipulation  of  the  rates  at  which  the 
employee  is  to  be  compensated  for  Lhe 
services  performed.  He  is  not  bound 
to  serve  for  any  definite  time  to  en- 
title him  to  compensation:  Hancy  tfc 
Caldwell,  35  Ark.  156. 

»  Turner  v.  Baker,  30  Ark.  188. 

'  Freeman  v.  Galbraith,  Wright, 
581. 

♦Thayer  v.  Wadsworth,  19  Pick. 
653;  Hoar  v.  Clute,  15  Johns.  224. 


'  Jennings  v.  Lyon,  39  Wis.  553;  20 
Am.  Rep.  57;  Kohn  v.  Fandel,  29 
-Miim.  470;  Difenback  v.  Stark,  56 
Wis.  4G2;  43  Am.  Rep.  719;  Hansell 
J'.  Erickson,  28  111.  257;  Union  Bank  r. 
lloinyard,  15  S.  C.  296;  Thayer  v. 
Wadsworth,  19  Pick.  349;  Earp  r. 
Tyler,  73  Mo.  617;  Reab  v.  Moor,  19 
J<|hii3.  337;  Freeman  v,  Galbraith, 
Wrii;ht,  591;  Isaacs  v.  McAndrew,  1 
Mont.  437;  Larkin  v.  Buck,  11  Ohio 
•St.  561;  Stein  v.  Rose,  17  Ohio  St. 
471.  A  contract  for  service,  "at  a 
salary  of  two  thousand  five  hundred 
dollars  per  annum,"  is  not  a  contract 


§  251 


PRINCIPAL    AND    AGENT. 


44  S 


servant's  whole  time  is  not  due  under  the  contract  but  ho 
is  only  rcnuired  to  serve  when  called  on,  ho  niav,  if  he 
liolds  hiniseir  in  readinc.  3  to  perform  during  the  term, 
recover  tlie  agreed  compensation  for  the  entire  jieriod.^ 

Illustrations.  —  J.  agreed  that  ho  and  wife  would  work  for 
L.  fur  a  year  for  a  gross  sum.  Four  months  after  tlie  wife,  being 
alioiit  to  be  confined,  left  the  service,  and  J.  was  discliarged. 
Ildd^  that  J.  could  recover  nothing,  as  his  wife's  sickness  might 
liave  been  foreseen  l)y  him  when  he  made  the  contract:  Jctwumj^ 
V.  Lyons,  od  Wis.  boo]  20  Am.  Hep,  57.  A  brick-layer  under- 
took to  lay  the  brick  of  a  house  at  two  dollars  and  fifty  cents 
per  thousand,  kiln  count.  Jldd,  that  the  compensation  was 
not  due  until  the  house  was  completed;  and  that  the  loss  aris- 
ing from  the  accidental  destruction  of  a  part  of  the  work 
during  the  progress  thereof  fi'll  on  him:  Shanks  v.  OHffln,  11 
B.  Mon.  153.  A  carpenter  agreed  to  do  the  carpenter's  work  on 
a  house,  and  was  to  receive  a  certain  sum  on  the  completion  of 
the  work,  his  employer  furnishing  the  materials;  and  the  house 
and  materials  were  destroyed  by  fire  v/ithout  the  fault  of  the 
carpenter,  the  house  being  in  possession  of  the  employer.  Held, 
that  the  carpenter  could  not  recover  a  2)^o  ''tr^i  compensation 
for  the  work  actually  done:  Brnnihy  v.  Smith,  3  Ala.  123.  The 
plaintiff  agreed  to  work  for  the  defendant  ten  and  a  half 
months,  and  spin  yarn  "at  three  cents  per  run."  Held,  that 
the  contract  was  entire,  and  nmst  bo  performed  before  the 
])laintiff  could  recover  for  the  price  of  labor;  and  that,  if  he 
left  the  service  of  the  defendant  before  the  expiration  of  the 
time,  he  could  not  recover  for  spinning  a  certain  number  of 
runs  of  yarn:  McMillan  v.  VanderUp,  12  Johns.  1G5.  An 
agreement  was  made  that  the  plaintiff  was  to  work  for  the  de- 
fendant "  for  eight  months,  for  which  the  defendant  was  to  pay 
him  $104,  or  $13  per  month."  Held,  that  the  contract  was 
entire,  and  that  the  plaintiff  could  not  sue  for  his  pay  until  he 
had  served  out  the  whole  time:  Jieab  v.  Moor,  19  Johns.  337. 

§  251.  Abandonment  of  Contract — No  Recovery  for 
Time  Served.  —  A  servant  employed  for  a  term  under  an 
entire  contract,  who  abandons  and  refuses  to  complete  it 
without  legal  cause,  can  recover  nothing  for  what  he  has 
done.  This  rule  is  laid  dow^n  in  a  multitude  of  decided 
cases  both   in  this  country  and   in   England.^    On  the 

1  Thompson  v.  Society,  5  Pick.  469;  »  Smith  r.  Brady,  17  N.  Y.  17.">;  ?2 
Jones  V.  Crraham,  21  Ala.  C54;  Brom-  Am.  Dec.  442;  Lantry  «;.  Parks,  8  Cow. 
ley  V.  School  District,  47  Vt.  381.  63;  Olmstead  v.  Beale,  19  Pick.  uiIS, 


448 

it  but  lie 
\y,  if  he 
10  term, 
n'iod/ 

work  for 
ifc,  beiiiff 
5cliarg(.'(l. 
;ss  might 
Jcniriiujx 
:r  umler- 
ifty  cents 
tion  was 
loss  iiris- 
thc  work 
Griffin,  14 
5  work  on 
plction  of 
:hc  liouse 
lit  of  the 
)r.  Ilild, 
pen  pa  tion 
23.  Tlic 
:1  a  half 
Icld,  tliat 
oforo  the 

at,  if  he 
•11  of  the 
imbcr  of 
IG5.  An 
iv  the  de- 
ls to  pay 
ract  was 

until  he 


449       CONTRACTS    BETWEEN    MASTER    AND   SERVANT.       §  251 


iS.    0>Jl, 


'■ery  for 

ndcr  an 

fiplctc  it 

i  lie  has 

decided 

On  the 

Y.  IT.*];  7-2 

rks,  8  Cow. 
Pick.  uiiS, 


other  hand,  in  the  case  of  Britton  v.  Turner,^  which  arose 
'u  New  Ilanipsliire  in  1834,  it  was  hold  that  the  default- 
ing servant  may  recover  from  the  master  th*)  value  of  his 
services  for  the  time  served,  less  the  damages  sustained 
\>\  the  master  by  reason  of  the  partial  non-comiiletion  <»f 
I  ho  contract.  This  doctrine,  though  since  criticised  in 
the  court  in  which  it  was  announced,"  remains  the  law  of 
Now  Hampshire,*''  and  has  been  followed  in  Iowa,'  Kansas,'' 


Ihivis?-.  Maxwell,  12  Met.  290;  Brown 
-■.  TitLli,  3:j  N.  J.  L.  418;  Bragg  v. 
Bradfor.l,  3.3  Vt.  .'15;  Eldriilge  v. 
Howe,  2  (iilni.  Ul;  4;{  Am.  Dec.  41; 
Wi)lfc  V.  Howes,  20  N.  Y.  11)7;  75 
Am.  Pec.  388;  lIof,'au  v.  Titlow,  14 
Cal.  255;  Angle  v.  llaiina,  22  HI.  429; 
74  Am.  Dec.  101;  and  see  cases  citcil 
ill  Wood  on  Master  and  Servant,  sec. 
147,  Jioto  1;  Webb  f.  Duckingfield,  13 
Johns.  389;  7  Am.  Doc.  388;  Martin 
V.  iSchocnbcrger,  8  Watts  &  S.  307; 
Civhan  v.  Dailey,  4  Ala.  33G;  Gillis 
r.  Space,  03  Barl>.  177;  Larkint".  Buck, 

11  Ohio  St.  501;  Hutchinson  v.  Wet- 
more,  2  Cal.  310;  5()  Am.  Dec.  337; 
Lari>  V.  Tyler,  73  Mo.  CI  7;  McMillan 
r.  A'aiiderlii),  12  Jolins.  1G5;  7  Am. 
Doc-.  299;  Tipton  v.  Feitner,  20  N.  Y. 
4'J9;  Cunningham  ».  Morrell,  10  Johns. 
2U3;  0  Am.  Dec.  332;  Jennings  v. 
Camp.  13  Johns.  94;  7  Am.  Dec.  307; 
Morrill  r.  Bemis,  4  Dcnio,  121;  Mort- 
main V.  Lefaux,  (J   Mart.    (La.)   054; 

12  Am.  Dec.  485;  Byrd  v.  Boyd,  4  Mc- 
Coi'd,  240;  17  Am.  Dec.  740;  Wright 
V.  Turner,  1  Stew.  29;  18  Am.  Dec. 
\\')\  Posey  r.  Garth,  7  Mo.  94;  37  Am. 
L»ec.  183;  llcnson  v.  Hampton,  32  Mo. 
410;  Schnerr  v.  Lemp,  19  Mo.  42; 
Millar  r.  Coddard,  34  Me.  102;  50  Am. 
Dec.  038;  Swanzcy  v.  Moore,  22  111. 
(i;>;  74  Am.  Dec.  134;  Nelichka  v.  Es- 
tcrlv,  29  Minn.  140. 

'  0  N.  H.  481;  26  Am.  Dec.  713. 

-  Davis  V.  Barrington,  30  N.  H.  517. 

2  Davis  V.  Barrington,  30  N.  N.  517. 

*  McClay  v.  Hedge,  18  Iowa,  66; 
Pixler  V.  Nichols,  8  Iowa,  106;  74  Am. 
Dec.  29?;  Byerlee  v.  Mendel,  39  Iowa, 
3S2. 

^  Duncan  v.  Baker,  21  Kan.  107.  In 
this  case  the  court  say:  ' '  The  weight  of 
authority  at  the  present  time  we  think 
is  unquestionably  against  the  doctrine 
that  where  a  contract  ic  entire,  and 
Vot.  I.-29 


consequently  not  apportioiialilo,  and 
has  been  oidy  partiiiliy  pirioiniud, 
the  failing  party  is  not  t  utillod  to  rv- 
cover  or  receive  anything  ior  vliat  iio 
has  actually  done.  It  will,  p' rhap-i, 
bo  admitted  that  such  doctrine  has 
been  overturned  with  resipuct  to  a!l 
contracts  except  those  for  pT.sonal 
services;  and  if  so,  then  tlieru  is  not 
mucli  of  the  doctrine  luft.  But  if  tlio 
doctrine  is  to  be  abandoned  with  refer- 
ence to  all  contracts  except  tho.se  for 
personal  services,  then  why  not  ab:in- 
don  the  doctrine  altogCLher?  Tlie 
reason  usually  given  is,  that  the  em- 
ployer in  contracts  for  i)ersonal  ser- 
vices has  no  clioice,  except  to  accept, 
receive,  and  retain  the  services  already 
perfonaeil;  wiiilo  in  other  contracts  ho 
may  refuse  to  accept,  or  may  return 
the  proceeds  of  the  partially  performed 
contract  if  be  chooses.  But  this  is  not 
always  nor  even  generally  true  witli  re- 
spect to  otlier  contracts.  Supjiosc  a 
miller  purchase  a  thousand  bushels  of 
wheat  for  a  thousand  dollars,  tlic  wheat 
to  be  delivered  within  one  month;  he 
receives  the  wheat  as  it  i.t  delivered 
and  grinds  it  into  Hour;  \\\\^n  tl;e 
vendor  has  delivered  live  hundred 
bushels  tlnreor  he  refuses  to  deliver 
any  more;  what  choice  has  the  miller 
then  except  to  retain  what  he  Ikh  al- 
ready received  ?  This  kind  of  suppo- 
sition will  also  apply  to  the  pureluue 
and  sale  of  all  other  kinds  of  articles 
where  the  purchaser  on  receiving  them 
changes  their  character  or  sells  them, 
so  that  he  cannot  return  them.  Or 
suppose  that  an  owner  of  real  estate 
employs  a  man  to  build  or  repair  some 
structure  thereon  for  a  gross  but  dcli- 
nite  sum,  the  owner  of  the  real  estate 
to  furnish  the  materials  or  a  portion 
thereof  in  case  of  building,  and  either 
party  to  furnish  them  in  case  of  re- 


§252 


PRINCIPAL   AND   AGENT. 


450 


Nebraska,'  and  several   more  states,  as  will  be  seen  by 
the  cases  cited  below.'^ 


§  252.  Exceptions — When  Quantum  Meruit  Recover- 
able.— And  there  are  certain  cases  where  a  quantum 
meruit  may  be  recovered  before  the  end  of  the  term. 
These  cases  are:  1.  Where  before  the  end  of  the  terra 
the  master  abandons  the  business;^  2.  Where  before  the 
end  of  the  term  the  servant  is  wrongfully  dismissed;'' 
3.  AVhere  complete  performance  is  prevented  by  the  act 
of  God — as  sickness  or  death° — or  by  the  act    of  the 


pairing,  and  the  job  is  only  half  fin- 
ished, what  choice  has  the  owner  of 
the  real  :st,'ito  with  reference  to  re- 
taining or  returning  the  proceeds  of 
the  workman's  labor?  This  kind  of 
supposition  will  also  apply  to  all  kinds 
of  work  done  on  real  estate,  and  will 
often  apply  to  work  done  on  personal 
property.  Of  course  in  all  cases  where 
the  employer  can  refuse  to  accept  the 
work,  and  does  refuse  to  accept  it,  or 
returns  it,  he  is  not  bound  to  pay  for 
it,  unless  it  exactly  corresponds  with 
the  contract.  But  where  he  receives 
it  and  retains  it,  whether  ho  retains  it 
from  choice  or  from  necessity,  he  is 
bound  to  i)ay  for  the  same  whab  it  is 
reasonably  worth,  less  any  damage 
that  he  may  sustain  by  reason  of  the 
partial  non-fulfillment  of  the  contract. 
Of  course  he  is  not  bound  to  pay  any- 
thing unless  the  work  is  worth  some- 
thing, unless  he  receives  or  may  receive 
pome  actual  benefit  therefrom;  and 
where  he  receives  or  may  receive 
some  actual  benefit  therefrom,  he  is 
bound  to  pay  for  such  benefit,  and 
only  for  such  benefit,  within  the  lim- 
itations hereinbefore  mentioned." 

»  Mcldillan  v.  Malloy,  10  Cent.  L. 
J.  447;  Purcell  v.  MeComber,  11  Neb. 
209;  38  Am.  Rep.  3G6. 

■^  Coo  V.  Smith,  4  Ind.  79;  58  Am. 
Dec.  G18;  Wolcott  v.  Yeager,  11  Ind. 
84;  Carroll  v.  Welch.  26  Tex.  147; 
Riggs  V.  Horde,  25  Tex.  Supp.  456; 
78  Am.  Dec.  584;  Chamblee  v.  Baker, 
95  N.  C.  98;  HoUis  v.  Chapman,  36 
Tex.  1. 

'  Fuller  V.  Rowe,  59  Barb.  344. 

*  Hill  V.  Green.  4  Pick.  114;  Brinkley 


V.  iSwicegood,  C5  N.  C  (i"2(j;  Byrd  v. 
Boyd,  4  McCord,  246;  17  Am.  Dec. 
740;  Swift  v.  Harrimaii,  oO  Vt.  GOT; 
Libhart  v.  Wooil,  1  Watts  &  S.  205; 
37  Am.  Dee.  4G1;  Ileuder^on  v.  Stiles, 
14  Ga.  135;  Ryan  r.  Dajton,  25  Conn. 
188;  65  Am.  Dee.  560. 

*  Wolfe  V.  Hawcs,  20  N.  Y.  197;  75 
Am.  Dec.  388;  Clark  r.  Gilbert,  26 
N.  Y.  279;  84  Am.  Dec.  iS9;  Jarrell 
V.  Farris,  0  Mo.  159;  Lmvington  v. 
Greene,  7  R.  I.  589;  Cuckson  v.  Stones, 
28  L.  J.  Q.  B.  25;  Ryan  r.  Dayton,  25 
Conn.  188;  65  Am.  Dec.  560;  Lake- 
man  V.  Pollard,  43  Me.  403;  69  Am. 
Dec.  77.  In  K.  v.  Raschen,  38  L.  T., 
N.  S.,  38,  the  plaintiff  was  engaged  by 
the  defendants  as  a  clerk  at  a  yearly 
salary,  and  was  to  have  one  month's 
notice  of  dismissal.  He  served  under 
the  contract  from  the  21  to  the  30th 
of  July,  when,  being  unwell,  he  ob- 
tained defendants'  permission  to  ab- 
sent himself  until  the  Cth  of  August. 
He  remained  away,  however,  until  the 
first  week  in  September,  when  he  re- 
turned and  tendered  his  services, 
which  the  defendants  refused;  au(l 
they  had,  moreover,  in  the  mean  time, 
namely,  on  the  20th  of  August,  given 
him  a  notice  by  letter  of  that  date, 
terminating  the  employment.  They 
refused  to  pay  him  the  amount  claimed 
by  him  for  wages  during  his  absence, 
on  the  ground  that  he  had.  by  his  own 
misconduct,  rendered  himself  incapa- 
ble of  performing  his  duties,  and 
therefore  was  not  entitled  to  any 
remuneration.  The  illness  under 
which  the  plaintiff  was  suffering  arose 
from  venereal  disease.    He  thereupon 


451       CONTRACTS   BETWEEN  MASTER  AND   SERVANT.      S  252 


law.'     So  a  master  waives  forfeiture  of  wages  for  services 
performed  by  a  servant  who  voluntarily  leaves  before  the 


brought  an  action  for  hia  wages  from 
the  1st  of  August  to  the  Ist  of  Sep- 
tuuilier,  hut  was  nonsuited  in  the  court 
below.  Oil  appeal  the  nonsuit  was 
set  aside  and  a  verdict  entered  for  the 
plaintiff.  Cleasby,  B.,  said:  "I  think 
pri/iHi  J'arie  illness  is  to  be  attributed 
to  tlio  act  of  God,  and  we  are  not  jus- 
tilled  in  going  back  for  any  length  of 
time,  and  entering  into  an  investiga- 
tion as  to  what  may  have  been  the 
cau.sc  of  it.  We  ought  not,  I  think, 
to  extend  the  effect  of  disability  aris- 
ing from  illness.  The  illness  which 
reudeied  him  unable  to  perform  the 
duties  for  a  time  came  upon  him  un- 
expectedly, and  wo  cannot  go  back  to 
the  lir.st  causes  and  into  the  question 
of  how  it  arose.  The  maxim.  Causa 
p/'oorinin  jwn  rernola  spectatur,  is  appli- 
cable hero.  As  to  how  precisely  the 
disease  arose,  there  may  be  various 
different  opinions,  and  there  might  be 
the  greatest  uncertainty  as  to  the 
cause  or  matter  which  originally 
brought  it  about.  It  was  a  misfortune 
wl'.ich  coulil  not  have  been  foreseen  at 
tlic  time  the  contract  was  made,  and 
I  think  the  plaintiff  is  entitled  to  say 
that  it  is  a  reasonable  excuse  for  his 
duties."  Hawkins,  J:  "I  am  of  the 
Bamu  opinion.  If  the  plaintiff  had 
been  aware,  at  the  time  of  the  making 
of  the  contr.act,  that  he  would  be  in- 
capacitated by  illness  from  performing 
his  duties,  I  am  not  prepared  to  say 
that  ho  could  recover  in  this  action. 
But  there  is  nothing  to  show  that  he 
knew  anything  of  the  illness  which  he 
subsequently  suffered  from  until  after 
the  agreement  had  been  entered  into. 
There  was  no  cross-examination  on 
that  point,  and  no  question  was  put 
to  get  out  of  him,  and  there  was  no 
evidence  to  show,  that  he  had  any 
suspicion  of  the  misfortune  which  sub- 
sequently overtook  him,  or  that  he  was 
aware  that  the  seeds  of  the  disease 
existed  in  him  at  that  time.  Now,  I 
base  my  opinion  upon  that  fact,  and 
I  think,  under  these  circumstances, 
that  he  is  entitled  to  the  amount 
claimed.  The  misconduct  alleged  in 
the  pleadings  is  hia  staying  away  with- 


out a  reasonable  excuse.  How  can  it 
bo  called  misconduct  if  a  man  stays 
away,  on  the  advice  of  a  doctor,  in 
order  to  get  himself  cured?  Now,  in 
the  present  case,  the  plaintiff  did  not 
voluntiirily  and  willfully  refuse  to 
serve,  but  was  compelled  to  absent 
himself  by  an  illness  whi^ h  came  ujjon 
him  during  the  time  oi  service,  and 
which  was  not  the  result  of  any  mis- 
conduct that  occurred  after  the  agree- 
ment was  made.  As  a  matter  of  fact, 
I  conclude  that  the  malady  was  con- 
tracted before  he  entered  into  the 
defendants'  service,  and  he  did  not 
improperly  obtain  admission  there. 
At  the  time  that  he  entered  into  tlie 
contract,  which  ho  did  honestly,  he 
neither  believed  nor  knew  that  ho 
would  not  be  able  to  fultill  it."  Dis- 
ability occasioned  by  temporary  .sick- 
ness will  not  disentitle  a  servant  to 
wages,  if  the  contract  be  treated  cs  sub- 
eistirtfj  throwfhout:  Cuckson  v.  Stones, 
1  El.  &  E.  i248;  28  L.  J.  Q.  B.  25;  32 
L.  T.  242.  Of  course,  it  is  one  thing 
as  regards  wages  accruing  up  to  the 
timo  of  the  sickness,  and  another  as 
regards  wages  for  the  period  during 
or  subsequent  to  the  sickness;  and  as 
to  the  latter  period,  it  is  important  to 
bear  in  mind  the  proviso  italicized 
above.  The  Scotch  law  on  this  branch 
of  the  subject  seems  in  some  particu- 
lars more  favorable  to  servants  than 
our  own.  If  the  sickness  bo  caused  by 
a  hurt  sustained  while  engaged  in  the 
master's  service,  —  e.g.,  by  a  kick  from 
his  horse,  or  the  bursting  of  his  fowl- 
ing-piece, —  the  servant  is  entitled  to 
full  wages;  and  if  ho  lived  in  tli«  fam- 
ily, to  l)oard  wages  up  to  the  periml 
or  the  termination  or  the  contract: 
Bell's  Commentaries,  1~9;  Lorimor's 
Instituted,  sc  ..  5G4.  If  the  master 
offer  to  maintain  the  servant  in  his 
own  house,  the  servant  in  the  general 
case  is  not  entitled  to  leave  and  claim 
board  wages;  but  if  it  bo  found  neces- 
sary for  his  recovery  that  he  should  Ijc 
removed,  the  master  must  pay  board 
wages:  2  Hutch.  Just.  1G7;  Fraser  on 
Master  and  Servant,  51.  If  the  ser- 
vant's sickness  has  arisen  from  over- 


1  Jones  V.  Jadd,  4  N.  Y.  411. 


§  253 


PRINCIPAL  AND   AGENT. 


452 


term  of  service  has  expired,  and  is  liable  therefor  at  the 
rate  stipulated  by  the  contract  only,  but  without  deduction 
of  damages  sustained  by  the  leaving,  where  he  offers  to 
pay  the  servant  at  the  contract  price,  and  tenders  ])ayment, 
although  by  mistake  he  tenders  less  than  the  amount  due 
at  that  rate,  and  although  ho  insists  at  the  time  that  he 
did  not  admit  his  liability.^ 

§  253.  Hours  of  Labor.  —  A  servant  hired  by  the 
month  or  year  cannot  be  compelled  to  work  an  unrea- 
sonable number  of  hours  each  day;  but  what  is  or  is  not 
reasonable  depends  upon  the  nature  of  the  bu^Jness,  the 
custom  of  the  trade  and  the  regulations  of  tho  employer, 
and  the  understanding  of  the  parties  when  tho  contract 
was  made.''  Where  a  party  contracts  to  work  by  the 
week,  knowing  the  nature  of  the  employment  to  be  such 
as  will  occupy  all  his  waking  hours,  ho  cannot  claim  com- 
pensation for  as  many  days'  work  as  the  number  of  hours 
of  labor  performed  by  him  would  have  amounted  to,  in- 
dependent of  the  contract.'  The  fact  that  a  charge  for  a 
certain  number  of  hours'  services  for  the  first  year  is 
assented  to  by  the  employer  does  not  create  an  implied 
obligation  on  his  part  to  pay  twice  as  much  the  second 
year  because  the  number  of  hours  are  doubled  in  the 


tasking,  the  same  principles  are  appli- 
cable: Lorimer's  Institutes,  sec.  ^503. 
If,  however,  the  sickness  be  referilule 
to  no  cause  which  the  master  could 
possibly  have  controlled,  the  rule  is, 
that  wages  and  board  wages  will  be 
duo  only  where  tho  illness  is  of  mod- 
erate duration;  and  a  deduction  from 
these  will  be  made  if  the  length  of  the 
bickness  be  very  great,  considered  in 
relation  to  the  length  of  the  engage- 
ment: 2  Hutch.  Just.  166;  Bell's  Com- 
mentaries, 180;  Fraser  on  Master  and 
Servant,  51 .  Workmen  earning  weekly 
wages,  and  not  residing  in  the  mats- 
tcr  s  liouse,  have  no  claim  against  the 
master  if  they  have  been  disabled  by 
eickncss  from  discharging  duty;  and 
neither  does  such  exist  in  the  case  of 


any  other  class  of  servants,  if  their 
engagement  be  liable  to  come  to  an 
end  at  a  moment's  notice;  but  it  is  said 
that  where  mechanics  or  artisans  arc 
engaged  for  a  lengthened  period,  they 
will  probably  be  found  to  have  the 
same  claim  to  wages  (not,  of  course,  to 
board  wages)  during  sickness  of  mod- 
erate duration  as  domestic  servants: 
Fraser  on  Master  and  Servant,  54; 
Lorimer's  Institutes,  sees.  572,  573. 
See  article  on  Inability  of  Servants 
to  Fulfill  Contracts  with  Masters,  re- 
printed in  9  Cent.  L.  J.  174. 

»  Patnote  v.  Sanders,  41  Vt.  CO;  93 
Am.  Dec.  564. 

*WoodonMaBterandServant,sec.SG. 

'  Luske  V.  Hotchkiss,  37  Conn.  219; 
9  Am.  Rep.  .314. 


453       CONTRACTS   BETWEEN   MASTER  AND   SERVANT.      §  254 


latter.*  But  if  by  statute  a  certain  number  of  hours  are 
fixed  as  a  clay's  work,  a  servant  may  lawfully  refuse  to 
work  beyond  that  time."  Because  the  compensation  for 
performing  the  duties  of  a  certain  office  is  fixed  at  a  cer- 
tain price  per  day,  it  is  not  dependent  upon  the  perform- 
ance of  work  on  each  lay.' 

§  254.  Extra  Hours  —  Compensation  not  Recoverable 
for  Working  Extra  Hours — Exceptions. — But  unless  there 
is  an  express  promise  to  pay  him,  a  servant  employed  for 
a  term  cannot  recover  for  working  extra  hours.*  His 
remedy,  it  is  said,  is  to  refuse  to  work  the  extra  time.^ 
Even  where  a  statute  declares  that  a  certain  number  of 
hours  shall  constitute  a  day's  work,  a  servant  who  works 
over  that  time  cannot  recover  extra  compensation.^  But 
a  servant  may  recover  for  extra  services  performed  at  the 
request  of  the  master,^  provided  the  service  is  one  the 
servant  is  under  no  legal  obligation  to  perform.^  Where 
a  person  contracts  to  serve  half  the  time  and  to  receive 
but  half  pay,  he  may  show  that  he  served  all  the  time, 
and  recover  at  the  rate  stipulated  for  in  the  writing." 

Illustrations.  —  W.  was  employed  by  D.  as  a  man-of-all- 
work,  at  a  fixed  weekly  stipend;  during  the  sickness  of  the 
latter  he  took  care  of  him  alternate  nights  and  alternate  Sun- 
days, receiving  pay  for  his  services  upon  Sunday,  but  none  for 
those  rendered  at  night,  nor  was  there  any  agreement  reepect- 
ing  them.  W.  having  recovered  for  the  extra  services  at  night 
in  the  court  below,  held,  that  the  verdict  should  not  be  dis- 
turbed:  Wilford  v.  Devin,  43  Iowa,  559. 


1  Miller  v.  Hooper,  7  Hun,  200. 

2  McCarthy  v.  Mayor,  90  N.  Y.  1; 
48  Am.  Rep.  COl. 

^  Al)bott  V.  Georgia  and  North  Caro- 
lina 11.  E.  Co.,  90  N.  C.  402. 

*  Fraser  v.  United  States,  16  Ct.  of 
01.  1S7;  Guthrie  v.  Merrill,  4  Kan. 
157;  Luske  v.  Hotchkiss,  37  Coun. 
210;  9  Am.  Rep.  314. 

*  Wood  on  Master  and  Servant,  sec- 
80;  Koplitz  v.  Powell,  50  Wis.  671, 
holding  that  if  a  servant  voluntarily 
works  during  uoseajsouable  hours,  he 


cannot  claim  extra  compensation  be- 
yond that  called  for  by  hia  contract 
with  his  employer. 

«  McCarthy  v.  Mayor,  90  N,  Y.  1 ; 
48  Am.  Rep.  601 ;  Luske  v.  Hotchkiss, 
37  Conn.  219;  9  Am.  Rep.  314;  United 
States  V.  Martin,  94  U.  S.  400. 

^  Railroad  Co.  v.  Clarkson,  7  Itid. 
595;  Duncan  v.  Commissioners,  19  Ind. 
154;  Clutterbuck  v.  Coffin,  20  L.  J. 
Com.  P.  Co. 

8  Harris  v.  Carter,  3  El.  &  B.  559. 

»  Edrington  v.  Leach,  34  Tex.  285. 


§25(5 


PRINCIPAL  AND  AGENT. 


454 


§  255.  Work  Performed  on  Sunday. — As  we  have  seen, 
a  servant  is  not  obliged  to  work  on  Sunday/  but  if  he 
does  so,  he  is  not  entitled  to  extra  pay,^  unless  the  work  is 
"necessary,"  and  the  master  requested  him  to  work  on 
that  day,  and  promised  to  pay  him  extra  compensation.' 
AVhere  one  is  employed  at  a  certain  price  per  month  to 
work  on  a  farm,  and  his  employment  contemplates  certain 
work  to  be  done  by  him  on  Sunday,  and  he  afterwards 
makes  a  final  settlement  without  claiming  additional  pay 
for  his  Sunday  work,  he  cannot  then  recover  for  such 
work.* 


§  256.  Right  to  Order  Servant  to  Different  Employ- 
ment— Compensation. — A  servant  hired  for  one  service 
may  refuse  to  labor  at  another  and  different,  service.*  But 
the  test  always  is.  Is  the  new  service  su  h  a  one  as  may 
fairly  be  contemplated  to  have  been  within  the  intention 
of  the  hiring.®  "If,"  says  Mr.  Wood,'  "a  farm  laborer 
should  refuse  to  carry  mortar  for  brick-layers  construct- 
ing a  building  for  the  master,  ho  might  properly  be  dis- 
missed therefor,  for  the  nature  of  the  service  is  general.' 
But  if  the  same  service  was  required  of  a  clerk,  a  book- 
keeper, lawyer's  clerk,  and  others  specially  employed,  he 
might  properly  refuse  to  perform  it.  Thus  a  lady's  maid 
cannot  be  required  to  milk  cows,"  a  journeyman  saddler 
cannot  be  required  to  cook,*"  nor  a  cook  to  act  as  market- 
woman,"  nor  a  farm  laborer  as  a  household  servant."    But 


^  Commonwealth  v.  St.  Germain,  1 
Browne,  24,  cited  ante.  A  contract 
to  pay  a  demurrage  will,  in  the  ab- 
sence of  any  proof  to  the  contrary, 
be  deemed  to  intend  to  mean  demur- 
rage for  working  days,  and  to  exclude 
Sundays:  Rigney  r. White,  4  Daly,  400. 

a  Guthrie  v.  Merrill,  4  Kan.  187. 

»  Whitcomb  v.  Oilman,  35  Vt.  297. 

*  Lowe  V.  Marlow,  4  111.  App.  420. 

''  Baron  v.  Placid6,  7  La.  Ann.  229. 

8  Anglo  V.  Hauna,  22  111.  429;  74 
Am.  Dec.  161;  Burton  v.  Pinkerton, 
L.  R.  2  £x.  340. 


^  Wood  on  Maiitar  ■ 


89. 


ont,  sec. 


8  Anglo  t'.  Kanr  >,  ill.  429;  74 
Am.  Dec.  161;  I'rwie'  .  Master  and 
Servant,  68. 

*  Bell's  Commentariefj,  117. 

"  Peter  v.  Terrol,  2  Mur.  28. 

"  Guuu  V.  Ramsay,  Hume,  384. 

'-  Stuart  V.  Richardson,  Hume,  390. 
A  director  of  a  theater  cannot  require  a 
dancing-girl,  engaged  as  premiere  se- 
comle  dansetise,  to  appear  in  any  dancos 
which  do  not  enter  into  e'.n])lr'yiiient 
according  to  the  usages  of  the  thea* 


454 


455      CONTRACTS  BETWEEN   MASTER   AND   SERVANT.      §  257 


ive  seen, 
ut  if  he 
work  is 
vork  on 
isation.' 
onth  to 
5  certain 
erwards 
nal  pay 
or  such 


Employ- 

service 
^*    But 
as  may 
tention 
laborer 
kistruct- 
be  dis- 
eneral.* 
a  book- 
yed,  he 
's  maid 
saddler 
narket- 
,"    But 

■  ont,  sec, 

429;  74 
ister  and 


IS. 
384. 

me,  390. 
require  a 
•niere  se- 
yflancos 
loynient 
he  thea< 


in  all  cases  this  question,  as  to  whether  certain  special 
service  outside  of  the  contract  can  be  reasonably  required 
of  the  servant,  must  depend  upon  the  contract  and  the 
character  of  the  service  contemplated  thereby,  and  the 
particular  necessities  of  the  master."  One  agreeing  to 
render  service  as  "salesman,"  or  in  any  other  capacity, 
may  show  by  the  usages  of  this  trade  what  services  lie 
was  to  render,  where  his  work  was  to  be  done,  what  goods 
he  was  to  sell,  and  how  many  hours  a  day  he  was  to  be 
employed.'  Thus,  engaged  as  a  "lace  buyer,"  he  might 
show  that  an  order  from  his  employer  to  fold  some  lace 
on  cards  was  not  within  his  contract,  and  that  his  refusal 
to  do  so  would  not  justify  his  dismissal;'^  or  engaged  as 
a  traveling  salesman,  and  agreeing  not  to  go  over  "the 
same  ground"  for  any  other  house,  these  words  ought  to 
be  properly  explained  ]>y  parol  evidence  of  usage;^  and 
usage  may  explain  what  is  included  in  "ship-carpenters' 
work,"  as  these  words  are  used  in  a  contract.^  But  the 
master  may  call  for  his  assistance  outside  of  his  ordinary 
engagement  in  a  case  of  great  emergency.^ 

§  257.  Increased  Duties— Extra  Compensation.  —  So  a 
person,  employed  at  a  salary  to  perform  certain  duties, 
cannot  recover  extra  pay  because  his  duties  have  been  in- 
creased beyond  what  he  expected.®    An  ac'ion  docs  not  lie 


tcr.  And  whcro  ho  dismisses  her  for 
refusing  to  dance  a  parlor-dance  in 
pailor-dres3  with  the  Ji;/itntn!e.i  of  the 
theater,  l:e  will  he  liable  to  her  in 
damages:  Baron  r.  Placid^,  7  La.  Ann. 
220. 

'  Flagan  ?•.  Domestic  Sewing  Ma- 
chine Co.,  9  Hun,  73;  iSweet  i:  Lee,  3 
Man.  &  G.  452;  Price  r.  Mouat,  11 
Com.  B.,  N.  S.,  509;  Hosley  v.  Black, 
28  N.  Y.  438. 

■i  Price  V.  Mouat,  11  Com.  B.,  N.  S., 
509. 

*  Mumford  v.  Gething,  7  Com.  B., 
N.  S  ,  305. 

*  G  dlyer  r.  Collins,  17  Abb.  Pr.  467. 

*  Wood  on  Master  and  Servant,  sec. 
89. 


8  Fraser  v.  United  States,  10  Ct.  of 
CI.  337;  Turiiell's  Si'.cues.smn,  o4  L;i. 
Ann.  888;  liair  v.  Bull,  0  V't.  3.");  Kop- 
litz  V.  Powell,  50  \\m.  071;  llodgcj  v. 
Railroad  Co.,  20  Vt.  220;  I'ew  v. 
N:-tioual  Bank,  1.30  Mass.  3i»4.  "A 
person  employed  as  the  secretary  of  a 
private  corporation,  at  a  lixcd  rate  of 
compensation,  cannot  demand  c::tra 
pay  for  services  in  that  capacity  which 
were  not  anticipated  at  thj  timj  of  his 
appointment,  or  which  were  not  enu- 
merated in  thecharter  orby-hnv.s.  The 
fair  construction  of  his  contract  is,  that 
ho  will  do  whatever  his  employers  m:iy 
have  occasion  to  employ  a  secretary 
about"  :  Black,  J.,  inCarrt".  Chartiera 
Coal  Co.,  25  Pa.  St.  337.     In  Voorheea 


§257 


PRINCIPAL  AND   AGENT. 


450 


on  a  promise  to  pay  for  services  which  it  was  the  pUiin- 
tiif 's  duty  to  perform  without  pay.*  But  a  person  employed 
on  a  particuhir  service,  or  by  the  month  or  year,  muy  have 
a  right  to  compensation  for  services  rendered  on  request, 
out  of  the  range  of  such  employment,  even  without  express 


V.  Combs,  33  N.  J.  L.  494,  a  iloincstic 
servant  was  employed  by  one  W.,  at  a 
Btipulatcd  monthly  wage.  After  V/.'a 
«leatli  she  cluimucl  an  increased  com- 

ftensation,  on  the  ground  that  l:cr  laljorj 
lad  been  increased  by  liia  sie'.:nc!Sd. 
It  was  held  that  she  could  not  re- 
cover. "The  presumption  of  Liw, "  sc^id 
the  court,  "is,  that  for  all  services 
rendered  by  her  to  her  employer, 
which  are  in  the  line  of  her  retrular 
duties,  or  of  a  similar  nature,  wliether 
ordinary  or  extraordinary,  she  is  sat- 
istied  by  the  payment  of  her  lixed 
salary.  The  ol)ject  of  an  express  con- 
tract i.i  to  guard  the  parties  aj^'ainst 
i.ncei'tainty  as  to  its  term,  or  exaction 
in  its  performance.  But  an  express 
contract  will  furnish  slender  protection 
indc'jd  to  the  master,  if  for  every  ad- 
ditidual  or  extra  service  ho  may  be 
buhjected  to  the  payment  of  such  sum 
aj  a  jury  may  nward.  Sucli  a  rule 
would  give  the  8(  I'vant  a  valid  claim 
for  increased  pay  w  henever  the  master 
entertained  an  unexpected  guest,  and 
enalde  tlic  clerk  at  a  fixed  salary  to 
demand  an  increase  if  wages  with 
every  increase  of  the  nicrchant's  busi- 
ness. No  reason  can  be  jicrceived  why 
the  master  might  not,  with  equal  pro- 
priety, ujion  the  more  diminution  of 
the  servant's  labor,  reduce  the  remun- 
eration. The  doctrine  upon  which  the 
plaintiff  rests  her  case  is  contrary  to 
the  well-settled  rule  that  an  express 
contract  excludes  an  implied  one.  An 
implied  contract  cannot  exist  when 
there  is  an  existing  express  contract 
about  the  identical  subject.  The  par- 
ties are  bound  by  their  agreement, 
and  there  is  no  ground  for  implying  a 
promise.  It  is  only  when  the  parties 
do  not  agree  that  the  law  interposes 
and  raises  a  promise.  Where  an  ex- 
press contract  exists,  there  must  be  a 
rescission  of  it  before  the  parties  will 
bo  remitted  to  the  contract  which  the 
law  implies,  in  the  absence  of  that 


agreement  which  they  make  for  them- 
selves: W.dkor  r.  Iirowii,  'J8  111.  oTS; 
81  Am.  Dee.  '2h7;  t'uUer  r.  Powell,  G 
Torn  Rep.  3*J4;  liart  r.  Lauiiiaii,  ij 
Barb.  410.  In  the  case  of  Hart  r.  La:i- 
m;in.  Hart  agreed  to  liiake  a  certain 
excavation  of  earth  for  a  speciid  price. 
After  he  entered  on  the  work,  lie,  un- 
expectedly to  Ijoth  parties,  encountered 
hard-pan,  and  gave  notice  to  Laui.ian 
that  he  must  abandon  t!;e  woik  unlesi 
Lauman  would  allow  him  more  than 
the  contract  price.  Lauman  told  Hart 
to  quit  the  work  until  some  arrange- 
ment could  be  made,  and  he  did  quit 
it  for  about  two  weeks,  when  it  \\a3 
resumed  under  a  new  agreement,  by 
which  he  was  to  have  reasonable  com- 
pensation for  the  work.  It  wa3  held 
in  this  case  that  Hart  could  not  re- 
cover under  the  new  agreement,  unless 
what  took  place  between  the  parties 
in  effect  rescinded  the  original  contract 
as  to  that  portion  of  the  work  which 
had  been  abandoned,  and  that  the  par- 
ties were  not  in  a  situation  to  make  a 
new  contract  binding  upon  them  until 
such  rescission.  In  other  words,  that 
where  work  was  entered  upolisvith  an 
express  stipulation  as  to  price,  a  yub- 
sequent    express    promise    to    pay  a 

Sreater  sum  on  account  of  unforeicon 
ifficulties  in  the  undertaking,  would 
bo  void  for  want  of  consideration  to 
support  it,  unless  it  was  accompanied 
by  a  virtual  rescission  of  the  original 
bargain.  The  extra  services  of  the 
plaintiflF  were  not  rendered  in  an  em- 
ployment different  from  that  for  which 
she  engaged,  but  were  more  burden- 
some by  reason  of  the  testator's  illness. 
In  the  absence  of  the  express  agree- 
ment to  pay  for  the  extra  services,  no 
recovery  can  be  had.  Tliis  view  is 
supported  by  Carey  v.  Halleek,  D  Cal. 
198;  Haymore  v.  Moore,  8  Ohio,  239; 
Smith  on  Master  and  Servant,  101,  and 
Hart  V.  Lauman,  before  cited. " 
^  Sweaay  v.  Hunter,  1  Murph.  181. 


457       CONTRACTS    BETWEEN    MASTER   AND    SERVANT.      §  257 


agreement  that  such  services  shall  be  paid  for.'  Where  a 
person  employs  an  architect  to  prepare  working  drawings 
for  a  house,  and  the  architect  changes  the  plan,  if  the 
owner  directs  the  work  to  be  altered  to  conform  to  the 
original  plan,  he  must  pay  the  workman  for  such  altera- 
tion.^ Where  extra  labor  performed  is  of  the  same  char- 
acter as  other  labor  agreed  for,  and  the  price  specified,  it 
will  bo  inferred  that  the  additional  work  is  to  bo  paid  for 
at  the  same  rate.'  Usage  is  admissible  to  settle  a  question 
as  to  the  proper  performance  of  the  duties  of  a  particular 
service.'*  Where  the  plaintitFs,  who  were  booksellers,  em- 
ployed the  defendant,  a  printer,  to  print  for  them  an 
edition  of  o\e  thousand  copies  of  a  book  called  "Taylor's 
Holy  Living,"  but  the  latter  printed  fifteen  hundred 
copies,  delivering  them  one  thousand  and  disposing  of  the 
remainder  to  his  own  use,  it  was  held,  in  an  action  brought 
by  them  for  damage  caused  by  the  market  being  thus 
overstocked,  that  it  was  a  proper  subject  of  testimony  to 
show  that,  according  to  the  usage  among  printers  and 
booksellers,  a  printer  contracting  to  print  for  a  bookseller 
.  a  certain  number  of  copies  of  any  work  is  not  at  liberty 
to  print  from  the  same  type,  while  standing,  an  extra 
number  for  his  own  disposal.^  So,  also,  it  is  competent 
to  prove  a  custom  that  the  employment  of  an  architect  to 
make  plans  and  designs  for  a  building  carries  with  it  an 
employment  to  superintend  its  construction.'"'  A  custom 
for  authors  having  a  book  to  write  to  employ  others  to  aid 
them  in  compiling  it,  and  that  such  fact  being  known 
would  not  damage  their  reputation,  is  admissible.^ 

Illustrations.  —  The  supervising  architect  of  the  treasury 
department  was  suspended  pending  the  trial  of  an  indictment 


^  Cincinnati  etc.  R.  R.  Co.  v.  Clark- 
Bon,  7  lud.  595. 
'^  Guerin  v.  Rodwell,  37  N.  J.  L.  71. 

*  Chicago  etc.  R.  R.  Co.  v.  Voaburgh, 
45111.  3il. 

*  Holcroft  V.  Barber,  1  Car.  &  K.  4; 


Vaughn  v.  Garduer,  7  B.  Mon.  326;    S.,  9. 


Hunt  V.  Carlisle,  1  Gray,  257 ;  Martin 
V.  Hilton,  9  Met.  371;  Hunt  r.  Mickey, 
12  Met.  349. 

*  Williams  v.  Oilman,  3  Mc.  27G. 

s  Wilson  V.  Baumaii,  SO  111.  493. 

'  Reade  v.  Sweetzer,  C  Abb.  Pr.,  N. 


8§  258,  259 


PRINCIPAL  AND  AGENT. 


458 


against  him,  and  A,  who  was  then  superintending  the  construc- 
tion of  a  now  building  for  the  department,  and  who  was  under 
pay  at  the  rate  of  eight  dollars  per  day,  was  directed  to  take 
charge  of  the  office.  The  supervising  architect  afterwards  re- 
turned to  duty,  and  received  the  amount  of  his  salary  during 
the  period  of  his  absence.  Ileld^  that  A  was  entitled  to  no  pay 
for  his  services  beyond  his  eight  dollars  per  day:  Frascr  v. 
United  States,  16  Ct.  of  CI.  507.  The  plaintiff  entered  into  a 
contract  with  defendant  to  draw,  for  the  latter,  plans  of  a  house. 
The  contract  was  afterwards  changed  so  that  plaintiff  was  to 
furnish  plans  for  a  house  of  greater  value  than  the  first,  and  no 
specific  sum  was  named  for  the  plans.  Held,  that  the  plaintiff 
might  prove  the  value  of  the  plans  furnished,  and  that  other 
services  rendered  were  not  included  in  furnishing  the  plans,  and 
the  value  of  such  additional  services:  Marcotte  v.  Beaupre,  15 
Minn.  152.  The  contractor  of  a  lako  tunnel  employed  another 
at  certain  stipulated  wages  to  plan  a  crib  and  other  means  of 
accomplishing  certain  difficult  parts  of  the  work,  and  afterwards 
employed  him  to  superintend  the  putting  down  of  the  crib  and 
otherwise  apply  his  plans  to  the  execution  of  the  work,  which 
he  did,  inventing  and  applying  thereto  "screw-anchors,"  etc. 
Held,  that  ho  might  recover  of  the  contractor  additional  com- 
pensation for  the  latter  services,  although  receiving  wages  for 
the  time  ho  was  therein  employed:  Dull  v.  Bramhall,  49  111.  304. 

§  258.  Contract  is  Personal — Delegation. — The  con- 
tract of  service  is  personal.  The  master  cannot  turn  over 
the  servant  to  another  master,^  nor  can  the  servant  sub- 
stitute another  in  his  place  and  stead,**  except,  of  course, 
by  the  consent  of  the  master  and  servant  respectively.* 

§  259.  Lost  Time. — The  term  of  the  service  being 
ended,  the  servant  cannot  be  compelled  to  continue  serv- 
ing to  make  up  lost  time;  nor  can  the  master  bo  com- 
pelled to  receive  the  extra  labor  of  the  servant  to  make  it 
up,  but  he  has  a  right  to  deduct  for  the  lost  time.* 

Illustrations.  —  Privates  on  the  capitol  police  remained 
absent  without  leave  and  without  reasonable  cause.  They  were 
not  dismissed,  but  substitutes  were  employed,  who  were  paid, 

»  McGuire  v.  O'Hallaran,  Hill  &  D.  *  Prentiss  v.  Ledyard,  28  Wis.  131; 

85.  Bast  V.  Byrne,  51  Wis.  531;  37  Am. 

Tenton    v.    Clark,    11    Vt.    557;  Rep.   841;    Nichols    v.   Coolalian,    10 

Campbell  v.  Price,  9  Ses.  Cas.  S.  264.  Met.  449;  McDonald  v.  Montague,  30 

» Cumminga  v.  Elaisdell,  43  Vt.  382.  Vt.  357. 


459       CONTRACTS    BETWEEN   MASTER  AND   SERVANT.      §  2C0 

llio  names  of  the  absentees  being  Btricken  from  the  pay-roll. 
They  won;  afterwards  restored,  and  sought  to  recover  their  pay 
during  the  time  of  their  absence,  on  the  ground  that  they  had 
not  been  dismissed.  Ilchl,  that  they  could  not  maintain  their 
claim:  Thirinrf  v.  United  States,  10  Ct.  of  CI.  13.  A  clerk  in 
the  olliee  of  the  board  of  education  of  New  York  City  wrote  to 
the  secretary  that  an  o[)eration  was  about  to  be  })eribrmed  on 
his  eyes,  and  asking  leave  of  i'bsenco  until  bis  sight  was  restored. 
Such  leave  was  granted  by  the  1)oard.  Before  his  return  a  sec- 
ond operation  was  undergone,  v,hich  necessitated  a  departure 
to  Europe.  Held,  that  ho  was  Tiot  entitled  to  any  salary  during 
the  period  of  his  absence  in  Europe,  ho  not  having  obtained 
distinct  formal  leave  of  the  board  therefor.  Mere  permissioii  of 
niembcrs  thereof  was  insufficient:  O'Leary  v.  New  York  Board  of 
Education,  U  Daly,  IGl. 

§  260.    General  Hiring — Prima  Facie  for  What  Term. 

— Ill  England  a  general  hiring — that  is,  a  hiring  where 
no  term  is  fixed — is  a  hiring  for  a  year.  This  rule  ap- 
plies to  all  kinds  of  servants,  domestic  or  others,  cxeept 
where  there  is  a  different  general  custom  proved,  or  the 
intention  of  the  parties  is  shown  to  have  been  different, 
either  by  their  agreement  or  the  circumstances  of  the 
case.'  In  the  United  States,  on  the  contrary,  a  general 
and  indefinite  hiring  is  prima  facie  a  hiring  at  will, 
though  the  servant  is  to  be  paid  by  the  day,  week, 
month,  or  year,  as  the   case  may  be.''    Unlimited  con- 


'  Wood  on  Master  and  Servant,  sec. 
136. 

^  De  Briar  v.  Mintum,  1  Cal.  450; 
Tatterson  v.  Mfg.  Co.,  106  Mass.  56; 
Fraukliu  etc.  Co.  v.  Harris,  24  Mich. 
115;  Haney  V.  Caldwell,  35  Ark.  156; 
Orr  V.  Ward,  73  111.  318;  Kansas  Pac. 
R.  R.  Co.  V.  Roberson,  3  Col.  142; 
Boogher  v.  Ins.  Co.,  8  Mo.  App.  533. 
In  Hathaway  v.  Bennett,  10  N.  Y. 
108,  61  Am.  Dec.  739,  the  court  say: 
"The  plaintiff's  counsel  has  referred 
us  to  the  English  law,  by  which  a  ser- 
vant is  entitled  to  one  month's  notice 
before  ho  is  discharged;  but  that  rule 
rests  entirely  upon  custom.  Little- 
dale,  J.,  said  in  Williams  v.  Byrne,  2 
Nev.  &  P.  139:  'The  case  of  a  menial 
servant  has  been  put,  who  may  be  dis- 


charged at  a  month's  notice,  but  that 
is  not  a  matter  of  law:  it  ia  a  custom 
that  might  bo  put  on  the  record  as  a 
fact,  and  the  jury  would  find  tliat  it 
existed.'  And  ia  that  ca.se  the  court 
held  that  the  month's  notice  was  not 
applicable  to  a  reporter  for  a  news- 
paper, no  such  custom  being  proved 
applicable  to  reporters.  And  in  Faw- 
cett  V.  Cash,  5  Barn.  &  Adol.  904,  the 
court  held  it  was  not  ajjplicable  to  a 
warehouseman  who  was  dismissed  from 
his  employment;  andiu  Bcestonr.  Coll- 
yer,  4  Bing.  309,  it  was  held  not  to  be 
applicable  to  clerks  or  servants  in 
husbandry.  All  these  decisions  were 
made  on  the  ground  that  no  custom  as 
to  such  classes  of  persons  had  beea 
proved." 


§2G0 


PRINCIPAL  AND  AGENT. 


4G0 


tracts  for  personal  service  may  bo  terminated  by  oithcr 
party  upon  rcasonoblo  notice.*  A  servant  employed  at 
\vill  may  bo  discharged  at  anytime.-  "Tho  reservation 
of  wagLS,  payable  monthly  or  weekly,  will  not  control  tho 
contract  ho  as  to  destroy  its  entirety  when  tho  parties 
liavo  expressly  agreed  for  a  specified  time,  as  a  year. 
But  if  the  payment  of  monthly  or  weekly  wages  is  tho 
only  circumstance  from  which  tho  duration  of  the  con- 
tract is  to  be  inferred,  it  will  be  taken  to  be  a  hiring  for 
a  month  or  a  week.'"  A  general  engagement  of  a  ser- 
vant "at  a  salary  of  fifteen  hundred  dollars  a  year,  payable 
weekly,"  unaffected  by  any  other  considerations  growl iii; 
out  of  tho  custom  of  tho  place,  tho  conduct  of  tho  jtartics, 
or  other  extraneous  evidence,  disclosing  a  contrary  inten- 
tion, constitutes  a  contract  of  hiring  for  tho  year."*  A  gen- 
eral hiring  to  bo  terminated  by  three  months'  notice  is  ii, 
hiring  by  tlie  year."  Where  ono  is  hired  by  the  week, 
and  is  paid  weekly,  the  burden  is  on  him  to  show  a  change 
in  the  contract  as  to  tho  term  of  service."  On  tho  ques- 
tion as  to  tho  term  for  which  a  servant  is  hired,  evidence 
of  tho  terms  for  which  other  employees  of  the  same  mas- 
ter were  hired  is  irrelevant.^  Under  an  ordinary  con- 
tract of  hiring  by  the  day,  the  person  hired  is  not  bound 
to  prolong  his  services  in  order  to  complete  any  particu- 
lar piece  of  work  on  which  ho  may  happen  to  be  em- 
ployed.®  By  the  common  and  legal  construction  of  a 
contract  for  the  labor  of  an  individual  at  a  monthly 
compensation,  such  compensation  is  payable  at  tho  end 
of  each  month.'    Usage  may  regulate  the  conditions  of 


>  Ward  V.  Ruckman,  34  Barb.  419. 

«  Parks  V.  Atlanta,  76  Ga.  828. 

3  Beach  v.  MuUin,  34  N.  J.  L.  343. 
Tho  fact  that  the  rate  of  compensatioQ 
agreed  upon  is  a  certain  sum  per  month 
or  pur  year  does  not,  in  the  absence  of 
other  evidence,  fix  the  period  of  hiring 
at  one  month  or  ono  year:  Evans r.  St. 
Louis,  Iron  Mountain  etc.  R'y  Co.,  24 
Mo.  App.  114. 


*Bleeker  v.  Johnson,  51  How.  Pr. 
380. 

*  Heidleberg  v.  Lynn,  5  Whart.  430; 
34  Am.  Dec.  506. 

*  State  V.  Fisher  Varnish  Co.,  43  N. 
J.  L.  151. 

'  Lakeman  v.  Pollard,  43  Me.  4G3; 
69  Am.  Dec.  77. 
8  Wyngert  v.  Norton,  4  Mich.  286. 
»  Heim  v.  Wolf,  1  E.  D.  Smith,  70. 


4C0 

by  oithor 
cloyed  at 
scrvatiou 
iitrol  tlio 
0  parties 
3  a  your. 

C3    is   tilt) 

the  con- 
liring  for 
of  tt  sor- 
r,  payable 
i  ^rowinj; 
,c  parties, 
iry  iiiteu- 
■•     A  gou- 
lotieo  id  a 
the  week, 
a  changy 
the  queri- 
evidenco 
amo  raas- 
lary  con- 
lot  bound 
/  parlicu- 
o  be  em- 
ion  of  a 
monthly 
t  the  end 
iitions  of 

51  How.  Pr. 

Whart.  4S0; 

h  Co.,  43N. 

43  Mc.  4G3; 

Mich.  286. 
Smith,  70. 


4G1       CONTRACTS  BETWEEN    MASTER  AND   SERVANT.      §  2G0 

tho  cmployoo's  service.  Thus  it  may  bo  ac.nissiblo  to 
show  tho  length  of  a  hiring*  wlion  there  i.s  no  express 
agreement  as  to  tho  time  tho  servant  is  to  work."  A. 
usage  is  admissible  between  tho  printers  and  proprietors 
of  newspapers  that  tho  latter  should  give  to  the  former 
four  weeks'  notice  of  taking  tho  work  from  thojn,  or  pay 
them  four  weeks'  wages.'  In  an  action  for  a  wrongful 
dismissal,  evidence  of  a  custom  among  dry  goods  jobbers 
in  Baltimore  that  when  a  clerk  or  salesman  begins  a  sea- 
son without  a  special  contract  ho  cannot  bo  dismissed  till 
the  end  of  it,  and  that  the  seasons  aro  two, — one  from 
January  1st  to  July  1st,  and  tho  other  from  July  1st  to 
January  1st, — was  admitted.*  A  custom  allowing  .cm- 
jjloyees  to  work  for  themselves  after  certain  liours  is  rea- 
sonable;"* so  is  a  usage  on  the  part  of  business  houses  to 
furnish  each  other's  clerks  with  goods  and  charge  them 
to  each  other." 

Illustrations. — One  was  under  monthly  employment,  and 
told  his  employer  that  ho  wished  it  more  permanent,  and  an 
amount  per  year  was  agreed  upon,  payable  semi-monthly.  Ilrldj 
that  a  hiring  for  a  year  might  bo  inferred:  Bnscom  v.  ShiUito,  37 
Ohio  St.  43].  A.  was  employed  by  M.  &.  C.  as  a  traveling  sales- 
man at  eighteen  hundred  dollars  "per  year,"  and  notilied  M. 
that  ho  would  make  no  engagement  for  less  than  a  year.  Dur- 
ing tho  year  M.  bought  out  C.'s  interest  in  the  partnership.  A. 
served  one  year  satisfactorily.  A  few  months  later  ho  was  dis- 
charged without  cause.  Held,  that  the  contract  was  a  continu- 
ing one,  to  be  terminated  at  the  end  of  each  year  by  tho  wish 
of  either  party,  and  that  A.  could  recover  the  entire  salary  for 
tho  second  year:  Alba  v.  Moriarty,  36  La.  Ann.  680.  A  agreed 
to  work  for  B  for  a  year,  and  for  a  second  year  at  an  advanced 
rate  if  B  should  continue  in  tho  business.  Held,  that  if  B  con- 
tinued with  a  partner  he  continued  in  business  within  the  mean- 
ing of  the  contract:  Collctt  v.  Smith,  143  Mass.  473.  An  offer 
by  letter  to  appoint  plaintiff  superintendent  of  defendant's  ships 
at  a  certain  sum  per  month  said,  "And  if  you  give  me  satisfac- 


» The  Swallow,  Olcott  (Admiralty), 
334;  Harris  v.  Nicholas,  5  Muuf. 
483. 

'GleasoQ  v.  Walsh,  43  Me.  397; 
Holcrof t  V.  Barber,  1  Car.  &  K.  4. 


'  Cunningham  v.  Fonblanque,  6  Car. 
&  P.  44. 
*  Given  v.  Charron,  15  Md.  502. 
»  Barnes  v.  Ingalls,  39  Ala.  193. 
'  Cameron  V.  Blackman,  39  Mich.  108. 


§g  261,  262 


PRINCIPAL  AND  AGENT. 


462 


tion  at  the  end  of  the  first  year,  I  will  increase  your  salary  ac- 
cordingly." Held,  a  contract  of  hiring  for  a  year:  Morton  v. 
Cowell,  Go  Md.  3o9;  57  Am.  Rep.  331. 

§  261.    Continuance  of   Service  after   Expiration  of 

Term — Presumption. — Where  without  any  new  contract 

the  servant  continues  after  the  expiration  of  the  term, 

the  presumption  is,  that  it  is  continued  on  the  same 

terms,*  b\it  the  employment  it  seems  must  be  in  the  same 

business,''  and  it  has  been  held  that  where  a  party  enters 

another's  eervice  without  any  agreement  as  to  the  rate  of 

compensation,  but  subsequently  the  rate  for  a  terra  is 

fixed  by  agreement,  his  continuing  to  serve  after  that 

time  will  not  raise  a  presumption  that  the  compensation 

is  to  continue  at  the  same  rate.' 

Illustrations. — Plaintiff,  as  a  physician,  was  employed  for 
a  year  at  a  fixed  salary,  to  render  professional  services  for  a 
county,  and  at  the  end  of  the  year,  no  successor  being  then 
appointed,  no  new  contract  being  made  with  him,  and  nc  notice 
given  by  him  that  he  should  demand  a  different  rute  of  com- 
pensation, he  continued  to  render  the  same  kind  of  services  for 
several  months,  and  until  another  physician  had  been  ap- 
pointed and  qualified  as  his  successor.  Held,  that  he  could 
recover  for  such  additional  period  of  service  only  at  the  rate 
of  compensation  fixed  by  his  contract  of  the  previous  year; 
Weise  v.  Milwaukee  County  Supervisors,  51  Wis.  564. 

§  262.  Regulations  of  Master.  —  Regulations  of  the 
master  as  to  the  conditions  of  the  service  are  binding  on 
the  servant,  if  reasonable,*  and  if  known  to  him.^  But 
such  regulations  are  not  binding  on  a  minor.^  Such 
regulations  as  the  following  have  been  had  valid,  viz.: 


*  Nicholson  v.  Patchin,  5  CaL  474; 
Huntingdon  v.  Claflin,  38  N.  Y.  182; 
Weise  V.  Supervisors,  51  Wis.  564; 
Iron  Co.  v.  Richardson,  5  N.  H.  294; 
Wallace  v.  Floyd,  29  Pa.  St.  184;  72 
Am.  Dec.  620;  Ranck  v.  Albright,  36 
Pa.  St.  371;  Grover  etc.  R.  R.  Co.  v. 
Bulkley,  48  111.  189. 

'^  Ranck  v.  Albright,  36  Pa.  St.  367. 
»  Smith  V.  Velio,  CO  N.  Y.  106. 

*  Harmoa  v.  Salmon  Falls  Mfg.  Co., 


35  Me,  447;  58  Am.  Dec.  718.  A 
regulation  or  a  contract  by  which  the 
employee  releases  the  master  from  all 
liability  for  damage  resulting  from 
the  employee's  negligeuoo  is  void: 
Roesner  v.  Herman,  10  Biss.  486. 

*  Stevens  v.  Reeves,  9  Pick.  198; 
Collins  V.  Iron  Co.,  115  Mass.  23; 
Bradly  v.  Mfg.  Co.,  N.  H.  487. 

'  Derocher  v.  Continental  Mills,  58 
Me.  217;  4  Am.  Rep.  286. 


463       CONTRACTS    BETWEEN   MASTER   AND   SERVANT.      §  263 

that  an  employee  must  give  notice  of  his  intention  to  leave, 
or  forfeit  the  wages  earned/  But  sickness  or  the  act  of 
the  law  will  excuse  the  notice,^  unless  he  has  expressly 
agreed  to  give  notice  in  such  case.*  A  mere  temporary 
absence  is  not  an  abandonment.*  And  an  employee  who 
overstays  his  leave  of  absence  does  not  abandon  his 
place.*^ 

Illustrations.  —  The  wages  of  workmen  were  ascertained 
on  Thurfday,  but  not  paid  until  Saturday;  a  workman  worked 
from  Thursday  to  Thursday,  and  left  on  Friday.  Held,  that- 
ho  forfeited  his  wages  for  the  week:  Walsh  v.  Wallcy,  L.  R. 
9  Q.  B.  3G7.  An  employer  was  authorized  to  keep  back  part 
of  the  servant's  wages  until  the  work  was  performed  to  his 
"entire  satisfaction."  The  master  wrongfully  discharged  him. 
Held,  that  no  part  of  his  wages  could  be  withheld  under  the 
pretense  that  his  work  was  not  satisfactory:  Sloan  v.  Ilayden, 
liO  Mass.  141. 


§  263.  Duty  to  Keep  Master's  Secrets. — When  a  party 
who  has  a  secret  in  trade  employs  persons  under  a  con- 
tract express  or  implied,  or  under  a  duty  express  or  im- 
plied, tliose  persons  cannot  gain  the  secret  and  then  set 
it  up  against  the  employer.®    The  servant  may  be  re- 


'  Harmon  v.  Salmon  Falls  Mfg.  Co., 
35  Mo.  447;  58  Am.  Dec.  718;  Hunt 
V.  Otis,  4  Met.  464;  Pottsville  Iron  and 
Stoel  Co.  r.  Good,  116  Pa.  St.  385;  2 
Am.  St.  Rep.  614.  ^  .ster  who  noti- 
fies his  servant  that  on  the  next  day 
he  shall  cut  down  his  wages,  where- 
upon the  servant  leaves  at  once,  can- 
not avail  himself  of  a  rule  that  ser- 
vants leaving  without  giving  two 
weeks'  notice  forfeit  their  wages: 
Schieteng'.T  r.  Bridgeport  Knife  Co., 
54  Com  .  64.  The  amount  of  forfeit- 
ure must  not  be  excessive:  Richardson 
V.  Woehlcr,  26  Mich.  90.  A  clause  in 
a  contract  that  on  the  failure  to  give 
two  weeks'  notice  of  intention  to  quit 
he  shall  forfeit  "whatever  may  be 
due  at  the  time  of  leaving  "  is  void  for 
unreasonableness:  Schimpf  v.  Tennes- 
see Mfg.  Co.,  86Tenn.  219. 

« Fuller  V.  Brown,  11  Met.  440; 
Hughes  V.  Wamsutta  Mills,  11  AUeD, 
201. 


'Noon  V,  Salisbury  Mills,  3  Allen, 
340. 

*  "A  man  does  not  quit  the  service 
of  another  when  he  merely  takes  a 
holiday  without  the  other's  consent; 
still  less  does  he  quit  the  service  if  he 
only  breaks  ofiF  work  for  a  day  because 

he  is  sick Amandoe.snutknow 

a  fortnight  beforehand  when  ho  is  going 
to  Want  a  day  on  account  of  sickness, 
or  even  for  recreation,  and  therefore 
it  is  not  to  be  supposed  that  the  par- 
ties could  have  had  any  such  transient 
intermission  of  service  in  mind  when 
they  stipulated  for  the  fortnight's  no- 
tice": Heber  v.  U.  S.  Flax  Co.,  13 
R.  I.  303. 

*  Taylor  v.  Carr,  30  L.  J.  M.  C. 
201. 

*  Cranworth,  lord  chancellor,  in 
Morison  v.  Moat,  21  L.  J.,  N.  S.,  Ch. 
248;  Peabody  v.  Norfolk,  98  Mass. 
457;  96  Am.  Dec.  664. 


§§  264,  2G5 


PRINCIPAL    AND   AGENT. 


4G4 


strained  by  injunction  from  making  use  of  knowledge  of 
his  master's  affairs  acquired  in  his  service,  to  engage  in  a 
business  enterprise,  during  the  continuance  of  the  con- 
tract of  service,  which  may  antagonize  the  interests  of  the 
master.^ 

§  264.  Master  must  Provide  Work. — The  master  is 
bound  to  provide  the  servant  with  work  during  the  term, 
and  it  is  no  answer  to  his  claim  for  wages  that  he  had  no 
work  for  him  to  do.^ 

Illustrations. — The  physician  of  the  state  penitentiary, 
which  was  leased  to  an  individual,  was  appointed  by  the  in- 
spectors, removable  by  them  only,  and  his  salary  was  to  be 
paid  by  the  lessee.  The  lessee  refused  to  permit  the  physician 
to  enter  the  penitentiary,  and  thereupon  the  latter  brought  an 
action  against  the  former  for  his  salary.  Held,  that  he  was 
entitled  to  recover,  although  ho  did  not  perform  the  duties: 
Jones  V.  Graham,  21  Ala.  654.  The  plaintiff  agreed  to  spin  at 
the  defendant's  factory,  at  a  certain  rate  per  yard,  and  for  a 
certain  time,  upon  the  defendant's  furnishing  the  materials. 
Held,  that  the  defendant  must  furnish  a  reasonable  supply  of 
work,  but  that  the  plaintiff  waived  his  right  to  terniinatc  the 
contract  if  ho  remained  such  a  length  of  time  in  the  defend- 
ant's service  as  would  lead  a  jury  to  infer  a  waiver,  und  then 
left  it  without  stating  that  he  left  on  account  of  the  want  of  a 
supply  of  work:   Thayer  v.  Wadsworth,  19  Pick.  349. 


§  265.  Board  of  Servant.  —  Where  by  the  contract  the 
master  is  to  board  the  servant,  the  master  cannot  charge 
him  for  board  while  he  is  idle  by  sickness  or  without  his 
fault,''  but  he  cannot  charge  the  master  with  his  boiird  if 
he  boards  elsewhere.'*  In  a  Georgia  case  a  master  under- 
took to  board  a  servant,  and  wrongfully  dismissed  him, 
and  it  appeared  in  a  suit  by  the  servant  that  ho  vvas 
boarded  by  his  new  employers.  The  court  held  Ihat,  as 
he  was  re-employed  directly  after  his  dismissal,  ho  could 

»  Gowcr  V.  Andrew,  14  Cent.  L,  J.  595;  Whittle  v.  Frankland,  2  Best  & 

50;  59  Cal.  119;  43  Am.  Rep.  242.  S.  49. 

'^  Bromley  -e.  Scliool  District,  47  Vt.  ^  Nichols  r.  Coolahan,  10  Met.  450. 

381;  Cook  v.  Sherwood,  11  Week.  Rep.  ♦  Griffin  v.  Tyson,  17  Vt.  35. 


465   CONTRACTS  BETWEEN  MASTER  AND  SERVANT.   §  2G6 

not  recover  for  board,  there  being  no  suggestion  that  the 
hoard  furnished  by  his  newerai^loyer  was  inferior  to  that 
furnished  Vjy  defendant.^  A  raih'oad  company  is  liable  if 
it  agrees  to  provide  suitable  lodging  for  a  laborer,  and 
sends  him  to  a  high  mountain  pass  to  sleep  on  frozen 
ground,  with  only  damp  spruce  brandies  for  a  bed, 
whereby  he  becomes  sick  and  paralyzed,  and  his  health  is 
shattered.'' 

Illustrations.  —  A  and  B  entered  into  an  agreement  by 
which  A  was  to  labor  for  B,  and  be  boarded  by  him  in  a  par- 
ticular way,  or  at  a  certain  place.  Held,  that  A  had  no  right 
to  procure  his  board  in  a  different  way,  or  at  a  place  not  dessig- 
nated  between  them,  and  charge  B  therefor,  without  allowing 
some  failure  of  performance  on  the  part  of  B:  Griffin  v.  Tj/son, 
17  Vt  35.  In  an  action  for  wages  as  hotel  porter,  ])laintiff 
claimed  that  he  was  to  have  twenty-five  dollars  per  month,  and 
that  the  perquisites  of  the  place  were  not  considered  in  fixing 
that  price,  and  that  his  wife  and  child  were  to  room  and  board 
at  the  hotel  for  a  sum  per  month  equal  to  one  third  of  twenty- 
five  dollars.  Defendant  claimed  that  the  perquisites  were 
considered  in  fixing  the  price,  and  that  plaintiff  was  to  pay  a 
reasonable  price  for  the  room  and  board  of  his  wife  and  child. 
Held,  that  defendant  might  show  what  sums  plaintiff  received 
as  porter  from  the  guests  of  the  house,  as  bearing  upon  the  ques- 
tion of  whether  he  was  to  pay  such  reasonable  price:  Bennett 
V.  Stacy,  48  Vt.  163. 

§  266.  Compensation  of  Servant— Measure  of. —Where 
no  agreement  is  made  as  to  price,  the  servant  is  entitled 
to  demand  what  his  services  are  reasonably  worth,  judged 
by  the  price  paid  for  similar  services  at  the  time  and 
place.'  A  tradesman  removing  from  one  place  to  another, 
and  there  doing  work  without  any  agreement  about  the 
price,  can  claim  only  at  the  rate  of  the  latter,  and  not  of 
the  former,  place.^    Where  a  company  contracts  to  pay  an 


'  Ansley  v.  Jordan,  61  Ga.  482. 

^  Clifford  V.  Denver  etc.  R.  R.  Co.,  9 
Col.  333. 

'  Jones  V.  School  District,  8  Kan. 
362;  Nauman  v.  Zoerhlaut,  21  Wis. 
4(36;  Baum  v.  Winston,  3  Met.  (Ky.) 
Vol.  L-30 


127.  Where  nothing  ia  said  of  wages, 
the  master  is  hekl  to  contract  for  the 
current  wages:  Lawson  v.  Pcny, 
Wright,  242. 

*  Gracy  v.  Bailee,   16  Scrg.   &  R. 
126. 


§  266 


PRINCIPAL  AND  AGENT. 


466 


eraployeo  "  the  same  wages  as  shall  be  paid  to  other  men 
in  the  employ  of  the  company  filling  similar  positions," 
and  the  laborer  sues  for  compensation,  and  there  is  no 
showing  that  the  company  had  other  employees  in  sim- 
ilar positions,  he  is  entitled  to  prove  what  his  services 
were  worth.'  Where  the  parties  agree  as  to  the  com- 
pensation, but  not  as  to  the  term,  the  servant  may  re- 
cover for  the  time  served  at  the  agreed  rate.^  Where 
one  performs  services  to  be  paid  for  in  a  particular  Avay, 
and  they  are  not  so  paid  for,  he  may  recover  their  value 
in  money .^  Even  where  the  agreement  is  that  the  master 
is  to  pay  what  he  thinks  the  services  are  worth,  he  is 
bound  to  pay  what  they  are  reasonably  worth.*  The 
plaintiff  may  show  that  the  defendant  expected  to  pay 
very  liberally  for  his  services.^  Where  the  contract  is 
that  the  servant  may  charge  whatever  he  sees  fit,  he  may 
nevertheless  not  recover  more  than  is  reasonable.*  The 
measure  of  compensation  for  professional  services  ren- 
dered for  an  infant  having  property  should  ordinarily 
be  determined  by  the  same  considerations  which  regulate 
similar  services  on  behalf  of  an  adult  in  like  circum- 
stances.' There  is  no  rule  of  law  that  a  person  who  per- 
forms a  service  with  skill  is  entitled  to  less  compensation 
than  another  of  more  learning  and  skill  who  could  perform 
the  same  services  no  better.®     One  who  has  received  the 


*  Kent  Furniture  Mfg.  Co.  v.  Ran- 
som, 46  Mich.  410. 

'^  Griffiu  V.  Domas,  22  111.  App.  203. 
»  Shane  v.  Smith,  37  Kan.  65. 

*  Millar  v.  Cuddy,  43  Mich.  273;  38 
Am.  Ilep.  181;  but  see,  contra,  Butler 
V.  Winona  Mill  Co.,  28  Minn.  205;  41 
Am.  Rep.  277. 

*  Chiles  V.  Craig,  4  Dana,  544. 

*  Van  Arman  v.  Bynington,  38  111. 
443. 

'  Bowling  u  Scales,  1  Tenn.  Ch.  618. 

*  In  Stockbridge  v.  Crooker,  34  Me. 
349,  56  Am.  Dec.  662,  a  surgeon  sued 
for  the  value  of  his  services  in  per- 
forming a  surgical  operation.  On  ap- 
peal the  court  said:  "The  jury  were 


instructed  '  that  the  plaintiff  was  en- 
titled to  recover  for  the  service  a  sum 
commensurate  with  the  labor  per- 
formed, the  skill  exhibited,  and  the 
responsibility  incurred  by  him  in  the 
matter.'  These  were  proper  subjects 
for  consideration  by  the  jury  while 
they  were  determining  what  would  be 
a  reasonable  compensation  for  the  pr  j- 
fessional  services  pert'orined.  The  law 
allows  a  reasonable  compensation,  and 
permits  the  jury  to  take  into  consid- 
eration all  the  facts.  The  same  rule 
of  law  decides  the  compensation  to  be 
made  for  services,  whether  performed 
by  a  day-laborer,  or  by  a  mechanic,  or 
by  a  surgeon.    It  does  not  enter  into 


466 


467   CONTRACTS  BETWEEN  MASTER  AND  SERVANT.   §  266 


2T  men 
tions," 
;  is  no 
in  sim- 
ervices 
B  cora- 
vdv  re- 
Where 
ar  way, 
r  value 
master 
I,  he  is 
.*     The 

to  pay 
tract  is 
he  may 
.«  The 
;es  ren- 
iinarily 
regulate 
circum- 
ho  pcr- 
nsation 
■)erform 

ed  the 

iflf  was  en- 
vice  a  sum 
al)or    i)er- 
aiid  the 
lim  in  the 
subjects 
ury  while 
wouKl  l>c 
jr  the  pr  J- 
The  law 
ation,  and 
ito  consid- 
same  rule 
tion  to  be 
performed 
3chanic,  or 
enter  into 


compensation  prescribed  for  his  services  in  a  special  con- 
tract can  recover  no  more,  although  they  were  worth 
more.*  A  person  who  is  employed  to  do  work  such  as  is 
done  by  an  expert  book-keeper  may  be  entitled  to  an 
expert  book-keeper's  salary,  though  the  word  "expert" 
was  not  used  in  the  contract  of  hire.'  Under  a  contract 
by  whic?i  a  salesman  is  to  receive  for  his  services  a  share 
of  the  "  net  profits  "  of  the  business,  the  interest  on  capi- 
tal invested  by  the  principal  in  the  business  is  not  an 
expense  to  be  deducted  in  ascertaining  the  net  profits.^ 
A  salesman  who  is  to  receive  a  commission  on  sales,  with 
the  privilege  of  drawing  twenty-five  dollars  per  week,  to 
be  deducted  from  his  commissions,  is  entitled  to  the 
weekly  payment,  though  he  has  not  earned  commissions 
to  that  amount.'  It  does  not  preclude  a  larger  recovery 
that  the  servant  offered  to  work  for  others  at  a  lower 
price;®  or  that  he  presented  a  bill  for  a  less  amount,®  A 
present  by  the  master  to  the  servant  is  not  to  be  deducted 
from  his  wages.'  Where  the  contract  is  to  pay  in  a  par- 
ticular manner,  that  mode  must  be  pursued,  and  there  is 
no  implied  contract  to  pay  in  a  different  manner.* 


distinctions  bo  nice  as  to  determine,  as 
matter  of  law,  that  a  mechanic  who 
performs  his  services  faithfully  and 
with  competent  skill  is  not  entitled  to 
receive  as  much  compensation  therefor 
as  another  would  be  who  had  acquired 
much  greater  skill  and  had  performed 
like  services  no  better.  Or  that  a  sur- 
geon who  had  performed  an  operation 
skillfully  and  faithfully  would  not  be 
entitled  to  receive  the  same  compensa- 
tion as  one  more  learned  and  skillful 
who  could  perform  the  same  operation 
no  better.  While  the  law  does  not 
act  iipon  such  distinctions,  it  permits 
jurors  to  take  into  consideration  the 
exhausting  studies,  the  time  con- 
sumed, and  the  expenses  incurred,  to 
acquire  ^reat  professional  knowledge 
and  distmction,  or  great  mechanical 
or  other  skill.  If  the  law  made  the 
compensation  for  services  performed 
commensurate  with  the  skill  exhibited 
and  the  responsibility  incurred,  it 
would  be  necessary  to  admit  testimony 


in  such  case  to  prove  how  much  skill 
had  been  exhibited,  and  how  great  re- 
sponsibility had  been  incurred.  It 
would  often  be  diflBcult  if  not  impos- 
sible to  receive  such  testimony  in  such 
a  manner  that  a  jury  could  safely  act 
upon  it.  The  rule  stated  would  tend 
to  greatly  impair  uniformity  of  com- 
pensation for  professional  and  mechan- 
ical services  of  the  same  description, 
and  to  introduce  a  diflferent  rule  of 
compensation  for  like  services  when 
performed  by  different  individuals. " 
1  Bradbury  v.  Helms,  92  111.  35. 

*  Von  Kaas  v.  Hamilton,  G3  Wis. 
132. 

'  Paine  v.  Howells,  90  N.  Y.  6C0. 
«  Weinberg  v.  Blum,  13  Daly,  399. 

*  Roles  V.  Mintzer,  27  Mian.  31. 

«  AUis  V.  Day,  14  Minn.  51C;  Com- 
missioners V.  Brewer,  9  Kan.  .308. 

'  Neal  V.  Gilmore,  79  Pa.  St.  421. 

^  Smith  V.  Bowler,  1  Disn.  520; 
Stone  V.  Stone,  43  Vt.  130;  Murray  v. 
Baker,  6  Hun,  264. 


2C6 


PRINCIPAL   AND   AGENT. 


468 


A  servant  entitled  to  be  paid  by  the  month  may  call  for 
his  wages  at  any  time  after  one  month,  and  his  right  to 
monthly  payments  i?  not  waived  by  neglecting  to  demand 
them  monthly.^  The  wages  of  one  employed  by  the  day 
or  month  become  due  at  the  close  of  each  day  or  month, 
there  being  no  contrary  understanding.'*  If  the  employer 
has  an  established  place  where  ho  pays  his  servants,  the 
latter  are  bound  to  go  there  for  their  pay.'  A  railroad 
employee  discharged  from  service  is  entitled  to  immediate 
payment  of  his  wages,  and  may  maintain  an  action  for 
their  recovery,  the  evidence  failing  to  show  a  general  cus- 
tom among  railroads  to  defer  payment,  or  notice  to  the 
plaintiff  of  a  regulation  or  usage  of  his  employer  to  do  so.* 

The  master  has  no  right  to  reduce  the  wages  of  a  ser- 
vant during  the  term  for  which  he  has  been  hired,  and  the 
servant  waives  nothing  by  remaining  in  the  service  after 
he  has  been  notified  that  he  will  not  be  paid  more  than  a 
certain  sum.®  But  if  the  hiring  has  not  been  for  a  fixed 
term,  or  if  the  term  has  expired,  then  the  servant  by  con- 
tinuing in  the  service  after  notice  that  he  will  be  paid 
less  is  held  to  have  assented  to  the  change.^  It  is  no  de- 
fense to  an  action  for  day-wages  that  the  work  was  un- 
skillfully  done.'  But  where  one  undertakes  to  do  a  piece 
of  work  in  a  w^orkmanlike  manner,  and  "  as  well  as  any 
other  mechanic  could,"  and  the  work  when  completed  will 
not  answer  the  purj)Ose  for  which  it  was  designed,  he  can- 
not recover  the  price.®  Usage  may  regulate  an  employee's 
wages."  Thus  the  mode  of  paying  the  crews  of  vessels/" 
the  proper  charges  of  a  veterinary  surgeon,"  and  the  right 
of  a  local  agent  employed  to  sell  glass-ware  in  a  certain 
territory  to  claim  commissions  both  upon  goods  ordered 


1  White  V.  Atkins,  8  Cush.  367. 
■^  De  Lappo  v.  Sullivan,  7  Col.  182. 
3  Dockham  v.  Smith,  113  Mass.  320; 
18  Am.  Rep.  495. 

*  Thompson  v.  Minneapolis  and  St. 
Louis  R'y  Co.,  35  Minn.  428. 

*  Hackman  v.  Flory,  IG  Pa.  St.  196. 
«  Spier  V.  Earl,  41  Mich.  191. 


'  Clark  V.  Fensky,  3  Kan.  389. 

^  Leflore  v.  Justice,  1  Smedes  &  M. 
381 

» "Sewell  V.  Corp,  1  Car.  &  P.  392. 

"o  Eldridge  v.  Smith,  13  AUen,  140. 
But  not  if  unreasonable:  Metcalt"  c. 
Weld,  15  Gray,  210. 

"  Sewell  V.  Corp,  stipra. 


4G8 


469       CONTRACTS  BETWEEN   MASTER  AND   SERVANT,      g  260 


directly  through  him  and  upon  goods  ordered  by  buyers 
living  in  the  territory  of  the  agent,  directly  from  the 
manufacturer/  have  been  shown  by  evidence  of  custom. 
So  if  there  be  any  general  custom  in  a  particular  business 
under  which  payment  becomes  due  weekly,  monthly,  or 
otherwise,  the  parties  will  be  presumed  to  have  contracted 
with  reference  thereto,  and  payment  must  be  made  in  ac- 
cordance therewith;''  and  so  on  the  question  of  the  proper 
charges  of  physicians,  lawyers,  and  mechanics,  evidence 
of  usage  is  admissible.'  The  proper  criterion  in  the  as- 
sessment of  a  quantum  meruit  is  the  usual  and  reasonable 
price  which  others  have  received  for  similar  services.'  A 
custom  of  paying  for  a  whole  quarter  even  when  the  chil- 
dren are  at  school  only  a  part  of  it  is  valid.^  A  custom 
among  printers  of  books  that  they  are  not  entitled  to  any 
thing  until  the  whole  work  is  printed  is  admissible;''  so  is 
a  custom  that  an  advertisement  given  without  instruc- 
tions is  kept  in  a  newspaper  until  ordered  to  be  discon- 
tinued.^ 

Illustrations.  —  An  employee  of  the  fire  department  of  the 
city  of  Now  York  was  appointed  to  a  certain  position,  to  which 
was  attached  a  certain  salary.  Subsequently,  by  an  order,  ho 
was  directed  to  perform  the  duties  of  an  inferior  position  for  loss 
pay.  Held,  that  by  obeying  the  order  and  performing  the  du- 
ties of  the  inferior  place  for  two  years,  he  estopped  himself  from 
claiming  the  pay  attached  to  his  original  position:  O'Brien  \. 
New  York,  28  Hun,  250;  Monroe  v.  New  York;  28  Ilun,  2.58.  A 
general  actuary  of  a  bank  agreed  to  serve  for  five  years,  for 
"  such  sums  from  the  net  profits  of  the  institution  as  such  pro- 
fits, after  paying  all  incidental  expenses,  may  warrant,  not  to 
exceed  one  thousand  dollars  per  annum."     Held,  that  if  no 


'  Lyon  V.  George,  44  Md.  205. 

'■*  Thayer  v.  Wadsworth,  19  Pick. 
349;  Doik'e  v.  Favor,  la  Gray,  82. 
And  see  Hunt  v.  Otis  Co.,  4  Mot.  404; 
Kayli)r?'.  Fall  River  Iron  Works,  118 
Mass.  317;  Baxter  v.  Nurse,  G  Man.  & 
Vr.  1)35;  1  Car.  &  K.  10;  Fairman  i\ 
Oakford,  5  Hurl.  &  N.  635;  Cutter  v. 
Powell,  2  Smith's  Lead.  Gas.  21;  Gray 
V.  Murray,  3  Johns.  Ch.  107. 


» Pursell  V.  McQueen,  9  Ala.  380; 
Hayes  v.  Moynihaii,  GO  111.  40'.);  Ewing 
V.  Beauchamp,  4  Bibb,  490;  Johnson 
V.  De  Peystcr,  50  N.  Y.  460. 

*  Murray  v.  Ware,  ]  Bibb,  325;  4 
Am.  Dec.  637.  But  see  Sumiett  v. 
Pierce,  1  Mart.,  N.  S.,  192. 

*  Keckeley  v.  Cummins,  Harp.  208. 
8  Gillett  V.  Mawman,  I  Taunt.  138. 

*  Thomaay.  O'Hara,!  Mill  Const. 303. 


§207 


PRINCIPAL  AND  AOENT. 


470 


profits  wero  made  in  ono  year,  defendant  could  not  claim  com- 
pensation for  tlie  services  of  that  from  the  profits  of  a  subsequent 
year:  Jenncry  v.  Olmatead,  90  N.  Y.  363. 


§  267.  Master  may  Recoup  Damages. — In  an  action 
for  wages,  tho  master  may  recoup  damages  which  he  has 
suffered  through  tho  servant's  neglect  or  failure  to  work 
as  agreed.^  Thus  where  tho  plaintiff  sues  for  labor  on  a 
building  contract,  tho  defendant  may  recoup  damages  for 
tho  work  not  being  according  to  contract,^  or  not  done 
within  tho  timo  specified  in  the  contract.'  In  an  action 
for  wages  for  service  in  a  family,  the  employer  may  recoup 
damages  for  tho  seduction  of  his  daughter  by  the  servant.* 
If  the  servant  spoil  material  used  by  him,  ho  is  not  liable 
for  its  first  value,  but  only  its  depreciated  value.'  One 
who  employs  an  unskillful  artisan  or  tyro,  knowing  his 
deficiencies,  is  liable  to  him  for  his  usual  prices,  however 
inferior  tho  performance  may  be,  especially  when  the 
work  has  been  received.*  And  it  is  no  defense  to  an 
action  for  wages  that  the  employee  had,  by  negligently 
injuring  a  third  person,  exposed  the  employer  to  liability 
for  damages,  unless  the  employer  has  actually  paid,  or 
has  been  adjudged  liable  to  pay,  damages.'  A  contract 
allowing  stipulated  damages  for  the  breach  of  a  me- 
chanic's contract  of  service,  to  be  valid,  must  provide  for 
some  fixed  and  reasonable  sum  of  forfeiture,  which  is  not 


»  Stoddard  v.  Treadwell,  26  Cal.  294; 
Pixler  V.  Nichola,  8  Iowa,  106;  Still  v. 
Hall,  20  Wend.  51;  Blodgett  v.  Ber- 
lin Mills  Co.,  52  N.  H.  21");  Field  v. 
Ringo,  7  Ark.  435;  Bruuson  v.  Mar- 
tin, 17  Ark.  270:  Lee  v.  Clements,  48 
Ga.  128;  Pliel^ia  v.  Paris,  39  Vt.  511; 
De  Witb  V.  CuUings,  32  Wis.  298; 
Campbell  v.  Somerville,  114  Mass. 
334;  Allaire  Works  v.  Guion,  10 
Barb.  55;  Newman  v.  Reagan,  63  Ga. 
755. 

sAdlard  v.  Muldoon,  45  111.  193; 
Queen  v.  Doolau,  55  111.  526;  Estep  v. 
Fenton,  66  111.  467;  Cooke  v.  Preble, 
80  111.  381;  Haysler  v.  Owen,  61  Mo. 


270; 
131. 


Elliot    V.    Heath,     14    N.    H. 


»  Cooke  V.  Preble,  80  111.  381;  Ab- 
bott V.  Gatch,  13  Md.  314;  71  Am. 
Dec.  635;  Wagner  v.  Corkhill,  40  Barb. 
175;  Duckworth  v.  Allison,  1  Mees.  & 
W.  412;  Barber  v.  Rose,  5  Hill,  70; 
Front  etc.  R.  R.  Co.  v.  Butler,  50  Cal. 
574. 

*  Bixby  V.  Parsons,  49  Conn.  483;  44 
Am.  Rep.  246. 

'  Hillyard  v.  Crabtree,  11  Tex.  264; 
62  Am.  Dec.  475. 

8  Peters  v.  Craig,  6  Dana,  307. 

'  Merletto  v.  North  and  East  River 
Steamboat  Co.,  13  Daly,  114. 


471       CONTRACTS  BETWEEN   MASTER  AND  SERVANT.      §  268 

oppressive  or  unequal  in  its  effect  on  the  parties.  One 
simply  forfeiting  all  wages  due  at  the  time  of  leaving  will 
not  bo  enforced.  A  forfeiture  of  thirty  days*  wages  by 
the  employer,  for  his  default,  is  too  vague  and  indeter- 
minate as  a  consideration  to  sustain  a  forfeiture  of  wages 
against  a  workman  engaged  in  piece-work,  and  is  void  for 
want  of  mutuality.* 

Illustrations. — Goods  intrusted  to  a  common  carrier  were 
injured  by  the  negligence  of  the  carrier's  servant.  The  carrier 
paid  the  damages  to  the  owner.  Held,  that  he  could  recover 
tlie  amount  from  his  servant:  Smith  v.  Foran,  43  Conn.  244; 
21  Am.  Rep.  G47.  A  railroad  conductor  sues  the  company  for 
wages.  The  latter  may  set  oflf  and  recover  damages  which  it 
has  sustained  by  the  conductor's  negligence  in  performing  his 
duties:  Mobile  R.  R.  Co.  v.  Clanton,  59  Ala.  392;  31  Am.  Rep. 
15.  An  employee  might  have  finished  work  for  his  employer  at 
a  certain  time,  but  failing  to  do  so,  it  was  yet  accepted  by  the 
employer  when  afterward  finished.  Held,  that  the  employer 
could  not  afterward  avoid  liability  on  the  ground  of  its  not  being 
finished  in  time,  but  that  he  had  a  counterclaim  or  recoupment 
to  the  extent  of  his  loss  by  such  delay:  Rogers  v.  Beard,  36 
Barb.  31. 


§  268.    Right  of  Master  to  Servant's  Earnings. — If  a 

servant,  other  than  an  apprentice,  engages  in  other  em- 
ployment which  does  not  infringe  on  the  time  to  which 
the  master  is  entitled,  the  latter  has  no  claim  to  his  earn- 
ings; but  if  he  takes  other  employment  during  the  time 
that  the  master  is  entitled  to  his  services,  the  master  is 
entitled  to  his  earnings  as  against  the  servant,  but  not 
against  the  person  employing  him,  unless  the  latter  knew 
when  ho  so  employed  him  that  the  master  was  entitled 
to  his  time,  and  was  paying  him  therefor.'^  On  a  con- 
tract for  services  for  a  fixed  compensation  as  agent  in 
settling  claims,  the  master  is  prima  facie  entitled  to  no- 
tary's fees  earned  by  the  servant  in  the  employment.' 

^  Eichardsoni;.Woehler,26Mich.  90.  tracted  in  hi3  service:  VVennall  v.  Ad- 

*  Wood  on  Master  and  Servant,  sec.  ney,  .3  Bos.  &  P.  247. 

101.    The  master  is  not  liable  for  the  ^  Leach  v.  R.  R.  Co.,  86  Mo.  27;  56 

expenses  of  the  servant's  sickness  con-  Am.  Rep.  408. 


269 


PRINCIPAL  AND  AGENT. 


4?2 


That  an  employee,  after  his  discharge,  has  engaged  in 
business  for  himself  in  competition  with  his  late  employer, 
is  no  defense  to  the  former's  action  for  a  breach  of  hir- 
ing.' A  mechanic  liired  for  the  purpose  of  perfecting  cer- 
tain machinery,  and  bound  to  devote  his  sk'U  and  labor 
to  the  interest  of  those  for  whom  <"io  machinery  is  being 
worked,  is  not,  by  that  fact,  under  any  obligation  to  ab- 
stain from  applying  for  a  patent  in  liis  own  name  for 
such  machinery,  if  otherwise  entitled  thereto.^ 

Illustrations. — The  defondant  was  in  the  employ  of  the 
plaintiff  under  a  written  agreement  to  work  for  the  interest 
of  plaintiff  in  the  maiuifacture  of  shellers  and  powers,  and  to 
give  the  latter  any  improvements  he  might  make.  Held,  that 
lie  was  not  bound  to  assign  to  plaintiff  his  interest  in  an  in- 
vention in  check-rowers,  although  the  plaintiff  had  added  the 
manufacture  of  check-rowers  to  its  other  business,  and  defend- 
ant employed  his  time  in  perfecting  his  invention  by  the  con- 
sent of  the  plaintiff,  and  with  the  assistance  of  its  agents  and 
employees:  Jnlict  Mfg.  Co.  v.  Dice,  105  111.  649;  Dice  v.  Jolict 
Mfg.  Co.,  11  111.  App.  109. 

§  269.    Right  to  Dischargee  Servant — By  Contract. — 

The  contract  may  give  the  master  a  right  to  discharge  the 
servant  without  his  assigning  any  reason,  or  it  may  give 
him  a  right  to  do  so  for  certain  specified  reasons,  in  which 
case,  to  justify  a  discharge,  those  reasons  must  be  shown 
to  exist.  Where  the  contract  under  which  a  ball-player  is 
employed  provides  that  the  club  is  to  be  the  sole  judge 
of  the  sufficiency  of  the  reasons  for  discharging  him,  he 
may  not  be  discharged  without  a  reason  or  the  allegation 
of  a  reason.^  A  corporation  cannot  discharge  a  servant 
at  any  time  without  sufficient  cause,  by  virtue  of  a  gen- 
eral power  of  removal  of  employees,  contained  in  its 
charter,  if  it  makes  a  specific  contract  with  him  for  a 
fixed  time.*     Under  an  agreement  for  the  employment  of 

'  stone    V.    Vimont,    7   Mo.   App.        *  Winship  v.  Portland  League  Baae 

277.  Ball  etc.  Assoc,  78  Me.  571. 

*  Green  v.  Willard  Barrel  Co.,  1  Mo.        *  Soldiers'  Orphans'  Home  v.  Shaffer, 

App.  202.  63  111.  243. 


473       CONTRACTS   BETWEEN    MASTER   AND   SERVANT.       §  209 


a  clork  at  a  coramissioii  on  all  business  done  by  him,  a 
monthly  allowance  to  be  paid  to  him  on  account  of  it, 
and  tho  balance  not  to  bo  paid  until  the  end  of  the  year, 
he  agreeing  to  forfeit  such  balance  if  ho  should  iiot  re- 
main till  then,  tho  employer  has  a  right  to  discontinue 
his  services  during  tho  year,  and  thus  prevent  him  from 
being  entitled  to  tho  balance  of  commissions,  provided  a 
sullicient  causo  therefor  arises,  such  as  his  intoxication, 
unfitting  him  for  his  duties.^  Where  a  person  who  con- 
tracts to  render  certain  personal  servic'es  in  consideration 
of  a  share  in  the  profits  of  the  business  in  which  he  is  to 
engage,  and  who  agrees  to  abstain  from  the  use  of  intox- 
icating drinks  while  engaged  in  tho  business  of  his 
employment,  subsequently  unfits  himself  for  the  proper 
transaction  of  such  business  by  habits  of  intemperance, 
he  cannot  in  equity  recover  the  specified  share  of  the 
profits  for  tho  time  ho  kept  his  contract,  but  will  be  al- 
lowed a  rcasonablo  compensation  for  his  services  during 
that  period.''  Where  there  is  a  provision  in  a  contract 
for  personal  services  that  the  employee  may  leave  in  case 
of  a  disagreement,  the  fact  of  a  bona  fide  disagreement  is 
all  that  is  necessary  to  entitle  either  party  to  put  an  end 
to  the  contract.' 

Illustrations.  —  A  was  to  labor  for  B  for  a  specified  time,  and 
at  stipulated  wages,  '4f  they  could  agree."  IleUl,  that  either 
party  might  terminate  the  contract  at  pleasure,  and  without 
showing  any  reasonable  cause  of  disagreement:  Durrjinx.  RaJccr, 
32  Me.  273.  D.  was  employed  by  S.  for  a  week,  and  if  she  suited 
to  continue  during  the  summer  months.  Before  the  end  of  tlio 
week,  S.  declared  that  D.  suited,  and  D.  said:  "Then  as  long  as  I 
suit  you,  there  is  no  fear  for  the  summer  months";  to  wliieli  S. 
replied  affirmatively.  Held,  that  the  employment  remained 
conditional  on  D.'s  continuing  to  suit  S.:  Daveny  v.  ShaltnrJ:,  9 
Daly,  G6.  One  agrees  to  work  for  a  year  for  a  stipulated  f^uni, 
payable  weekly,  provided  his  services  are  satisfactory  to  his 
employers,  in  case  of  disagreement,  installments  to  be  paid  to 
the  time  of  disagreement,  unless  an  amicable  settleuient  can 


'  Huutington  v.  Claflin,   10  Bosw. 
262. 


«  Foster  v.  Watson,  10  B.  :Mo:i.  .377. 
'  Gatea  v.  Davenport,  2<J  Barb.  lUO. 


§  270 


PRINCIPAL  AND  AGENT. 


474 


bo  arranged.  Held,  that  the  employer  may  discharge  at  any 
time  without  assigning  a  reason:  Spring  v.  Anaonia  Clock  Co., 
24  Ilun,  175. 

§  270.  Right  to  Discharge  Servant— By  La,vi  in  Ab- 
sence of  Special  Oontract. — But  iu  the  absence  of  u 
contract,  there  are  many  things  which  may  furnish  the 
master  with  a  legal  right  to  discharge  the  servant, — the 
doing  or  leaving  undone  certain  things  being  considered 
by  the  law  as  breaches  of  tho  implied  contract  of  the  ser- 
vant to  serve  the  maste^  faithfully.  If  a  good  ground 
exists  at  tho  time  of  the  discharge,  it  is  not  necessary  that 
the  master  should  have  known  it  at  that  time,*  or  that  at 
the  time  he  gave  another  and  different  reason.^  Tho  mis- 
conduct, to  justify  a  discharge,  must  be  misconduct  while 
in  the  service,  unless  it  is  of  such  a  character,  that  its  exist- 
ence does  an  actual  injury  to  the  master's  business,  or  is 
in  the  nature  of  a  continuing  misconduct.'  An  employer 
is  the  sole  judge  of  the  competency  of  those  whom  he 
chooses  to  employ;  and  so  long  as  the  employee  is  on 
trial,  the  employer  has  the  right  to  determine  for  himself 
whether  he  possesses  the  proper  Qualifications  and  habits 
for  his  business.* 

Illustrations.  — The  master  discovers  that  the  servant,  pre- 
vious to  his  hiring  him,  has  been  convicted  of  a  crime.  Ildd, 
not  per  se  a  good  ground  for  discharge:  Wood  on  Master  and 
Servant,  sec.  110.  A  xiiister  discharged  a  governess  on  discov- 
ering that  she  had  provjously  been  delivered  of  a  bastard  cliild. 
Held,  not  a  good  ground:  Degroesherg's  Car,  cited  in  Wood 
on  Master  and  Servant,  sec.  110.  A  master  discharged  a  gov- 
erness on  learning  that  she  had  concealed  tho  fact  that  she  had 
been  divorced.  Held,  not  a  good  ground:  Fletcher  v.  Knell,  42 
L.  J.  Q.  B.  58.  A  employed  B  for  one  year  as  overseer  at  a 
fixed  salary.  B  went  to  A  drunk,  and  A  refused  to  receive  liiin. 
Held,  that  A  was  justified,  although  B  was  not  in  tho  habit  of 
getting  drunk:  Johnson  v.  Gorman,  30  Ga.  612. 

'  Harrington  v.  Bank,  1  Thomp.  &  '  Strauss  v.  Meertief,  64  Ala.  290;  38 

C.    3G1;  Ridgway  v.    Market  Co.,  3  Am.  Rep.  8. 

Ad.  &  E.  171;  Mercer  v.  Whall,  5  Q.  '  Illustrations  po«<. 

B.  417.  *  Quirk  v.  Haskins,  15  La.  Ann.  656. 


475       CONTUACTS    BETWEEN    MASTER   AND    SERVANT.      §  271 


§  271.  Valid  Oroands  for  Dismissal. — Tlio  following 
liuvu  been  held  good  causes,  viz.:  Absenting  liimself  with- 
out leave;'  conduct  prejudicial  to  the  niastcr'.s  interests 
generally;'  creating  dissatisfaction  among  his  fellow-.ser- 
vauts;''  defrauding  or  aitonipting  to  defraud  the  master;* 
engaging  in  business  for  himself  or  another;''  false  repre- 
sentations as  to  his  capacity;"  immoral  conduct;^  inso- 
lence to  the  master,"  for  there  is  an  obligation  implied  on 
the  part  of  the  servant  to  treat  him  respectfully;"  intoxi- 
cation, where  it  is  habitual  and  it  interferes  with  the  dis- 
charge of  the  servant's  duties,*"  but  not  an  occasional 
ovor-indulgcnce  in  liquor;"  unfitness  to  perform  his  duty 
by  reason  of  the  use  of  opiates,  and  by  reason  of  unsound 
mental  condition;'^  making  false  representations  to  his 


'Ford  V.  Danks,  16  La.  Ann.  119. 
But  a  Hhort  ab»euce  wluch  does  not 
iujurioudy  affuct  the  interests  of  the 
master  lias  l>een  held  not  sufUcient  to 
justify  a  discharge:  Fillieul  v.  Arm- 
atniiig,  7  Ad.  &  E.  557.  An  employer 
may  not  discharge  an  employee  from 
his  factory  for  a  single  act  of  disobe- 
diuucc,  in  absenting  himself  for  a 
day,  not  involving  any  serious  conso- 
qtiLiicc..,  and  not  unreasonable  in  it- 
SL-h':  Sliavcr  v  Ingham,  68  Mich.  G49; 
55  Am.  Rop.  712. 

"  Sinj;cr  v.  McCormick,  4  Watts  ft 
S.  20l5;  Newman  v.  Reagan,  65  Ga. 
512;  Brink  v.  Fay,  7  Daly,  502;  Jones 
I'.  Trinity  Parish  Vestry,  19  Fed.  Rep. 
5<);  Read  r.  Dunsmore,  9  Car.  &  P.  588; 
Dieringer  i:  Meyer,  42  Wis.  311;  24 
Am.  Rep.  415. 

^  Lacy  V.  Osbaldiston,  8  Car.  ft  P. 
80;  Weaver  v.  Halsey,  1  111.  App.  558. 

*  Wood  on  Master  and  Servant,  eeo. 
115. 

'•>  Stonoy  V.  Trans.  Co.,  17  Hun,  579; 
A<iams  Exp.  Co.  v.  Trego,  35  Md.  47; 
Dieringer  /•.  Meyer,  5  Cent.  L.  J.  291; 
42  Wis.  311;  24  Am.  Rep  415.  It  ia 
no  defense  to  a  suit  for  wages  that  the 
services  were  rendered  while  the  plain- 
tiff was  an  employee  of  a  third  person 
in  another  line  of  business,  and  both 
during  and  outside  the  business  hours 
of  such  third  person:  Wallace  v.  De 
Young,  98  111.  638;  38  Am.  Rep.  108. 


A  traveling  commercial  agent  commits 
no  violation  of  duty  by  takiug,  gratui- 
tously, orders  for  goods  upon  a  house 
in  whose  service  he  has  formerly  been 
employed,  if  without  prejudice  to  tlio 
interests  of  his  employers;  Geiger  v. 
Harris,  19  Mich.  209. 

•  Anstco  V.  Ober,  26  Mo.  App.  005. 
T  Atkin  V.  Acton,  4  Car.  &  1'.  208; 

Weaver  v,  Hniscy,  1  111.  App.  S.IS. 
8  Beach  v.  Mullin,  34  N.  .1.  L.  243. 

•  Baillio  f.  Kell,  4  Ring.  N.  0.  638. 
"  Huntington  v.  Clailin,   10  Bo3W. 

262;  McCormick  v.  Domary,  10  Neb. 
515;  Gonsolis  v.  Gcarheart,  31  Mo. 
585.  A  foreman  of  a  tailor's  .'^llop  who 
goes  on  a  sprco  has  no  cause  of  action 
for  future  wages  if  ho  i.i  discharged  or 
reprimanded  so  that  he  leaver :  Physioc 
V.  Shea,  75  Ga.  466.  If  ono  who  has 
hired  a  servant  ascertains  that  ho  is  a 
drunkard  before  the  term  of  service 
begins,  the  contract  may  be  repudi- 
ated: Nolan  V.  Thompson,  11  Daly, 
314. 

*^  Id. ;  Wood  on  Master  and  Servant, 
sec.  113.  A  master  may  dischargo  his 
servant  for  public  druukonness  and 
disorderly  conduct,  althoupli  it  was 
only  on  one  occasion,  and  did  not  in- 
capacitate the  servant,  or  cause  him 
to  fail  in  the  performa.ico  of  his  work: 
Bass  Furnace  Co.  v.  Glasscock,  82  Ala. 
452;  60  Am.  Rep.  748. 

"  Lyon  V.  Pollard,  20  Wall.  403. 


§271 


PRINCIPAL  AND  AGENT. 


476 


emploj'cr;^  negligence  or  unskillfulness  in  the  discharge  of 
his  duties/  whether  arising  from  lack  of  skill,  without  his 
fault,  or  willful  carelessness  or  neglect,^  for  there  is  an 
implied  obligation  on  the  part  of  the  servant  to  servo  the 
master  diligently  and  faithfully,*  and  that  ho  is  possessed 
of  the  requisite  skill  in  the  business  in  which  he  is  en- 
gaged to  do  so,''  but  the  master  will  be  estopped  where  he 
knew  the  qualifications  and  habits  of  the  servant  when 


'  Hortou  V.  McMurtry,  5  Hurl.  &  N. 
G71;  Jo:ied  r.  Trinity  Parish  Vestry, 
19  Fed.  Rep.  G'J.  la  an  action  to  re- 
cover damages  for  a  wrongful  dis- 
charge from  service,  under  a  contract 
providing  for  a  certain  salary  in  con- 
Bideratiou  of  plaintiff's  exclusive  time 
and  services,  the  defendant  may  show, 
on  cross-examination  of  plaintiff,  that 
when  plaintiff  was  employed  he  made 
false  representations  to  defendant;  that 
he  afterwards  refused  to  ohey  instruc- 
tions; that  he  did  not  do  work  enough 
to  earn  his  salary;  that  he  received  pay 
from  other  parties  during  the  term  of 
the  contract;  and  also  by  direct  evi- 
dence the  amount  of  goods  sold  by 
plaintiff,  and  that  they  were  sold 
contrary  to  instructions;  that  he  sold 
scarcely  any  goods,  when  he  might 
have  sold  large  quantiticii;  and  that 
liis  work  was  not  done  according  to 
contract,  and  on  that  account  was 
worthies?:  Child  v.  Detroit  Mfg.  Co., 
Mich.,  1S88. 

2  Wood  on  Master  and  Servant,  sec. 
120;  Stanton  n  Bell,  2  Hawks,  145;  11 
Am.  Dec.  744;  Eaton  v.  Woolly,  28 
Wis.  G2S;  Morris  v.  Rcdfield,  23  Vt. 
295.  Inaccuracies  and  discrepancies 
in  the  hooks  of  a  merchant  are  suffi- 
cient cause  for  the  discharge  of  a 
book-keeper  by  his  employer:  Griffin 
V.  Hayncd,  24  La.  Ann.  480. 

'  Griffni  v.  Haynea,  24  La.  Ann.  480. 
In  Lyon  v.  Pollard,  20  Wall.  403,  Mr. 
Justice  Mill'jr  said:  "  Wc  do  not  agree 
with  counsel  that  for  the  insanity  of 
plaintiff,  or  her  mental  incapacity  to 
perforin  her  part  of  the  contract, 
whether  from  natural  infirmities  or 
from  the  use  of  opium,  the  only  remedy 
of  the  defendant  is  an  action  against 
her  on  the  contract.  The  plaintiff  was 
employed  to  perform  important  and 
specific  duties.    Her  compensation  for 


this  was  to  be  one  fifth  of  the  net  pro- 
ceeds of  the  business  which  s!ie  hal 
agreed  to  superintend.  If  she  ren- 
dered herself,  or  otherwise  became, 
incapable  of  performing  those  duties, 
that  of  itself  authorized  defendant  to 
rescind  or  terminate  the  contract.  He 
was  not  bound  to  continue  as  the  sui)er- 
intendent  of  a  large  hotel  a  person  who 
was  a  lunatic,  or  who  was  so  stupid 
under  the  influence  of  narcotics  that 
her  presence  was  a  danger  and  an  in- 
jury, and  who  could  render  no  reason- 
able service.  Tlie  contract  on  her  part 
required  some  capability  of  performing 
the  duties  she  had  assumed,  of  render- 
ing some  service.  If  she  could  render 
none,  defendant  was  not  bound  to  con- 
tinue it  even  for  the  thirty  days 
which  the  terminat^.on  of  it  by  notice 
required." 

*  McCracken  v.  Hair,  2  Spear,  2')G; 
Merc3r  v.  Whall,  5  Q.  B.  447;  Waugh 
V.  Shuuk,  20  Pa.  St.  130.  That  tlie 
fact  that  his  efforts  to  make  sales  did 
not  prove  more  successful,  and  that  a:i- 
pther  person  who  was  afterwards  em- 
ploy ad  in  the  same  capacity  had  suc- 
ceeded in  making  larger  sales,  was  no 
evidence  that  he  did  not  serve  the 
firm  faithfully  and  to  the  bc.Bt  of  his 
ability:  Hamill  v.  Fodtc,  51  Md.  419. 

*  Harmer  v.  Cornelius,  5  Com.  15., 
N.  S.,  23C;  Goslin  v.  Hodson,  24  Vt. 
140;  McDonald  v.  Simpson,  4  A;\. 
523;  38  Am.  Dec.  45.  Where  a  sales- 
man sues  to  recover  a  saia-y  dependent 
on  the  amount  of  his  sales,  his  laek  of 
diligence  may  be  shown  by  his  em- 
ployer; and  the  employers  expres- 
sions of  confidence,  based  upon  the 
saloman's  reports,  while  admissible  iu 
evidence,  do  not  preclude  the  em- 
ployer from  showing  a  lack  of  dili- 

tcnce:  Alberts  v.  Stearns,  50  Mich. 
i9. 


477      CONTRACTS  BETWEEN   MASTER   AND   SERVANT.      §  271 


he  hired  him;*  not  accounting  for  goods  received  or 
money  collected;*  obscene  language  used  by  the  ser- 
vant;^ refusing  to  obey  the  master's  orders,  provided 
they  are  reasonable,^  for  the  servant  is  not  bound  to  obey 
an  unlawful  command,  as  to  do  a  fraudulent,  immoral, 
or  criminal  act,**  but  there  is  an  implied  obligation  on 
the  part  of  the  servant  to  obey  his  reasonable  orders  and 
commands;®  slandering  his  employer;''  stealing  from  the 
master  or  embezzling  his  money;^  substituting  another 
in  his  place  or  stead;"  suing  the  master  repeatedly  for 
wages  not  due;*"  taking  bribes  from  workmen  to  favor 
them." 

Illustrations. — A  servant  aided  a  fellow-servant  in  leaving, 
and  told  him  to  take  his  wages  from  the  till.  IMd,  a  good 
ground:  Turner  v.  Robinson,  6  Car.  &  P.  IG.  A  clerk  of  a 
railroad  company  was  discharged  for  disclosing  to  a  person 
connected  with  another  company  the  accounts  of  the  company. 
Held,  proper:  Railroad  Co.  v.  Lythgoe,  2  Lown.  M.  &  P.  22i.  A 
clerk  quarreled  with  another  clerk  in  the  store,  and  drew  a 
revolver  in  the  presence  of  customers.  Held,  to  justify  his  dis- 
charge: Kearney  v.  Holmes,  6  La.  Ann.  373.    The  plaintiff  was 


1  Felt  V.  School  District,  24  Vt.  297; 
Peters  v.  Craig,  6  Dana,  307. 

^  Blenkam  v.  Hodge,  16  L.  T.,  N.  S., 
608. 

^  Wood  on  Master  and  Servant,  sec. 
112.  In  Hamblin  v.  Race,  78  111.  422, 
tlie  court  said:  "It  was  contended 
that  the  appellee  was  insolent  to  his 
employers,  and  coarse  and  vulgar  in 
his  conduct,  to  such  an  extent  as  fully 
justified  appellants  in  discharging 
him.  This  was  a  question  of  fact  for 
the  determination  of  the  jury.  All 
will  at  once  concede  that  an  employee 
must  bo  respectful  and  obedient  to  all 
reasonable  commands  of  his  employees 
and  those  having  control  of  the  busi- 
ness in  which  he  is  employed,  and  no 
cue  will  dispute  that  a  person  so  em- 
ployeu,  when  engaged  in  the  discharge 
of  his  business,  and  in  his  intercourse 
with  cus  -ners  and  persons  transact- 
ing business  with  the  house  and  with 
his  employers  and  those  having  charge 
of  the  business,  must  be  respectful, 
and  must  abstain  from  all  vulgarity 


and  obscenity  of  language  and  con- 
duct. If  wanting  in  any  of  these  re- 
quirements, it  would  bo  grounds  for 
discharging  a  salesman  in  a  store  from 
his  employment." 

*  Wood  on  Master  and  Servant,  sec. 
119;  Jacquot  v.  Bdurra,  7  Dowl.  Pr. 
348;  Spain  v.  Arnott,  2  Stark.  256; 
Turner  u.  Mason.  14  Mees.  &  W.  112; 
Callo  V.  Brounckor,  4  Car.  &  P.  518; 
Still  V.  Hall,  20  Wend.  51;  Mitchell  v. 
Toale,  25  S.  C.  238;  60  Am.  Rep. 
502. 

''  Cullen  V.  Thomson,  4  Macq.  424; 
R.  V.  Mutters,  34  L.  J.  54. 

®  Harrington  v.  Bank,  1  Thomp.  & 
C.  361;  Lawrence  v.  GuUifer,  38  Me. 
532. 

'  Brink  v.  Pay,  7  Daly,  562. 

*  Trotman  v.  Dunn,  4  Camp.  21 1 ; 
Libhart  v.  Wood,  1  Watts  &  S.  265; 
37  Am.  Dec.  461. 

*  Stonton  v.  Bell,  2  Hawks,  145;  11 
Am.  Dec.  744. 

w  Brink  v.  Fay,  7  Daly,  562. 

"  Engel  V.  Schoolherr,  12  Dalv,  417. 


§271 


PRINCIPAL   AND    AGENT. 


478 


a  salesman  in  defendant's  store.     Without  the  latter's  knowl- 
edge he  sold  goods   to   a   firm   in  which   he  was  a  partner. 
Held,  a  good  cause  for  liis  discharge:   McDonald  v.  Lord,  26 
How.  Pr.  404.     A  female  servant  during  her  term  of  service 
becomes  enceinte.     Held,  a  good  ground  for  discharge:  Rex  v. 
Brampton,  Cald.  11.     A  servant  attempted  to  ravish  a  female 
fellow-servant.    Held,  a  good  ground  for  discharge:  Atkin  v. 
Acton,  4  Car.  <fe  P.  208.    Bladders  were  bought  from  one  person, 
and  the  servant  represented  to  the  master  that  another  person 
was  the  seller.    Held,  a  good  ground  for  discharge:  Horton  v. 
McMurty,  5  Hurl.  &  N.  667.     A  servant  appropriated  in  pay- 
ment of  his  salary  $150  sent  to  him  by  his  master  for  business 
purposes.    Held,  a  valid  ground  for  discharge:  Smith  v.  Thomp- 
son, 8  Com.  B.  44.    A  book-keeper  made  errors  in  his  master's 
books.   fiVW,  a  valid  ground  for  his  discharge:  Griffin  \.  Haynes, 
24  La.  Ann.  480.     A  traveling  salesman  was  instructed  by  his 
employers  to  remit  at  once.     He  sold  wine  to  a  brothel -keeper, 
and  did  not  remit.     Held,  a  good  ground:  Blenkern  v.  Hodge, 
16  L.  T.,  N.  S.,  608.     A  bank  teller  who  often  remained  at  work 
after  hours  left  the  iron  shutters  of  the  windows  open,  and  was 
remonstrated  with  by  the  cashier,  but  replied  that  he  would  do 
as  he  pleased.     On  another  occasion  this  was  repeated.     Held, 
to  justify  his  discharge:  Harrington  v.  Bank,  1  Thomp.  &  C.  361. 
A  domestic  servant  being  ill,  her  master  gave  her  some  medi- 
cine, and  directed  her  not  to  go  to  church.     She  disobeyed  and 
went  to  church.    Held,  a  good  ground  for  discharge:  Hamilton 
V.  McLean,  3  Shaw  &  D.  379.     A  servant  refused  to  go  to  bed 
when  so  commanded  by  the  master.     Held,  a  good  ground  for 
discharge:  Wheatly  v.  ]Vhite,  12  Sol.  Jour.  812.    A  nurse-girl 
who  had  been  ordered  not  to  take  the  master's  child  into  the 
house  of  a  stranger  did  so.     Held,  a  good  ground:  Gibson  v. 
Pentland,  cited  in  Wood  on  Master  and  Servant,  sec.  119.     An 
express  company  employed  as  messenger  a  conductor  on  a  rail- 
road.    Held,  that  they  must  have  contracted  with  him  with  ref- 
erence to  his  prior  obligations  to  the  railroad  company,  and  that 
he  was  not  liable  to  them  for  a  neglect  caused  by  his  attend- 
ing to  his  duties  as  conductor:  Southern  Express  Co.  v.  Frink, 
67  Ga.  201.     In  an  action  upon  a  contract  to  employ  the  plain- 
tiff as  overseer  of  a  plantation  at  a  certain  salary,  it  appeared 
that  the  defendant  had  refused  to  receive  the  plaintiff  into  his 
service  because  he  came  to  him  drunk.    Held,  that  the  refusal 
was  justifiable,  although  it  was  proved  that  the  overseer  was 
not  a  common  drunkard:  Johnson  v.  Gorman,  30  Ga.  612.    A 
clerk  of  a  partnership,  under  a  contract  for  a  fixed  salary  the 
first  year,  and  an  increase  of  salary  afterwards,  secretly  over- 
drew, on  the  faith  of  such  increase,  but  on  being  applied  to  by 


479      CONTRACTS   BETWEEN   MASTER  AND    SERVANT.      §  272 


one  of  the  partners,  disclosed  the  facts.  Held,  that  he  had  not 
thcrehy  forfeited  his  right  to  an  increase  of  salary,  a  majority 
of  the  partners  having  continued  him  in  the  service  of  the  firm, 
under  the  conviction  that  no  fraud  was  intended:  Kirk  v. 
Hodgson,  3  Johns.  Ch.  400, 

§  272.  Involuntary  Breaches  by  Servant. — Where  the 
hreach  of  the  contract  or  regulations  of  the  master  is  in- 
voluntary on  the  part  of  the  servant,  he  will  not  suffer;* 
as,  where  the  cause  is  the  act  of  God,**  or  of  the  law,^  or 
something  beyond  his  control.* 


'  He  may  recover  his  wages  for  the 
time  he  has  served:  T/t/e  cases  in  next 
note.  M.  was  employed  to  serve  T. 
as  a  ck-rk  in  his  store  for  the  term  of 
one  year,  at  forty  dollars  per  month. 
During  tlic  term,  M.  was  discharged 
for  embezzlement,  indicted  for  the 
crime,  and  acquitted.  It  was  held 
that  M.  might  maintain  an  action 
against  T.  to  recover  what  his  services 
were  reasonably  worth  during  the 
time  of  his  employment,  not  exceed- 
ing the  rate  of  compensation  stipulated: 
Massey  v.  Taylor,  5  Cold.  447;  98 
Am.  Dec.  429.  But  he  cannot  recover 
damages  for  the  refusal  of  the  master 
to  take  him  back.  Thus  in  Leopold 
V.  Salk'^y,  89  111.  412,  31  Am.  Rep.  93, 
A,  a  salesman,  contracted  with  B,  a 
clothing  manufacturer,  to  work  for 
him  for  a  term  of  three  years,  at  a 
stated  salary.  Shortly  afrer  A  en- 
tered upon  his  work,  ho  was  arrested 
and  put  in  jail  for  two  weeks  during 
the  busiest  season  of  B.  It  was  held 
that  the  arrest  of  A,  though  without 
his  fault,  and  his  failure  to  work,  ne- 
cessitating the  employment  of  another 
in  his  i)Iace,  was  an  abandonment  of 
the  contract,  and  precluded  him  from 
recovering  damages  for  B's  refusal  to 
take  him  back.  And  if  his  sickness 
put  the  master  to  greater  expense  than 
what  is  due  him,  in  obtaining  another 
to  take  hid  place,  he  can  recover  noth- 
ing: Patrick  v.  Putnam,  27  Vt.  759; 
and  see  Clark  v.  Gilbert,  20  N.  Y.  279; 
84  Am.  Dec.  189. 

■^  Clark  V.  Gilbert,  26  N.  Y.  279;  84 


Am.  Dec.  189;  Fuller  v.  Brown,  11 
Met.  440;  K.  v.  Raschen,  38  L.  T., 
N.  S.,  38.  Although  a  sickness  in- 
capacitating an  overseer  from  work 
for  half  a  month  is  not  alone  sufficient 
cause  for  discharging  him,  this,  com- 
bined with  such  rei)eated  failures 
correctly  to  keep  the  time  of  the 
plantation  hands  as  causes  discontent 
endangering  their  continuance  at 
work,  may  constitute  such  cause: 
Miller  «.  Gidiere,  30  La.  Ann.  201. 

*  In  Hughes  v.  Wamsutta  Mills,  11 
Allen,  201,  the  master  in  an  action  for 
wages  set  up  that  by  a  regulation 
known  to  the  servant,  two  weeks'  no- 
tice of  leaving  the  service  was  required, 
which  the  plaintiff  before  leaving  had 
not  given.  It  appeared  that  the  ser- 
vant had  been  arrested  on  a  charge  of 
adultery,  and  '  as  in  jail.  The  plain- 
tiflf  had  judgment,  Bigelow,  C.  J., 
saying:  "The  stipulation  clearly  had 
reference  only  to  a  voluntary  aban- 
donment of  the  defendant's  employ- 
ment, and  not  one  caused  w  majore, 
whether  by  the  visitation  of  God 
or  other  controlling  circumstances. 
Clearly  the  abandonment  must  have 
been  such  that  the  plaintiff  could  have 
foreseen  it;  ho  could  give  notice  only 
of  such  departure  as  he  could  antici- 
pate, and  the  stipulation  that  he  was 
to  have  the  privilege  of  leaving,  after 
giving  two  weeks'  notice,  without  for- 
feiting his  wages,  implied  that  the 
forfeiture  was  to  take  place  only  when 
it  would  be  within  his  power  to  give 
the  requisite  notice.     It  certainly  can- 


*  As  in  Millet  v.  Lovett,  2  Dane  signed,  was  captured  by  the  enemy, 
Abr.  461,  where  a  seaman,  before  com-  it  was  held  that  ho  could  recover  bis 
pletiug  a  voyage  for  which  he  was    wages. 


g§  273,  274 


PRINCIPAL   AND   AGENT. 


480 


§  273.  Discharged  Servant  must  Leavs  Peaceably — 
Ejection.  —  When  a  servant  is  discharged  he  must  leave 
peaceably.  The  master  may  order  him  out  of  the  house 
and  from  the  premises,  and  if  he  refuses  to  go,  may  use 
force.' 


§  274.  Servant  may  Recover  Wages  to  Time  of  Dis- 
missal.— Where  a  servant  is  dismissed  for  a  legtd  cause, 
he  may  nevertheless  recover  the  agreed  wages  up  to  the 
time  of  the  dismissal,  subject  to  any  legal  set-off  by  the 
master.'^    But  it  has  been  held  that  where  there  is  an  eu- 


not  be  coptciided  that  the  stipulation 
was  absolute;  that  he  was  to  receive 
no  wages  in  case  of  leaving  without 
notice,  whatever  may  have  been  the 
cause  of  his  abandonment  of  the  ser- 
vice. It  is  settled  that  absence  from 
Bickness,  or  other  visitation  of  God, 
would  not  work  a  forteiture  of  wages 
under  such  a  contract:  Fuller  v.  Brown, 
1 1  Met.  440.  Pari  ratione,  any  aban- 
donment caused  by  unforeseen  circum- 
stances or  events,  and  which  at  the 
time  of  their  occurrence  the  person 
employed  could  not  control  or  i)revent 
from  operating  to  terminate  his  em- 
ployment, ought  not  to  cause  a  forfeit- 
ure of  wages.  It  may  be  said  that 
in  the  case  at  bar  the  omission  of 
the  offense  for  which  the  plaintiff  was 
arrested  was  his  voluntary  act,  and 
that  the  consequences  which  followed 
after  it,  and  led  to  his  compulsory  de- 
parture from  the  defendant's  service, 
are  therefore  to  bo  regarded  as  bring- 
ing the  case  within  the  category  of  a 
voluntary  abandonment  of  his  employ- 
ment. But  the  difficulty  with  this 
argument  is,  that  it  confounds  remote 
with  proximate  causes.  The  same 
argument  might  bo  used  in  case  of  in- 
ability to  continue  in  service,  occa- 
sioned by  sickness  or  severe  bodily 
injury.  It  might  be  shown  in  such  a 
case  that  some  voluntary  act  of  im- 
prudence or  carelessness  led  directly 
to  the  physical  consequences  which 
disabled  a  party  from  continuing  his 
service  under  a  contract.  The  true 
and  reasonable  rule  of  interpretation 
to  be  applied  to  such  contracts  is  this: 
To  work  a  forfeiture  of  wages,  the 


abandonment  of  the  employer's  ser- 
vice must  be  the  direct,  voluntary  act, 
or  the  natural  and  necessary  conse- 
quence of  some  voluntary  act,  of  the 
person  employed,  or  the  result  of 
some  act  committed  by  him  with  a 
design  to  terminate  the  contract  or 
employment,  or  render  its  further 
prosecution  impossible.  But  a  forfeit- 
ure of  wages  is  not  incurreil  where 
the  abandonment  is  immediately 
caused  by  acts  of  occurrences  not  fore- 
seen or  anticipated,  over  which  the 
person  employed  had  no  control;  and 
the  natural  and  necessary  consequence 
of  which  was  not  to  cause  tlio  termi- 
nation of  the  employment  of  a  party 
under  a  contract  for  services  or  labor. " 

•  De  Briar  v.  Minturn,  1  C'al.  450; 
Haywood  v.  Miller,  .3  Hill,  00. 

'•*  Murdock  v.  Phillips  Academy,  12 
Pick.  244;  Du  Quoin  t'o.  v.  Tliorwell, 
3  111.  App.  394;  Jenkins  v.  Long,  8 
Md.  1.32;  Byrd  v.  Boyd,  4  McCord, 
246;  17  Am.  Dec.  740;  Newman  v. 
Reagan,  63  Ga.  755;  Foster  v.  Watson, 
16  B.  Mon.  377;  Lawrence  v.  Gi.llifcr, 
38  Me.  532;  Sugg  v.  Blow,  17  Mo.  .359; 
Jones  V.  Jones,  2  Swan,  605;  Massoy 
V.  Tavlor,  5  Cold.  447;  98  A:n.  Dec. 
429,  In  Taylor  v.  Paterson,  9  La. 
Ar  251,  it  was  held  that  a  servant 
ri  .tfully  discharged  before  tlie  cud  of 
*.  e  term  may  recover  tlie  wages  ac- 
tually earned,  subject  to  deductions 
for  his  torts,  and  for  the  inconvenience 
the  master  is  put  to  througl  being 
compelled  to  hire  another  in  his  place, 
Contra,  and  that  the  servant  cannot 
recover  his  wages:  Libhart  v.  Wood, 
1  Watts  &  S.  205;  37  Am.  Deo.  463; 


481   CONTRACTS  BETWEEN  MASTER  AND  SERVANT.   §  275 


IS  an  en- 


tire contract  to  serve  for  a  certain  time,  and  during  the 
term  the  servant  commit  a  criminal  ofFonse,  although  not 
injurious  either  to  the  person  or  property  of  the  master, 
the  servant  cannot  recover  any  part  of  his  wages/ 

Illustrations.  —  A  sued  B  to  recover  money  due  under  a 
contract  of  service  as  a  farm  laborer,  the  contract  also  imposing 
upon  A  tlie  duty  of  selling  the  fPvrin  produce  for  I).  Acts  oiF 
dishonesty  and  peculation  on  A's  part  were  proved,  and  B 
therefore  claimed  that  A  was  entitled  to  nothing.  Ifrhl,  that 
B's  position  was  untenable,  but  that  B  might  set  ofT  against  A's 
claim  all  amounts  that  he  could  show  that  A  had  improperly 
retained:   Turner  v.  Kouwenhoven,  29  Ilun,  232. 


§  275.  Servant  Occupying  Master's  House — When  and 
when  not  Tenant. — A  servant  occupying  adwelling-liouse 
or  premises  belonging  to  the  master,  and  as  accessory  to 
his  employment,  does  not  become  a  tenant  of  the  master.^ 
Therefore  the  master  is  not  a  trespasser  if  he  ejects  the 
tenant  after  dismissing  him,  even  if  he  has  been  dis- 
missed illegally  and  without  cause.'  After  the  service  is 
at  an  end,  however,  the  master  must  resume  control  of 


Singer  r.  McCormick,  4  Watts  &  S. 
2G7;  Bcacli  r.  MuUin,  34  N.  J.  L.  34.3. 
In  Posey  v.  Garth,  7  Mo.  94,  37  Am. 
Dec.  183,  ib  is  said:  "  If  a  person  retai:i 
a  servant  for  a  year  at  wages,  the  per- 
formance of  the  service  is  a  conditioa 
precedent  to  the  payment  of  wages, 
and  the  servant  cannot  recover  them 
before  he  has  performed  the  year's 
service.  If  he  is  prevented  by  his 
employer  from  fulfilling  his  contract, 
and  ij  wantonly  and  without  sufficient 
cause  discharged  before  the  expiration 
of  the  period  for  which  he  was  hired, 
lie  is  entitled  to  tlie  wages  for  the 
whole  period  he  was  to  serve;  but  if 
there  is  any  fault  or  misconduct  in 
hi;n  towards  his  employer  sufficient  to 
varrant  his  discharge,  and  in  conse- 
quence thereof  he  is  driven  from  the 
Barvico  of  the  person  by  whom  he  is 
hired,  he  is  not  entitled  to  any  wages. 
Reciprocal  justice  requires  that  such 
should  bo  tlie  law  of  contracts  of  this 
character;  if  it  were  otherwise,  then 
Vol.  L  — 31 


while  the  employer  is  bound  by  his 
contract  to  retain  the  s;.'rva:it,  al- 
thonj^h  it  may  bo  against  Lis  inclina- 
tion, for  the  whole  \  <!riod  of  his  i:ervice, 
or  pay  bi;n  the  wliole  wage  *,  the  ser- 
vant, by  his  misconduct,  i.iay  compel 
his  employer,  for  his  own  .security, 
to  discharge  him,  and  then  recover 
wage  J  for  the  term  he  has  ficrvcd.  So 
wluio  the  contract  is  biiiding  on  the 
employer,  the  servant  is  bound  or  not, 
at  lii.i  option.  Such  a  con;itruct!o:i  cf 
the  contract  would  cncoiirago  fraud 
and  wickedness  in  servants,  and  in- 
duce them,  whenever  their  inclination 
pron)pts,  to  bo  guilty  of  such  enormi- 
ties a  1  will  oompjl  their  dischaige." 

»  Libhart  v.  Wood,  1  Watts  &  S. 
2G5;  37  Am.  Dee.  403. 

•^  Haywood  V.  Miller,  3  Hill,  90; 
Huglies  V.  Chatham,  5  Man.  &  G.  54; 
People  i:  Aunis,  45  Barb.  304. 

3  Haywood  v.    Miller,    3    Hill,    90; 
Kerrains  v.  People,  GO  N.  Y.  221;  19- 
Am.  Rep.  158. 


§  276 


PRINCIPAL  AND  AGENT. 


482 


the  i>romises  within  a  reasonable  time;  otherwise  the  ser- 
vant will  becomo  a  tenant  at  will.' 


§  276.    Wrongful  Discharge  of  Servant— Remedies. — 

A  servant  wrongfully  discharged  has  two  remedies,  either 
of  which  ho  may  pursue  at  his  election,  viz.:  1.  He  may 
treat  the  contract  as  rescinded,  and  sue  the  master  on  a 
quantum  meruit  for  the  services  rendered;  2.  He  may 
treat  the  contract  as  continuing,  and  sue  the  master  for 
damages  for  the  breach.'^  The  remedies  are  the  same 
where  the  master  has  contracted  to  employ  the  servant 
^('^  a  term,  but  refuses  to  receive  or  employ  him.'  For- 
f !'  it  was  held  that  the  servant  could  recover  the  entire 
wagca  for  the  whole  term  on  simply  showing  that  he  was 
ready  at  all  times  to  perform  his  contract,  a  doctrine  of 
"  cv.  strw  .ive  service"  being  invoked  in  the  servant's 
behalf.^  But  in  later  times  this  doctrine  is  criticised  as 
unwise  and  unfair,  and  as  encouraging  idleness  by  per- 
mitting the  servant  to  sit  down  with  his  arms  folded  and 
receive  the  wages  of  a  worker;^  and  it  is  now  universally 


'  Kerrains  v.  People,  CO  N.  Y.  225; 
19  Am.  Rep.  158;  Doyle  v.  Gibba,  6 
Lana.  180. 

^  "These  remedies  are  independent 
of  and  additional  to  his  right  to  sue  for 
wages  for  sums  actually  earned  and 
due  by  the  terms  of  the  contract. 
This  last  i^mount  he  recovers  because 
he  has  completed  either  in  full  or  in  a 
specified  part  the  stipulations  between 
the  parties.  The  first  two  remedies 
pointed  out  are  appropriate  to  a 
wrongful  discharge":  Uowardv.  Daly, 
61  N.  Y.  370;  10  Am.  Rep.  285;  Smith 
on  Master  and  Servant,  p.  96;  Rich- 
ardson i\  Eagle  Machine  Works,  78 
lud.  422;  41  Am.  Rep.  584;  Powers 
V.  Wilson,  47  Iowa,  6GC;  Bradshaw 
V.  Branan,  5  Rich.  465;  McDaniel  i'. 
Parks,  19  Ark.  671;  Gardeuhire  r. 
Smith,  39  Ark.  280;  Cox  v.  Adams, 
1  Nott  &  McC.  284;  Walworth  r. 
Pool,  9  Ark.  394;  Rogers  v.  Parham, 
8  Ga.  190;  Britt  v.  Hays,  21  Ga.  157; 
Fowler  v.  Armour,  24  Ala.  194;  Miller 
v.  Goddard,  34  Me.  102;  56  Am.  Dec. 


638;  Jones  v.  Jones,  2  Swan,  605;  Col- 
burn  r.  Woodworth,  31  Barb.  381; 
Hcim  V.  Wolf,  1  E.  D.  Smith,  70; 
Webster  v.  Wade,  19  Cal.  291;  79  Am. 
Dec.  218. 

»  Davis  V.  Ayres,  9  Ala.  292;  Hoch- 
Bter  V.  De  la  Tour,  2  El.  &  B.  678; 
Crist  r.  Armour,  34  Barb.  378;  Utter 
V.  Chapman,  38  Cal.  659;  Howard  v. 
Daly,  61  N.  Y.  .362;  19  Am.  Rep.  285; 
Petitt  V.  Turner,  2  Thomp.  &  C.  608. 

*  Gandell  v.  Pontiguy,  4  Camp.  375; 
Aspdin  V.  Austin,  5  Q.  B.  671;  Decamp 
V.  Hewitt,  11  Rob.  (La.)  290;  43  Am. 
Dec.  204. 

*  Thus  in  Howard  v.  Daly,  61  N.  Y. 
363,  19  Am.  Rep.  285,  the  court  say: 
"  Thi3  doctrine  is,  however,  so  opposed 
to  principle,  so  clearly  hostile  to  tlie 
great  mass  of  the  authorities,  and  so 
wholly  irreconcilable  to  that  great  and 
beneficent  rule  of  law  that  a  person 
discharged  from  service  must  not  re- 
main idle,  but  must  accept  employ- 
ment elsewhere  if  offered,  that  wo 
caouot  accept  it.    If   a  porsoa  dis- 


482 
bo  ser- 


iies. — 

,  cither 
Ic  mav 
iT  on  a 
G  may 
iter  for 
3  same 
servant 
»     For- 
B  entire 
he  was 
rine  of 
jrvant's 
jised  as 
by  per- 
led  and 
versally 

,  COS;  Col- 

Jarb.    381; 

mith,  70; 

)l;79Am. 

!92;  Hoch- 
&   B.  078; 

;7S;  Utter 
Elowarcl  t'. 

Rep.  285; 
&  C.  608. 

amp.  375; 
;  Decamp 

;  43  Am. 

61  N.  Y. 
court  say: 
so  opposed 
tile  to  the 
es,  and  bo 
great  and 
t  a  person 
lat  not  re- 
)t  employ- 

that  w<3 
orson  dis- 


483   CONTRACTS  BETWEEN  MASTER  AND  SERVANT.   §  276 

held  that  the  measure  of  the  servant's  recovery  is  the 
sum  he  was  to  receive  during  the  term,  less  such  sums  as 
ho  may  have  earned  or  could  have  earned  by  rcasonablo 
diligence  in  obtaining  other  employment.'     Where  the 


charged  from  service  may  recover 
wages  or  treat  the  contract  aa  still 
subsisting,  then  he  must  remain  idle 
in  Older  to  be  always  ready  to  pcrft)rin 
the  service.  How  absurd  it  would  be 
that  one  rule  of  law  should  call  up<m 
him  to  accept  other  employment,  wliile 
another  rule  required  him  to  remain 
idle  in  order  that  he  may  recover  full 
wages  !  Ihe  doctrine  of  '  constructive 
service '  is  not  only  at  war  with  prin- 
ciple, but  with  the  rules  of  political 
economy,  as  it  encourages  idleness,  and 
gives  compensation  to  men  who  fold 
their  arms  and  decline  service  equal 
to  those  who  perform  with  willing 
hands  their  stipulated  amount  of 
labor.  Tliough  the  master  has  com- 
mitted a  wrong,  the  servant  is  not  for 
one  moment  released  from  the  rule 
that  he  should  labor,  and  no  rule  can 
be  sound  which  gives  him  full  wages 
while  living  in  voluntary  idleness. " 

I  Wolf  V.  Studobaker,  05  Pa.  St.  459; 
Spencer  v.  Halstead,  1  Denio,  000; 
Heckscher  v.  McCrea,  24  Wend.  309; 
Wilson  V.  Martin,  1  Denio,  602;  Hood 
V.  Raines,  19  Tex.  400;  Lindlcy  v. 
Dempsey,  45  Ind.  246;  Miller  v.  Mar- 
iners Church,  7  Me.  51 ;  20  Am.  Dec. 
341;  Walworth  v.  Pool,  9  Ark.  394; 
("hamberlin  v.  McCalister,  6  Dana, 
352;  Shannon  v.  Comstock,  21  Wend. 
457;  34  Am.  Dec.  262;  Ream  v.  Wat- 
kins,  27  Mo.  516;  72  Am.  Dec.  283. 
In  Byrd  v.  Boyd,  4  McCord,  246,  17 
Am.  Dec.  740,  it  is  said:  "The  Eng- 
lish cases  go  very  far  in  establishing 
that  contracts,  particularly  with  ser- 
vants and  seamen,  cannot  be  appor- 
tioned, and  that  the  performance  of 
the  service  is  a  condition  precedent  to 
the  payment  of  wages,  and  they  result 
in  the  rule  that  when  they  are  pre- 
vented from  performing  it  by  the  mis- 
conduct of  the  master,  they  are  entitled 
to  the  stipulated  wages  for  the  whole 
time,  and  e  converso,  they  are  entitled 
to  nothing  if  they  abandon  service 
voluntarily.  And  yet  the  rule  has  been 
so  far  relaxed  as  to  entitle  the  master 
to  a  deduction  of  any  sum  which  a 
seaman  may  have  earned  in  another 


vessel  in  the  mean  time:  Abbot,  392; 
1  Comynon  Contracts,  362.    This  rule 
is  cvi(lently  the  result  of  expediency, 
especially  as  applied  to  seamen;  and  it 
becomes  a  question  of  some  importance 
liow  far  it  is  apfdicable  to  the  subject 
under  consideration.     Tlio  relation  cf 
employer  and  overseer  is  one  whicli  the 
state  of  the  country  renders  almost 
indispensably     necessary     to     every 
planter;  and   collisions   do  and  must 
necessarily   arise,   and   it   is  fit  that 
tliere  should  be  some  settled  rule  on 
the    subject.      Where    the    employer 
wantonly  and  without  cause  turns  off 
his  overseer  at  a  season  of  the  year 
when  it  would  be  impracticable  to  get 
employment  elsewhere,  and  his  time  is 
wholly  lost,  I  should  feel  no  hesitation 
in  enforcing  the  rule  rigidly,  not  only 
as  a  punishment,  but  as  a  just  remu- 
neration to  the  overseer;  and  so  when 
the  overseer  abandons  the  employer 
without  cause,  or  by  his  neglect  in- 
flicts a  loss  on  him  commensurate  with 
the  servicer  which  he  has  performed, 
he  clearly  deserves  no  compensation. 
There  is,   however,  a  third  class  of 
cases  for  which  it  is  necessary  to  pro- 
vide, and  which  are  perhaps  of  the 
most  common  occurrence.     They  are 
those  whore  the  employer  reaps  the 
full  benefit  of  the  services  which  have 
been  rendered,  but  some  circumstance 
occurs  which  renders  his  discharging 
the  overseer  necessary  and  justifiable, 
and  that  perhaps  not  immediately  con- 
nected with  the  contract,  as  in  the 
present  case.     It  happens  frequently, 
too,  that  it  becomes  a  question  of  great 
difficulty  to  ascertain  with  whom  the 
first    wrong    commenced.      I    cannot 
reconcile  it  to  my  notions  of  natural 
justice  that  the  overseer  should  not 
recover  a  compensation  for  the  services, 
so  far  ac  they  were  directed  and  which 
have  been  beneficial  to  the  employer, 
and  I  am  unable  to  discover  any  evil 
which  is  likely  to  result  from  submit- 
ting such  a  matter  to  the  sound  dis- 
cretion of  a  jury  of  the  country,  and 
as  a  matter  of  expediency  I  should  be 
disposed  to  estabusb  it  as  a  rule." 


§  276 


PRINCIPAL  AND   AGENT. 


484 


servant  is  employed  for  a  term  and  wrongfully  discliarged 
before  the  end  of  it,  the  presumption  is,  that  he  is  entitled 
to  recover  for  the  whole  term,  and  the  burden  is  on  the 
defendant  to  .diow  a  legal  excuse  for  not  paying  him  the 
full  amount  for  the  whole  term/  The  defendant  must 
prove  "either  that  the  plaintiff  was  actually  engaged  in 
other  profitable  service  during  the  term,  or  that  employ- 
ment was  offered  him  and  he  rejected  it."^  If  the  servant 
finds  employment  at  the  same  or  higher  wages,  he  is  en- 
titled to  recover  for  the  time  actually  lost;  and  if  he  finds 
employment  at  lower  wages,  ho  is  entitled  to  recover  the 
difference  between  the  amount  earned  and  what  his  mas- 
ter had  agreed  to  pay  him.'  The  servant  may  recover 
wages  durir.g  the  time  he  is  idle,  even  though  in  his  sec- 
ond employ inei't  he  gets  higher  wages  than  under  his 
first  contiact,  and  therefore  in  all  he  is  better  off  than 
though  ho  had  not  been  discharged.^  If  the  servant  sue 
for  the  breach  before  the  term  expires,  he  can  only  re- 
cover damages  up  to  the  time  when  he  sues;  but  if  he 
waits  until  the  end  of  the  term,  he  can  recover  full  dam- 
ages for  the  whole  time."     If  the  servant  institutes  suit 

'King  V.  Steiren,  44  Pa.  St.  99;  84    Willoughby  r.  Thomas,  24  Oratt.  C22;' 


Am.  Dec.  419;  Gillis  v.  Space,  63  Barb. 
177;  Polk  r.  Daly,  14  Abb.  Pr.,  N.  S., 
150;  Costigan  v.  Mohawk  11.  R.  Co., 
2  Dcnio,  (J09;  43  Am.  Dee.  7o8;  Horn 
V.  Land  Asd'n,  22  M'nn.  233;  Do  Leon 
V.  Echeverria,  45  N.  Y.  Sup.  Ct.  (510: 
Pond  V.  Wynian,  1.")  Mo.  175;  Nearns 
V.  Harbert,  25  Mo.  352;  Howard  v. 
Daly,  01  N.  Y.  302;  19  Am.  Rjp.  285; 
Hearno  v.  Garrett,  49  Tex.  019;  Byrd 
V.  Boyd,  4  McCord,  240;  17  A;n.  Dec. 
740;  Saxonia  Mining  Co.  v.  Cook,  7 
Col.  509.  In  an  action  for  dajnages 
for  a  wrongful  discharge,  the  burden 
is  on  the  master  to  sliow  that  the  dis- 
charge wai  for  good  cause:  Koenig- 
kraemcr  v.  Missouri  Glass  Co.,  24  Mo. 
App.  124. 

-  2  Gruenl.  Ev.,  sec.  261  a,  and  cases 
cited;  King  v.  Steiren,  supra.  See 
Hunt  V.  Crane,  33  Miss.  609;  09  Am. 
Dec.  381. 


Gillis  V.  Space,  03  Barb.  177;  Sugg  v. 
Blow,  17  Mo.  359;  Huntington  r.  K.  K. 
Co.,  33  How.  Pr.  410;  Sutherland  v. 
Wyer,  07  Me.  04. 

*  Sherman  v.  'lYans.  Co.,  31  Vt.  162; 
Willougliby  V.  Thomas,  24  Gratt.  552; 
Gillis  r.  Space,  03  Barb.  177. 

*■  Richardson  v.  Eaglo  Mac.  Works, 
78  Ind.  422;  41  Am.  Rep.  585.  A 
servant  wrongfully  discharged  before 
the  expiration  of  the  term  for  which 
ho  was  hired  cannot  recover  on  the 
theory  of  constructive  service,  but 
must  claim  damages  for  his  wrongful 
discharge:  Bennett  v.  St.  Louis  Car 
Rooting  Co.,  23  Mo.  App.  587;  James 
V.  Allen  County,  44  Ohio  St.  220;  58 
Am.  Rep.  821.  One  hiring  another  to 
work  one  month  for  a  stipulated  sum, 
and  discharging  him  before  the  cml  of 
the  month  without  sufficient  cause,  is 
liable  to  pay  him  for  the  fuU  month: 


»  Heim  v.  Wolf,  1  E.  D.  Smith,  70;    Dunn  v.  Hereford,   1  Wy.  Ter.  206. 


■ 


484 


485      CONTRACTS   BETWEEN   MASTER   AND   SERVANT.      §  276 

and  recovers  judgment  before  the  expiration  of  the  term 
for  which  ho  was  hired,  this  will  operate  as  a  bar  to  any 
subsequent  action.'  Thus  if  a  person  hired  for  three 
years  is  discharged  during  the  second  quarter,  sues  to 
recover  for  arrears  of  wages  and  damages  for  breach,  and 
recovers  a  judgment  for  one  quarter's  wages,  this  will  be 
u  bar  to  a  second  suit  upon  the  same  contract,  for  wages 
of  the  subsequent  quarter  of  the  first  year,  and  damages.'* 
Where  a  servant  is  wrongfully  discharged,  but  his  wages 
are  paid  up  to  that  time,  he  cannot  recover  for  future 
installments,  but  only  for  breach  of  contract,  and  one 
recovery  is  a  bar.'     Where  the  employer  agrees  with  the 


A  servant  dismiaseil  from  hia  master's 
c'.nployine'.it  before  the  expiratiou  of 
tli'J  term  contracted  for  cannot  main- 
tain ;ui  action  to  recover  wages  subse- 
que.iLly  accruin<{;  his  remedy  is  an 
action  lor  damages  for  breach  of  the 
couti-^ict:  Weed  r.  Burt,  78  N.  Y.  191. 
In  (lorilon  i\  Brewster,  7  Wis.  355, 
the  pUiutiff  was  employed  as  superin- 
tc'.ultiit  of  a  lumbering  establishment 
for  live  years  at  a  salary  of  two  thou- 
sand a  year.  At  tlio  end  of  the  first 
year  ho  was  discharged.  Ho  immedi- 
ately instituted  suit  to  recover  dam- 
af;e.j  for  the  balance  of  the  term.  Ho 
afterwards  obtained  employment  at  a 
yearly  salary  of  one  thousand  dollars. 
Tho  trial  took  jjlace  while  he  was  thus 
employed.  A  verdict  of  four  thousand 
dollars  was  rendered  in  favor  of  plain- 
tiff, on  the  theory  that  the  state  of 
facts  existing  at  tho  time  of  trial 
would  continue  until  the  end  of  the 
term  of  liij  first  engagement.  In  re- 
versiug  the  judgment,  the  supreme 
court  uaid:  "  In  any  business  tho  price 
of  labor  fluctuates  greatly  within  four 
ycai's;  particularly  is  this  true  of  the 
lumbering  business  in  this  country. 
Now  suppose  the  respondent  could 
only  obtain  for  his  services  next  year 
five  hundred  dollars,  and  so  on,  would 
it  not  bo  unjust  to  say  he  should  only 
recover  according  to  the  rule  adopted 
by  tho  jury  in  this  case  ?  Or  suppose 
tho  value  of  labor  should  rise  so  that 
he  could  obtain  for  his  services  two 
thousand  dollars  or  two  thousand  five 
Imndreil  dollars  a  year,  what  then 
would  be  bis  loss  by  the  failure  of  the 


appellant  to  fulfill  his  contract  ?  Still 
another  difficulty  presents  itself.  Sup- 
pose the  respondent  should  die  within 
the  four  years,  or  become  incapacitated 
to  perform  «firvice  of  any  kind,  would 
lie  be  entitled  lo  recover  the  damages 
he  has  recovered?  In  ascertaining 
the  amount  of  damages  on  his  con- 
tract running  four  years,  we  do  not 
think  the  court  and  jury  were  au- 
thorized in  assuming  that  tlio  same 
state  of  things  existing  at  tho  time  of 
trial  would  continue  until  the  expira- 
tion of  tho  contract.  Had  the  re- 
spondent seen  fit  to  wait  before  bring- 
ing his  action  until  the  period  had 
elapsed  for  the  comidete  performanco 
of  the  agreement,  tho  measure  of  com- 
pensation could  then  have  been  easily 

arrived  at But  as  the  case  now 

stands,  we  think  he  was  only  entitled 
to  recover  his  salary  on  the  contract 
down  to  the  day  of  trial,  de<lucting 
therefrom  any  wagea  which  he  might 
have  received  or  might  have  reason- 
ably earned  in  the  mean  time.  Tliis 
rule  appears  to  us  to  be  the  most 
equitable  and  safe  of  any  that  occurs 
to  our  minds,  and  the  one  most  likely 
to  efi'ect  substantial  justice  between 
the  parties. " 

I  Booge  V.  Pacific  R.  R.  Co.,  .3.3  Mo. 
212;  82  Am.  Dec.  IGO;  Sourshi  v.  Sa- 
lorgne,  14  Mo.  App.  486. 

^  Colburn  v.  Wood  worth,  31  Barb. 
381;  Booge  v.  Pacific  R.  R.  Co.,  33 
Mo.  213;  82  Am.  Dec.  IGO;  contra, 
Isaacs  V.  Da  vies,  68  Ga.  169. 

"  Jamc3  V.  Allen  County,  44  Ohio 
St.  226;  58  Am.  Rep.  821. 


§277 


PRINCIPAL  AND   AGENT. 


48G 


servant  that  if  after  trj'ing  him  three  months  tlio  master 
is  satisfied,  a  year's  salary  will  be  paid  him  "just  as  it  he 
had  worked  for  a  full  year,"  and  then  without  cause  dis- 
charges the  servant,  the  servant  is  entitled  to  the  whole 
yearly  salary.*  A  master  cannot  sot  up  the  unskillfulness 
or  dishonesty  of  the  servant  in  an  action  for  his  wages. 
His  remedy  was  to  have  discharged  the  servant.'' 

Illustrations. — A  wrote  to  B,  who  was  in  the  Sandwich  Is- 
lands, offering  him  tiftecn  Imndred  a  year  to  servo  him  in  Chi- 
copec,  Massachusetts.  B  accepted  and  removed  to  Chicopce,  but 
A  refused  to  receive  him.  Held,  that  B  could  not  recover  for  the 
time  consumed  in  or  the  expenses  of  the  journey.  lie  could 
only  claim  to  bo  placed  in  as  good  a  condition  as  he  would 
have  been  if  the  contract  had  boon  performed:  Noble  v.  Ames 
Mfg.  Co.,  112  Mass.  497.  A  plaintit!"  had  been  employed  by 
the  defendant  for  one  year  at  a  specified  salary,  payable  in 
monthly  installments,  and  before  the  year  expired  ho  was  dis- 
charged, and  afterwards,  before  the  end  of  his  term,  he  brouglit 
suit,  claiming  that  the  contract  was  still  in  force,  and  that  he 
was  and  had  been  ready  and  willing  to  perform.  Held,  that 
he  could  only  recover  for  the  instalhnents  that  had  matured  at 
the  time  the  suit  was  brought,  notwithstanding  the  term  had 
expired  before  th^  cause  was  tried.  If,  when  he  was  discharged, 
he  had  terminated  the  agreement,  and  sued  on  the  breach  of 
the  contract,  and  the  cause  was  not  tried  until  the  term  had 
expired,  and  it  had  then  appeared  that  he  had  been  unable  to 
procure  employment  during  the  time,  it  may  be  that  he  could 
have  recovered  for  all  the  damage  ho  had  sustained  during  the 
term  by  the  breacli  of  the  contract:  Hamlin  v.  Race,  78  111.  422; 
In  an  action  for  discharge  from  employment,  plaintiff  proved  a 
contract  for  one  year,  and  that  he  did  his  work  properly,  and 
was  paid  up  to  the  time  of  his  discharge  before  the  expiration 
of  the  year.  Held,  that  it  was  error  to  award  a  nonsuit:  Alex- 
ander V.  Americus,  61  Ga.  36. 


§  277.    Servant  Bound  to  Seek  Other  Employment. — 

The  discharged   servant   is  bound   to   make   reasonable 
efforts  to  obtain  employment  elsewhere.'     But  the  servant 


'  Wachs  V.  Fricdmann,  11  Mo.  App. 
602. 

-Clark  V.  Fensky,  3  Kan.  389; 
Turner  v.  Kouwenhoven,  29  Hun, 
232. 


'  Sherman  v.  Trans.  Co.,  31  Vt.  162; 
Howard  v.  Daly,  CI  N.  Y.  3G2;  ID  Am. 
Rep.  285;  Polk  v.  Daly,  14  Abb.  Pr., 
N.  S.,  150;  FowlerV.  Armour,  24  Ala. 
194;  Steinberg  v.  Gcbhardt,  41  Ma 


4BG 


4S7      CONTRACTS   BETWEEN   MASTER   AND   SERVANT.      §  277 


is  only  bound  to  sock  employment  of  the  same  general 
nature  as  that  in  which  ho  is  eniplo.ed,  and  in  the  same 
place.'     A  general   laborer  would    bo   required    to   seek 


520;  Benzigcr  v.  Miller,  ."50  Ala.  206; 
Boogo  r.  llailrf)a<l  Co.,  '.»  Mo.  212;  82 
Am.  Di!C.  !()();  Uilli.i  r.  Space,  (IH  Barb. 
177;  (Jazotte  Printing  Co.  v.  Moras,  CO 
Iiul.  153;  Williams  v.  Chicago  (Joal 
Co.,  GO  111.  14'.>;  Arintiold  r.  Nasli,  31 
Miss.  301;  Chambcrlin  r.  Morgan,  08 
Pa.  St.  108.  In  Sliannon  v.  Com- 
Ktock,  21  VVunl.  457,  34  Am.  Dec.  202, 
Cowen,  J.,  said:  "Her  wo  have  a 
contract  to  sell  labor  and  ser  .icos.  On 
the  vendee  declining  them,  the  vendor 
sells  them  to  another,  or  converts 
them  to  Ilia  own  use;  in  other  words, 
lie  goes  about  his  business  in  another 
dirccticm,  which  fetches  him  the  same, 
or  nearly  the  same,  or  more  perhaps, 
than  the  agreed  price,  which  has  failed. 
This  is  u'jcessarily  so,  unless  the  ven- 
dor of  the  labor  liooso  to  lie  idle  for 
the  supposed  length  of  time  which 
performance  would  have  demanded. 
But  that  he  has  no  right  to  do.  Tiio 
rule  of  this  subject  is  well  laid  down 
by  Melleii,  C.  J.,  in  Miller  w.  Mariners' 
Church,  7  Mo.  51,  20  Am.  Dec.  .341. 
•Ill  general,  the  delinquent  party  is 
holdcu  to  make  good  tho  loss  occa- 
sioned by  the  delinquency.  But  his 
liability  is  limited  to  direct  damages, 
which,  acconliiig  to  the  nature  of  the 
subject,  may  bo  contemplated  or  pre- 
sunaed  to  result  from  his  failure.  The 
purchaser  of  pcridhable  goods  at  auc- 
tion fails  to  complete  his  contract. 
What  shall  bo  done?  Shall  tho  auc- 
tioneer loave  tho  goods  to  perish  and 
throw  the  entire  loss  upon  the  pur- 
chaser? Tiiat  would  bo  to  aggravate 
it  unreasonably  and  unnocessardy.  It 
i3  his  duty  to  sell  them  a  second  time, 
and  if  they  bring  less,  he  may  recover 
the  difference,  with  commissions  and 
otlier  expenses  of  resale  from  tho  pur- 
chaser. If  tho  party  entitled  to  tho 
benefit  of  a  contract  can  protect  him- 
self from  the  loss  arising  from  a  broach 
at  a  reasonablo  expense,  or  with  rea- 
sonable exertions,  he  fails  in  his  social 
duty  if  he  omits  to  do  so,  regardless 
of  the  increased  amount  of  damages, 
for  which  ho  may  intend  to  hold  tho 
other  contract  party  liable. '  Tho  rea- 
son and  justice  of  these  remarks  are 


open  to  continued  illustration  in  tho 
aifuira  of  men.  A  inason  is  engaged 
to  Work  for  a  month,  iind  tendur.i  him- 
self andoQcrs  tu perform,  but  hij  hirer 
declines  hi.i  service.  Tlio  next  day 
tho  mason  is  employed  at  equal  wages 
elsewhere  for  a  month,  {'learly  Lis 
loss  is  but  one  <lay,  and  it  ij  h's  tluty 
to  seek  other  omploynicnt.  Idleness 
is  in  itself  a  breacli  of  moral  obligation. 
But  if  lie  continue  idle  for  the  purpose 
of  ehargini;  another,  he  superadds  a 
frivud  which  the  law  had  rather  punish 
than  countonance." 

>  Howard  v.  Daly,  01  N.  Y.  302;  19 
Am.  R-p.  28.J;  .Strauss  ?•.  Mocrtief,  04 
Ala.  200;  38  Am.  Hep.  8;  Walworth  v. 
Pool,  0  Ark.  394;  Bookman  r.  Drake,  2 
H.  L.  Cas.  00(5;  Fuchs  r.  Koernor,  107 
N.  Y.  520.  In  Costigan  v.  Moliawk  K. 
R.  Co.,  2  Dcnio,  G0;>,  43  Am.  Dec.  758, 
tho  court  said:  "Tho  doi'endants  had 
agreed  to  employ  the  plaintiLf  in  super- 
intending <i  railroad and  they 

cannot  insist  that  ho  should,  in  order  to 
relievo  t'.ieir  pockets,  tuko  up  the  busi- 
ness of  a  farmer  or  a  merchant.  Nor 
could  they  require  him  to  leave  his 
homo  and  place  of  residence  to  engage 
in  business  of  the  same  character  with 
that  in  which  ho  had  been  employed 
by  tho  defendants."  So  in  Strauss  v. 
Meertief,  04  Ala.  290,  38  Am.  Kep.  8, 
tho  court  say:  "Wo  muot  not  bo  un- 
derstood a-3  intimatin.j  tliat  ho  is  under 
the  duty  of  engaging  in  or  accepting 
any  other  employment  than  such  as 
may  bo  of  tho  aama  nature  and  descrip- 
tion of  that  inwhicli  ho  waM  employed 
by  tho  dufondant;  or  employment  of 
that  kind  at  a  place  different  from  that 
in  which  t'.ic  c.nploy  nent  of  the  de- 
fendant contemplate  1  tiis  remaining 
during  tho  term.  l:.c  lathor  liiriug 
his  minor  son  as  a  clerk  to  a  merchant 
may  juftly  bo  presumed  to  have  in 
view  the  acquirement  by  tho  son  of 
knowledge  and  skill  in  that  particular 
business.  This  will  often  be  a  more 
material  consideration  than  the  wages 
the  son  can  earn  during  minority. 
That  for  tho  son  there  waa  offered,  or 
could  with  reasonable  exertions  have 
been  obtained,  employment  as  a  la> 


g277 


PUINCIPAL    AND   AGENT. 


488 


goncral  work.  But  n  carpontcr  would  not  bo  compelled 
to  do  the  work  of  a  farm  laborer,  or  an  actor  the  work  of 
a  clerk,'  or  a  physician  the  work  of  a  dentist,  or  a  super- 
intendent of  a  railroad  the  work  of  a  conductor,''  or  an 
overseer  the  work  of  a  day-laborer,*  or  a  forem  in  a 
type  foundry  the  work  of  a  common  hand,*  or  wcad 
gamekeeper  the  work  of  assistant  gamekeeper.^  It  is 
no  defense  to  a  claim  for  damages  for  being  discharged 
from  employment  in  manufacturing  at  a  fixed  salary, 
that  after  his  discharge  plaintiff  refused  an  offer  of  em- 
ployment to  sell  goods  of  a  different  kind  on  commission.* 
lie  need  not  go  beyond  the  neighborhood  where  ho  was 
employed.  His  duty  is  to  seek  and  accept  work  only  in 
the  same  vicinity.  Thus  a  teacher  is  not  bound  to  leave 
her  home  to  find  employment/  or  a  railroad  superintend- 
ent the  community  where  employed,*  or  an  actor  a  city 
where  he  was  to  i^erform,"  or  an  overseer  the  vici  '^y  in 
which  he  was  to  do  service.*"  But  while  the  mas  nay 
reduce  the  damages  by  showing  that  the  servant  obiumed 
or  could  have  obtained  other  employment,  this  cannot 
defeat  his  right  of  recovery."  If  he  fails  to  get  it  and 
does  work  for  himself,  its  value  cannot  bo  deducted  from 


borer  oh  a  farm,  or  as  the  employee  of 
a  railroad  company,  or  a  workman  in 
a  machine-shop,  or  as  an  operative  in  a 
factory,  or  in  any  service  not  of  the 
same  kind,  and  not  affording  to  the 
son  like  advantages  for  the  acquire- 
ment of  knowledge  and  skill  as  a 
merchant,  cann.  t  and  ought  not  to 
furiii.h  aground  Tor  the  diminution  of 
the  plaintitf 's  recovery.  There  is  much 
of  personal  trust  and  confidence  re- 
posed hy  a  father  in  engaging  his  son 
m  the  service  of  another.  It  must  be, 
if  sheer  indifference  to  the  welfare  of 
the  son  ia  not  imputed,  a  material  in- 
gredient of  all  such  contracts.  Because 
of  the  personal  trust  which  enters 
into  a  contract  of  apprenticeship,  the 
law  holds  it  is  not  assignable  by  the 
master:  Tucker  v.  Magee,  18  Ala.  99. 
Any  reasonable  objection  because  of 
capacity,  reputation,  mode  of  dealing, 
and  transacting  business,  or  of  habits 


or  morals,  which  could  be  made  to  the 

Eerson  from  whom  employment  could 
e  obtained,  would  afford  a  justification 
to  the  plaintiff  for  rejecting  it  when 
offered,  or  excuse  him  from  not  making 
exertion  to  secure  it." 

»  Polkr.  Ualy,  14  Abb.  Pr.,N.S.,I56. 
^  Costigan  v.  Railroad  Co.,  2  Denio, 
609;  43  Am.  Dec.  758. 

»  Walworth  v.  Pool,  9  Ark.  394. 

*  Gillisr.  Space,  63  Barb.  177;  Beck- 
ham V.  Drake,  2  H.  L.  Cas.  607. 

*  Ross  V.  Pender,  1  Ses.  Cas.  S.,  4th 
series,  352. 

«  Fuchs  V.  Koemer,  52  N.  Y.  Sup. 
Ct.  77. 

'  Gillis  V.  Space,  63  Barb.  177. 

®  Costigan  v.  Railroad  Co.,  2  Denio, 
609;  43  Am.  Dec.  758. 

»  Howard  v.  Daly,  61  N.  Y.  362;  19 
Am.  Rep.  285. 

"  Walworth  v.  Pool,  9  Ark.  394. 

^^  Wilkinson  v.  Black,  80  Ala.  329. 


4S9      CONTRACTS    BETWEEN    MASTER   AND    SERVANT.       §  278 

llio  amount  of  his  claim.*  A  master  having  dischargid  a 
servant  has  no  right  to  recall  him  on  pain  of  rorfciting  all 
claim  for  compensation;  but  if  the  servant  is  n(»t  olhor- 
wise  employed,  ho  may  recall  him  to  do  a  part  of  the  stipu- 
lated work  without  restoring  him  to  his  former  position.'' 

Ii.LcsTUATioNS.  —  A  hired  B  for  a  year,  and  dii^chargtHl  iiim 
before  the  end  of  the  year.  IJ  sued  for  hrciich  of  coiitraet. 
Ifrhl,  that  A  was  entitlerl  to  prove  that  afterwards,  within  the 
y(  ar,  lu;  again  oflercd  B  employment,  which  B  rcfusi'il,  as  this 
would  diminish  damages:  t.,qelow  v.  American  Forcile  Powder 
M/j.  Co.,  3'J  lluu,  590. 


§  278.    Waiver  by  Servant  of  Wrongful  Discharge. — A 

servant  may  by  acquiescing  in  a  wrongful  disehargo 
waive  his  right  to  sue  for  damages,"  but  an  involuntary 
acquiescence  will  not  bar  him,  as  where  a  servant  was 
ordered  by  the  master  to  send  in  lis  resignation,  as  he 
was  to  bo  dismissed  any  way,  and  he  did  so.'' 

Illustrations.  —  A  made  a  contract  with  B  for  a  year's  ser- 
vice. Before  the  expiration  of  the  year,  A  by  letter  discharged 
B,  and  inclosed  in  the  letter  a  chock  in  settlenicnt  for  a  cer- 
tain amount,  requesting  B  to  return  the  check  if  tlie  amount 
was  not  satisfactory.  B  kept  the  check  and  used  it,  and  after 
the  expiration  of  the  year  sued  A  for  a  year's  salary,  crediting 
him  with  the  amount  of  the  check.  Held,  that  the  action  could 
not  be  maintained:  Hutton  v.  Stoddart,  83  Ind.  5.39.  Plaintiff, 
hcing  employed  by  defendant  as  its  state  agent  for  Wisconsin 
for  a  term  of  one  year  from  April  1,  1877,  was  notified  l)y  de- 
fendant's vice-president,  under  date  of  December  14,  1877,  that, 
for  reasons  stated  (not  implying  any  dissatisfaction  with  plain- 
tiff), the  directors  had  concluded  that  at  least  for  the  next 
calendar  year  the  agency  for  Wisconsin  must  be  added  to  the 
duties  of  the  person  who  was  then  defendant's  state  agent  in  an 
adjoining  state;  and  added  that  defendant's  general  agent  was 
then  in  the  West,  and  would  probably  visit  plaintiff  in  a  few 
days,  when  "all  matters  relating  to  the  future"  could  "be  ar- 
ranged between"  him  and  plaintiff.  Plaintiff  immediately 
answered  at  length,  expressing  acquiescence  in  the  necessity 
for  the  change,  and  giving  no  intimation  that  he  should  claim 


'  Harrington  v.  Gies,  45  Mich.  374. 
-  Mitchell  V.  Toale,  25  S.  0.  238;  GO 
Am.  Rop.  502. 


'Hutton  V.  Stociaart,  83  I  ml.  539. 
*  Cumberland    etc.    R.    R.    Co.    v. 
Slack,  45  Md.  ICl. 


§279 


PRINCIPAL  AND  AGENT. 


490 


his  salary  after  January  1,  1878.  On  December  19,  1877,  he 
sent  out  circulars  to  defendant's  subordinate  agents  in  Wiscon- 
sin, stating  that  on  January  1st  next  the  relations  existing 
between  him  and  them  would  be  dissolved  "  by  expiration  of 
engagement";  and  commending  to  them  the  state  agent  who 
was  to  succeed  him.  Held,  that  these  papers  showed  a  termina- 
tion of  plaintiff's  employment  with  his  consent;  and  he  could 
not  recover  salary  for  the  remainder  of  the  year  covered  by 
his  contract:  Southmayd  v.  Watertown  Fire  Ins.  Co.,  47  Wis. 
517. 

§  279.    Waiver  by  Master  of  Breach  or  Forfeiture.— A 

master  may  waive  a  breach  of  contract  by  the  servant,  or 
condone  a  ground  of  discharge.*  Keeping  the  servant  in 
his  service  after  knowledge  of  such  breach  raises  an  in- 
ference of  waiver  on  his  part.''  Where  an  employee  was  to 
receive  payment  at  a  specified  rate  if  he  continued  torn 
perate  and  faithful  in  the  employer's  service,  it  was  held 
that  the  fact  that  he  was  occasionally  intemperate  and 
discontinued  the  service  for  short  perioas  would  not  pre- 
vent his  recovering  the  stipulated  rate  for  the  time  ac- 
tually spent  in  such  service,  if  he  was  received  back  into 
it,  and  continued  therein,  without  any  new  arrangement 
being  made,  or  any  intimation  given  that  the  old  one  was 
terminated.'^  So  a  master  may  waive  a  forfeiture  of  wages 
for  leaving  his  service  before  the  end  of  the  term,  by 
a  tender  of  payment  or  by  making  part  payment,  or  by 
any  acts  on  his  part  showing  that  he  recognizes  a  liabil- 
ity ."^  But  the  waiver  of  one  breach  does  not  estop  the 
master  as  to  a  subsequent  breach;^  and  the  retention  of  a 
servant  whoiio  torts  have  injured  the  master  does  not 
waive  his  right  of  action  against  the  servant  for  dam- 
ages.^ 


»  Brown  v.  Kimball,  12  Vt.  617. 

*  Harrington  v.  Bank,  1  Tliomp.  & 
C.  303;  Ridi^way  ?'.  Market  Co.,  3  Ad. 
&  E.  171;  Jones  v.  Trinity  Parish.  )9 
Fed.  Rep.  59. 

"  Prentiss  v.  Led  yard,  28  Wis.  131. 

*  Patnote  v.  Sanders,  41  Vt.  60; 
Pelouze  V.  Stewart,  1  N.  Y.  l^g.  Obs. 


170;  Dover  v.  Pleminons,  10  Ired.  23; 
Seaver  v.  Morse,  20  Vt.  620;  Cahill  r. 
Patterson,  30  Vt.  592;  Boyle  v.  Parker, 
46  Vt.  343;  Hogan  v.  Titlow,  14  Cd. 
255;  Rice  v.  Dwight  Mfg.  Co.,  2  Cush. 
80. 

*  Hunter  v.  Gibson,  3  Rich.  101. 

8  Stoddard  v.  Treadwell,  20  Cal  294. 


491      CONTRACTS   BETWEEN    MASTER  AND   SERVANT.      §  280 


Illustrations. — A  agreed  with  B  to  serve  him  as  overseer 
for  a  certain  term,  and  to  abstain  during  the  term  from  all  in- 
toxication, under  a  penalty  of  forfeiture  of  his  wages  '*if  ho  got 
drunk  and  was  dismissed."  A  did  repeatedly  get  drunk,  and 
was  finally  dismissed.  Ileldy  that  a  failure  of  B  to  take  advan- 
tage of  the  first  act  of  drunkenness  was  not  a  waiver  of  the  pro- 
vision of  forfeiture,  and  that  A  could  not  recover  on  a  quantum 
meruit  for  his  services:  Hunter  v.  Gibson,  3  Rich.  IGl.  A 
laborer  did  work  under  a  contract  to  work  for  a  specified 
period,  but  left  before  the  time  expired,  and  the  parties  after- 
wards met  and  attempted  to  settle,  and  the  employer  offered  to 
pay  the  laborer  for  the  time  he  had  worked  if  he  would  make  a 
certain  deduction,  for  damages,  which  ho  refused  to  make,  and 
the  parties  separated.  Held,  that  this  was  not  a  waiver  of  the 
special  contract  on  the  part  of  the  employer:  Monell  v.  Burns, 
4  Denio,  121. 

§  280.  Causes  Which  will  Justify  Servant  in  Abandon- 
ing Service.  —  The  servant  is  justified  in  leaving  the  ser- 
vice before  the  end  of  his  term,  upon  the  breach  by  the 
master  of  any  of  the  express  provisions  of  the  contract. 
The  same  is  true  as  to  those  provisions  which  the  law- 
incorporates  into  every  contract  of  service.  These  are, 
among  others:  Assaulting  him  even  without  a  battery, 
where  the  servant  fears  injury  if  he  continues;^  char- 
ging the  servant  wrongfully  with  committing  a  crime;  ^ 
employing  him  in  unlawful^  or  unreasonably  danger- 
ous services;''  or  in  work  not  contemplated  in  the  hir- 
ing;* the  existence  of  an  epidemic  in  the  neighborhood;" 


'  Bishop  V.  Ranney,  59  Vt.  316.  A 
master  lias  no  right  to  use  "  moderate 
force  "  to  compel  his  servant,  a,  girl  of 
eighteen,  to  obey  his  reasonable  com- 
maails:  Tinkle  v.  Duuivaut,  16  Lna, 
503. 

'^  Longmuir  v.  Thompson,  11  Sliaw, 
571. 

^  Warner  r.  Smith,  8  Conn.  14;  Com- 
monwealth V.  St.  German,  1  Browne, 
24;  Berry  v.  Wallace,  Wright,  657. 

*  Wood  on  Master  and  Servant,  sec. 
83;  Eagle  etc.  Co.  v.  Welch,  Gl  Ga.  444. 

*  Baron  v.  Placide,  7  La.  Ann.  229. 

*  Lakeman  v.  Pollard,  43  Me.  403, 
69  Am.  Dec.  77,  Hathaway,  J.,  saying: 
"Ihe  plaiati£f  couteuds  that  ho  was 


excused  from  the  pertormance  of  his 
contract,  and  justified  in  quitting  when 
ho  did  by  reason  of  the  alarm  und  dan- 
ger occasioned  by  the  prevalence  of 
the  cholera  in  the  vicinity  of  the  mills, 
and  that  he  is  entitled  to  a  reasonable 
compsnsation  for  the  labor  performed. 
If  the  fultillment  of  the  piaintifT's  con- 
tract became  imposbiblo  by  the  act  of 
God,  the  obligation  to  perform  it  was 
discharged.  If  ho  was  prevented  by 
sickness  or  similar  inability,  he  may 
recover  for  what  he  did  on  a  (jiKinfitm 
mei-uit:  1  Parsons  on  Contracts,  524. 
The  plaintiflF  was  under  no  obligation 
to  imperil  his  life  by  remaining  at 
work  iu  the  vicinity  of  a  prevailiug 


§281 


PRINCIPAL  AND  AGENT. 


492 


exposing  the  servant  to  dangers,  physical  and  moral,  even 
without  the  master's  fault; '  failing  to  provide  him  with 
proper  food  and  lodging;''  fault-finding  by  the  master,  if 
severe  and  unjustifiable,  and  the  servant  does  not  waive  it 
by  remaining  in  the  service;'  treating  him  improperly 
and  inhumanely;*  refusing  to  pay  him  his  wages.^ 

Illustrations. — A  female  servant  left  her  employment  be- 
cause of  the  continued  annoyance  and  rudeness  towards  her  of 
a  relative  of  the  employer.  This  relative  lived  in  the  same 
house,  but  the  employer  had  no  control  over  him.  //eW,  justifi- 
able: Patterson  v.  Gage,  23  Vt.  558;  56  Am.  Dec.  96. 

§  281.  Dissolution  of  Contract — By  Expiration  of  Time 
or  Consent  of  Parties. — The  contract  of  service  is  ended 
by  the  expiration  of  the  time  limited.  The  servant  has 
then  the  right  to  leave."  But  the  fact  that  he  honestly 
thinks  that  the  time  has  expired  will  not  excuse  him  if 
the  fact  was  otherwise.^  So  the  contract,  before  its  ex- 
piration, may  be  ended  by  the  consent  of  the  parties, 
express  or  implied,*  and  if  the  master  consents,  he  can- 


epidemic  BO  dangerous  in  its  character 
that  a  man  of  ordinary  care  and  pru- 
dence, in  the  exercise  of  those  qualities, 
wouM  have  been  justified  in  leaving  by 
reason  of  it;  nor  does  it  make  any  dif- 
feronco  tliat  the  men  who  remained 
there  at  work  after  the  plaintiff  left 
were  healthy  a-id  continued  to  be  so. 
He  could  not  then  have  had  any  cer- 
tain knowledge  of  the  extent  of  his 
danger.  Ho  might  have  been  in  im- 
minent peril,  or  he  might  have  been 
influenced  by  unreasonable  apprehen- 
oions.  lie  must  necessarily  have  acted 
at  his  peril,  under  the  guidance  of  his 
judgment.  The  propriety  of  his  con- 
duct in  leaving  his  work  at  that  time 
must  be  determined  by  examining  the 
state  of  facts  as  then  existing.  When 
the  laborer  has  adequate  cause  to  jus- 
tify an  omission  to  fulfill  his  contract, 
suck  omission  cannot  bo  regarded  as 
his  fault.  Whether  or  not  the  plain- 
tiff had  such  cause  was  a  question  of 
fact,  to  be  determined  by  the  jury 
upon  the  evidence." 


»  Patterson  v.  Gage,  23  Vt.  558;  56 
Am.  Dec.  96. 

••«  Gillis  V.  Space,  63  Barb.  177.  If 
the  employer  furnish  a  suitable  room, 
it  is  enough  even  though  it  does  not 
suit  tlie  taste  of  the  servant:  Illinois 
College  V.  Perry,  8  111.  App.  188. 

»  Brown  v.  Kimball,  1'2  Vt.  017.  But 
hariih  language  by  an  employer  is  no 
sufficient  excuse  for  breaking  a  contract 
to  labor  a  specific  time  at  a  fixed  price: 
Forsyth  v.  Hastings,  27  Vt.  040. 

*  McGrath  v.  Herndon,  4  T.  B.  Mon. 
480;    Newman    v.    Bennett,   2    Cliit. 
195;    Matthews  v.   Terry,  10   Conn. 
455. 

*  Dobbins  v.  Higgins.  78  111.  440; 
R.  R.  Co.  V.  Spurck,  24  111.  588;  Canul 
Co.  V.  Gordon,  6  Wall.  501 ;  Lefraiicois 
V.  Charbonnet,  5  Rob.  (La.)  185;  39 
Am.  Dec.  533. 

*  Wood  on  Master  and  Servant,  sec. 
159. 

'  Winn  V.  Southgate,  17  Vt.  355. 

*  Wood  on  Master  and  Servant,  sec. 
164;  Boylo  v.  Parker,  46  Vt.  343. 


492 

ral,  even 
lim  with 
iiaster,  if 
waive  it 
properly 

ment  be- 
1(1 8  her  of 
the  same 
W,  justifi- 


1  of  Time 

is  ended 
vant  has 
honestly 
56  him  if 
e  its  ex- 
!  parties, 
,  he  can- 

Vt.  558;  56 

rb.  177.    If 

itablc  room, 
it  tloes  not 
mt:  Illinois 

188. 
t.  G17.  But 
loyer  is  no 
ij^  a  contract 
tlxoil  price: 
.  C4G. 

T.  B.  Men. 
tt,   2    Chit. 

10   Conu. 

(8  111.  440; 
588;  Canal 
Lefraiicois 

1.)  185;    39 

ervant,  sec. 

Vt.  355. 
ervant,  aeo, 
t.  343. 


493      CONTRACTS   BETWEEN   MASTER  AND  SERVANT.      §  282 

not  set  up  that  the  servant  left  before  the  end  of  his  terra, 
in  answer  to  his  claim  for  wages  for  the  time  served.^  The 
master's  consent  may  be  implied  from  hij  acts.^ 

Illustrations.  —  A  lady  engaged  a  servant  upon  condition 
that  she  obtained  a  certificate  of  good  character  from  her  last 
master.  Held,  that  no  recovery  could  be  had  if  the  certificate 
v,as  not  obtained,  for  refusing  to  receive  her:  Forbes  v.  Milne,  6 
Bhaw,  75.  The  defendant  agreed  to  serve  the  plaintiff  as  a 
traveler  and  agent  "for  twelve  months  certain,"  after  which 
time  either  party  should  be  at  liberty  to  terminate  the  agree- 
ment by  giving  the  other  a  three  months'  notice.  Held,  that 
at  the  close  of  the  twelve  months  the  agreement  could  be  de- 
termined by  either  party  without  any  notice,  and  that  the  stip- 
ulation as  to  a  three  months'  notice  only  applied  in  case  the 
engagement  was  prolonged  beyond  the  twelve  months:  Langton 
V.  Carleton,  L.  R.  9  Ex.  57.  Before  the  end  of  his  term  the  ser- 
vant told  his  master  that  he  was  going  to  quit.  The  master  did 
not  object,  but  said  there  were  as  good  men  to  be  had  as  he  was. 
Held,  that  the  servant  could  recover  for  the  time  served:  Boyle 
V.  Parker,  46  Vt.  343.  The  servant,  before  the  end  of  his  term, 
asked  his  employer  if  he  wanted  him  to  work  any  longer.  The 
master  said  he  might  do  as  he  pleased.  Held,  not  a  consent  to 
his  leaving:  Winn  v.  Southgnie,  17  Vt.  355.  Before  the  end  of 
his  term  the  servant  quit.  Afterwards  the  master  said  that  he 
was  glad  ho  had  gone,  as  he  was  worth  nothing  to  him.  But 
though  he  had  previously  manifested  a  wish  to  get  rid  of  him, 
he  had  never  told  him  to  go.  HehU  that  the  servant  had  no 
right  to  leave:  Decamp  v.  Stevens,  4  Blackf  24.  The  agent  of  a 
railroad  company  employed  A  to  guard  certain  convicts.  Then 
the  company  leased  the  convicts  to  B,  who  agreed  to  assume 
the  responsibility  of  guarding  them.  Of  this  A  had  no  notice. 
Held,  that  the  company  was  bound  to  pay  A  for  his  services, 
and  that  the  fact  that  the  agent  who  hired  A  became  B's  agent 
was  immaterial:  Marietta  and  North  Georgia  li.  R.  Co.  v.  Hil- 
burn,  75  Ga.  379. 


§  282.  When  Service  may  be  Dissolved  by  Either 
Party. — The  service  may  be  determined  by  cither  party 
at  any  time  in  these  cases:   1.  Where  the  continuance  of 

'  Patnote  v.  Sanders,  41  Vt.  G6;  98    Thomas    r.    Williams,   1    Ad.   &   E. 
Am.   Deo.  564;    Rogers  v.  Steele,  24    685. 
Vt.  513;  Green  v.  Hulett,  22  Vt.  188;        ^  Boyle  v.  Parker,  46  Vt.  343. 


§§  283,  284 


PRINCIPAL   AND  AGENT. 


494 


the  term  is  discretionary;*   2.  Where  the  term  is  indefi- 
nite;^   3.  Where  the  contract  is  not  mutual.' 


§  283.  Dissolution  of  Partnership. — The  dissolution  of 
a  partnership  releases  a  servant  of  the  partnership.*  If, 
however,  the  dissolution  is  by  the  act  of  the  parties,  they 
are  liable  to  the  servant;*  but  if  the  dissolution  is  by  the 
death  of  one  of  the  partners,  they  are  not  liable.*  And  if 
the  firm  is  not  dissolved, —  though  one  partner  goes  out 
voluntarily  or  by  death, — the  contract  is  not  ended.^  A 
master  by  taking  a  partner  in  his  business  does  not  dis- 
solve his  contract  with  a  servant.*  If  a  contract  for  per- 
sonal service  for  a  certain  sum  per  month,  and  a  further 
sum  at  the  end  of  the  year,  and  a  proportionate  part  of 
the  latter  sura  if  the  contract  become  void  by  death  or 
mutual  consent,  be  broken  by  the  voluntary  dissolution 
of  the  partnership,  the  firm  is  liable  for  a  proportional 
part  of  the  sum  that  was  to  be  paid  at  the  end  of  the 
year.^  Where,  pending  the  term  of  a  clerk's  service,  his 
employer  enters  into  partnership  with  another,  and  the 
clerk  enters  into  the  service  of  the  firm,  his  contract  with 
his  original  employer  is  at  an  end;  and  if,  afterwards,  he 
is  discharged,  he  cannot  recover  of  his  original  employer." 

§  284.  Bankruptcy  of  Master. — The  bankruptcy  of 
the  master  dissolves  the  contract."  Where  a  written  con- 
tract between  a  salesman  and  his  employers  provided  that 
the  salesman,  in  consideration  of  a  stipulated  salary  for 
two  successive  years,  should  devote  his  whole  time  and 


>  Provost  V.  Harwood,  29  Vt.  219; 
Patrick  v.  Putnam,  27  Vt.  759;  Dur- 
gin  V.  Baker,  32  Me.  273;  Daveny  v. 
Shattuck,  9  Daly,  66. 

'  De  Briar  v.  Minturn,  1  Cal.  450; 
Coffin  V.  Landis,  46  Pa,  St.  430;  Pea- 
cock V.  Cummings,  46  Pa.  St.  434; 
Harper  v.  Hassard,  113  Mass.  187; 
Blaisdell  v.  Lewis,  32  Me.  515;  Thayer 
V.  Wadsworth,  19  Pick.  349. 

3  Dunn  V.  Sayles,  5  Q.  B.  CSS. 


*  Wood  on  Master  and  Servant,  seo 
165. 

^Id. 

*  Id. ;    contra,  Fereira  v.  Sayres,  5 
Watts  &  S.  210;  40  Am.  Dec.  496. 

'Id. 

*  Harkins  v.  Smith,  13  Jur.  381. 

'  RedhefiFer  V.  Leathe,  15  Mo.  App.  12. 
'"  Anderson  v.  Freeman,  75  Ga.  93. 
"  Wood  on  Master  and  Servant,  sec. 
163. 


495      CONTRACTS   BETWEEN   MASTER  AND   SERVANT.      §  286 

attention  to  the  employers'  business,  it  was  held  that  this 
did  not  raise  an  implied  obligation  upon  the  employers 
to  continue  the  engagement  for  two  years;  and  that,  on 
their  going  into  bankruptcy  during  the  first  year,  the 
salesman  could  not  recover  his  contract  compensation 
beyond  that  time.* 

§  285.    Abandonment  by  Servant. — Also  the  abandon- 
meat  of  the  service  by  the  servant  ends  the  contract.* 


§  286.  Dismissal  by  Master. — So  does  the  dismissal  of 
the  servant  for  cause;*  and  where  the  servant  is  wrong- 
fully discharged,  the  contract  is  so  far  ended  that  the 
master  could  not  compel  him  to  resume  his  service.*  A 
master  cannot,  while  repudiating  his  contract  with  the 
servant  to  serve  for  a  definite  period  of  time,  reduce  the 
servant's  right  of  recovery  to  merely  nominal  damages, 
by  showing  that  he  offered  the  servant  the  same  work  at 
the  same  price  for  a  less  period  than  that  for  which  he 
was  hired.  Thus  where  one  is  hired  for  a  year  and  dis- 
charged, but  the  master  offers  the  servant  the  same  work 
at  the  same  price,  but  by  the  week,  the  servant  is  not 
bound  to  accept  it.^  An  employer  may  countermand  the 
doing  of  work  which  he  has  engaged  another  to  do,  and 
if  he  does  so,  and  the  servant  nevertheless  goes  on  and 
completes  it,  he  cannot  recover  for  his  labor  after  the 
countermand,  but  only  damages  which  he  has  suffered  by 
the  breach  of  his  contract."  Where  a  contract  of  hiring 
provides  that  if  the  servant  remains  after  a  year  in  the 
master's  employ  his  wages  shall  be  higher,  and  that  the 
master  may  discharge  him  at  any  time,  the  reasons  of 
the  master  for  discharging  him  are  immaterial,  at  least 


'  Orr  V.  Ward,  73  111.  318. 

^  Wood  on  Master  and  Servant,  sec. 
162. 

=•  Green  v.  Hulett,  22  Vt.  188. 

*  Wood  on  Master  and  Servant,  sec. 
101. 


'  Wachs  V.  Friedmanu,  1 1  Mo.  App. 
602. 

*  Clark  V.  Marsiglia,  1  Denio,  317; 
43  Am.  Dec.  670;  Lord  v.  Thomas,  C4 
N.  Y.  110;  Owen  v.  Friuk,  24  Cal. 
178. 


§§  ^87,  288 


PRINCIPAL  AND  AGENT. 


49G 


where  there  is  no  pretense  of  fraud.*  The  words,  "I  am 
very  sorry  to  have  to  ask  you  to  resign  your  position,"  in 
a  letter  from  an  employer  to  an  employee,  are  properly 
construed  as  a  peremptory  discharge.^ 

§  287.  By  Death  or  Disability.  — The  death  of  either 
party  or  the  permanent  sickness  of  the  servant  ends  the 
contract.* 

§  288.  Rights  of  Master — Injuries  to  Servant  by  Third 
Person. — At  common  law  in  England,  the  master  had  an 
action  against  a  third  person  who  unlawfully  injured  or 
interfered  with  his  servants.  This  right,  however,  was 
restricted  to  menial  servants — those  to  whom  the  master 
stood  in  somewhat  the  relation  of  a  parent — in  loco  paren- 
tis.* At  the  present  time  a  master  has  a  right  of  action 
against  any  person  who  injures  his  servant  whereby  he 
suffers  an  actual  loss.^     Thus  the  master  may  sue  a  car- 


»  Smitli  V.  BuflFalo  Street  R.  R.  Co., 
35  Hun,  204. 

''  Jones  V.  Graham  and  Mcrton 
Transp.  Co.,  51  Mich.  539. 

"  Clark  r.  Gilbert,  2G  N.  Y.  279;  84 
Am.  Dec.  189;  Hul>bard  v.  Belden,  27 
Vt.  G45;  Yerringtou  v.  Greene,  7  R.  I. 
589;  84  Am.  Dec.  578.  A  clerk  is 
hired  for  a  term  of  three  years  at  a 
stipulated  salary,  to  carry  on  a  branch 
store  for  his  employer.  Before  the 
end  of  the  term  the  employer  dies. 
The  contract  is  terminated,  and  no  re- 
covery against  the  estate  of  the  em- 
ployer can  bj  had:  Yerrington  v, 
Greene,  aitpra. 

*  See  remarks  of  Wright,  J.,  in 
Burgess  r.  Carpenter,  2  S.  C.  7;  16 
Am.  Rdp.  G43. 

^  Wood  on  Master  and  Servant, 
sacs.  221,  223;  Dennis  v.  Clark,  2 
Cash.  347;  48  Am.  Dee.  671;  Drew  v. 
R.  R.  Co.,  26  N.  Y.  49;  Ford  v.  Mun- 
roe,  20  Wend.  210.  lu  Woodward  v. 
Washburn,  3  Denio,  309,  the  court 
say:  "It  is  enough  that  the  relation 
of  master  and  servant  exists  between 
the  plaintiff  and  the  person  who  is  dis- 
abled or  prevented  from  performing 
the  service  he  has  contracted  to  per- 


form by  the  tortious  act  of  the  de- 
fendant. It  is  not  necessary  to  sustain 
such  action  to  show  that  the  person 
whose  service  had  been  lost  by  the 
plaintiff  was  either  his  apprentice  or 
child.  The  reason  and  foundation 
upon  which  this  doctrine  is  built 
seem  to  bo  the  property  that  every 
man  has  in  the  services  of  those  whom 
he  has  employed,  acr[uired  by  the  con- 
tract of  hiring,  and  purchased  by  giv- 
ing them  wages.  The  point  of  tlic 
argument  of  the  counsel  for  the  de- 
fendant on  this  part  of  the  case  is,  that 
the  relation  of  master  and  servant 
cannot  exist  quoad  this  action,  except 
between  apprentice  and  master,  parent 
and  child,  or  unless  the  plaintiff  stamls 
in  the  place  of  a  parent  to  the  one 
from  whom  service  is  due.  It  seems 
to  be  conceded  when  that  relation  ex- 
ists, at  d  the  master  has  sustained  loss 
of  service  by  his  servant  being  dis- 
abled by  the  tortious  acts  of  the 
defendant,  that  the  action  lies.  Chan- 
cellor Kent,  in  considering  the  relation 
of  master  and  servant,  subdivides  the 
several  kinds  of  persons  who  come 
within  the  description  of  servants  into 
first,  slaves;  second,  hired  servants; 


490 

!s,  "I  am 

ition,"  ill 

properly 

of  either 
ends  the 


by  Third 

r  had  an 
ijured  or 
Dver,  was 
lO  master 
)coparcn- 
of  action 
ereby  he 
ue  a  car- 

of  the  de- 
'y  to  sustain 

the  person 
lost  by  the 
)prentice  or 

foundation 
10    is    Imilfc 

that  every 
those  whom 
by  the  con- 
ued  by  giv- 
aint  of  tlie 
for  the  de- 
case  is,  that 
,11  d  servant 
;ion,  except 
ster,  parent 
intiff  stands 
to  the  one 
lb  seems 
relation  ex- 
stained  loss 

being  dis- 
cta  of  the 
lies.  Chan- 
the  relation 
•divides  the 

who  come 
ifvants  into 
1  servants; 


497   CONTRACTS  BETWEEN  MASTER  AND  SERVANT.   §  289 

rier  for  injuries  to  a  servant  while  being  carried  by  it,'  or 
a  person  whose  vicious  dog  or  other  animal  bites  or  in- 
jures his  servant.'^  A  railroad  company  may  sue  a  person 
who  maliciously  arrests  one  of  its  engineers  while  run- 
ning the  train  for  the  purpose  of  delaying  it.'  One  en- 
gaging the  servant  of  another  in  an  obviously  dangerous 
task  is  responsible  to  the  master  for  any  injury  received 
by  him  while  so  engaged,  even  though  the  servant  was 
negligent.^  No  actual  contract  to  serve  need  be  proved, — 
it  is  enough  for  the  master  to  show  that  at  the  time  of  the 
injury  he  was  having  the  benefit  of  the  servant's  labor.® 
Where  the  injury  results  in  the  immediate  death  of  the 
servant,  the  master  has  no  right  of  action  at  common 
law.^  This  is  but  one  phase  of  the  common-law  rule  as 
to  actions  for  the  death  of  another, —  a  rule  which  now 
both  in  America  and  England  has  been  altered  by  statute. 

Illustrations.  —  A  clerk  went  to  a  bank  on  business  shortly 
before  the  closing  hour,  and  wliile  he  was  there  the  doors  were 
closed  and  he  was  refused  exit  for  some  time.  Held,  that  an 
action  against  the  bank  for  loss  of  services  by  the  employer  of 
the  clerk  would  lie:    Woodward  v.  Washburn,  3  Denio,  3G9. 

§  ?89.  Enticing  Servant  from  Employment.— And  it 
is  now  held,  both  in  this  country  and  in  England,  that  an 
action  will  lie  by  the  master  against  another  who  know- 
ingly entices  away  his  servant,  or  induces  him  to  break 
his  contract  of  service.^     An  action  will  lie  for  enticing 


and  third,  apprentices.  In  regard  to 
the  second  description,  the  learned 
commentator  says:  'The  relation  of 
master  and  servant  rests  altogether 
upon  contract.  The  one  is  bound  to 
render  the  service,  and  the  other  to 
pay  the  stipulated  consideration.'  And 
again:  'In  England,  there, seems  to  bo 
a  distinction  between  menial  and  some 
other  servants,  but  I  know  of  no  legal 
distinction  between  menial  or  domes- 
tic and  other  hired  servants '":  2 
Kent's  Com.,  4th  ed..  pp.  258  et  seq. 

'  Ames  V.  Union  R.   R.   Co.,    117 
Mass.  541;  19  Am.  Rep.  426. 
Vol.  L- 32 


»  McCarthy  v.  Guild,  2  Met.  291; 
Dennis  v.  Clark,  2  Cash.  347;  48  Am. 
Dec.  G71. 

=*  Railroad  Co.  v.  Hunt,  55  Vt.  570; 
45  Am.  Rep.  639. 

*  Louisville  etc.  R.  R.  Co.  v.  Willis, 
83  Ky.  57;  4  Am.  St.  Rep.  124. 

*  Evans  v.  Walton,  36  L.  J.  Com.  P. 
307;  Martinez  v.  Gerber,  3  Man.  &  G. 
88. 

*  Wood  on  Maater  and  Servant,  sec. 
223;  see  Personal  Rights  and  Reme- 
dies, poii,  Division  II. 

'  Uaskins  v.  Royster,  70  N.  C.  601 ; 
16  Am.  Rep.  78J;  Walker  v.  Crouin, 


289 


PRINCIPAL  AND  AGENT. 


498 


away  a  servant  at  will,  when  a  subsisting  service  is  in- 
terrupted by  the  act  of  the  defendant.*  But  a  person  has 
a  right  to  employ  another's  servant  after  he  has  actually 
left  his  employer,  or  after  his  term  has  expired,  even 
though  but  for  the  new  offer  he  would  have  remained  in 
the  same  service  another  term.^  After  an  infant  has 
disaffirmed  his  voidable  contract  for  personal  services,  a 
person  who  employs  him  is  not  chargeable  with  the 
offense.'  An  action  on  the  case  brought  by  a  father  for 
the  enticing  away  of  his  son  from  his  service  is  not  sup- 
ported by  proof  that  the  defendant,  knowing  that  the  son 
had  left  his  father's  service  without  h  s  father's  consent, 
induced  him  to  enter  into  the  service  of  the  defendant, 
and  detained  him  when  he  wished  to  return.*  The  meas- 
ure of  damages  for  enticing  away  the  servant  of  another, 
who  is  hired  by  the  year,  where  that  other  fails  to  supply 
the  servant's  place,  is  the  direct  loss  suffered,  and  the 
average  net  profits  that  were  made  by  men  of  fair  busi- 
ness capacity,  out  of  the  labor  of  such  a  servant  during 
the  year  for  which  the  enticed  servant  was  hired.'  A 
master  may  recover  damages  of  any  one  who,  after  de- 
mand made,  detains  a  servant.*  Under  a  count  for  har- 
boring or  entertaining  a  servant,  evidence  of  enticement 
is  not  necessary.' 

Illustrations. — Defendant,  for   the    purpose    of  injuring 
plaintiff  and  of  inducing  him  to  abandon  a  lease  of  a  planta- 


107  Mass.  555;  Jones  v.  Blocker,  43  Ga. 
331;  Sabter  v.  Howard,  43  Ga,  601; 
Lumley  v.  Gye,  2  El.  &  B.  216;  Bixby 
».  Dunlap,  50  N.  H.  456;  22  Am.  Rep. 
475;  Daniel  v.  Swearengen,  6  S.  C. 
297;  24  Am.  Rep.  471;  HuflF  v.  Wat- 
kins,  15  S.  C.  8-2;  40  Am.  Rep.  680; 
Butterfield  v.  Ashley,  2  Gray,  254; 
Carew  v.  Rutherford,  106  Mass.  1;  8 
Am.  Rep.  287;  Melburne  v.  Byrne,  1 
Cranch  C.  C.  239;  Haight  v.  Badgely, 
15  Barb.  499;  contra.  Burgess  v.  (Jar- 
penter,  2  Rich.  7;  16  Am.  Rep.  643. 

»  Noice  V.  Brown,  39  N.  J.  L.  669. 

»  Sykes  v.  Dixon,  9  Ad.  &  E.  693; 


Hart  V.  Aldridge,  Cowp.  54;  Nichols 
V.  Martyn,  2  Esp.  732;  Boston  Glass 
Co.  V.  Bitmey,  4  Pick.  425.  The  Ten- 
nessee statute  covers  the  case  of  one 
who  hires  without  knowledge  of  a 
previous  contract  of  hire,  if  he  fails  to 
discharge  the  laborer  on  being  notified 
that  the  latter  is  under  a  contract  or 
has  violated  it:  Morris  v.  Neville,  11 
Lea,  271. 

^  Langl  -.m  v.  State,  55  Ala.  1 14. 

*  Butterfield  v.  Ashley,  2  Gray,  254. 

*Leev.  West,  47  Ga.  311. 

«  Ferrell  v.  Boykin,  Phill.  (N.  C.)  9. 

^  Duboiii  V.  Allen,  Auth.  128. 


498 


409       CONTRACTS   BETWEEN   MASTER   AND   SERVANT.      §  290 


e  13  m- 
•son  has 
actually 
>cl,  even 
lined  in 
ant   has 
vices,  a 
ith   the 
ther  for 
tiot  sup. 
the  son 
jonsent, 
endant, 
e  meas- 
mother, 
•  supply 
md  the 
ir  busi- 
during 
•ed.«    A 
fter  de- 
br  har- 
cemeut 


injuring 
planta- 

•;  Nichols 
ton  Glass 
The  Ten- 
i.se  of  one 
Ige  of  a 
ic  fails  to 
g  notified 
ntract  or 
Bville,  11 

.  114. 
ray,  254. 

N.  C.)  9. 
8. 


tion,  persuaded  and  threatened  plaintifTs  laborers,  so  that  they 
h'ft  him.  Jlcld,  that  defendant  was  liable  for  tlio  dnrnago  thus 
sustained:  Dirhon  v.  IHchon,  33  La.  Ann.  1201.  On  tlio  trial 
of  an  action  for  enticing  away  plaintiff's  servants,  it  nppcarcu 
that  dt'fcndaiit'fl  conduct  was  of  an  apjrravatcd  character. 
Held,  that  a  verdict  for  the  net  profits  which  plaintiff  wouM 
have  realized  hut  for  defendant's  conduct,  and  for  plaintiff's 
loss  by  reason  of  his  inability  to  improve  his  property,  was 
properly  rendered,  and  not  excessive:  Smith  v.  Goodman,  75 
Ga.  198. 

§  290.  Combinations  among  Workmen, — Every  man 
has  a  right  to  work  for  whom  he  pleases,  and  on  what 
terms  ho  pleases.  He  may  refuse  to  deal  witii  a  particu- 
lar man  or  class  of  men.  It  is  perfectly  legal  for  any 
number  of  persons,  without  an  unlawful  object  in  view, 
to  agree  that  they  will  not  work  for  or  deal  with  certain 
persons,  or  under  a  fixed  price,  or  without  certain  condi- 
tions.^    The  test  is  the  legality  of  the  intent.     Thus  it 


^  Carew  r.  Rutherford,  106  Mass.  1 ; 
8  Am.  Rep.  287;  Walker  v.  Cronin, 
107  Mass.  555;  Boston  Glass  Co.  r.  Bin- 
ncy,  4  Pick.  425;  Bowen  v.  Mathe- 
eon,  14  Allen,  409.  This  subject  lies 
more  properly  in  the  criminal  law,  — 
the  huv  of  conspiracy.  For  a  learned 
dijcusaio-i  of  the  law  as  to  conspira- 
cie  J  to  control  wages  of  workmen,  see 
People  V.  Fisher,  14  Wend.  9,  and 
noto  ill  28  Am.  Dec.  at  page  507. 
Commonwealth  v.  Hunt,  4  Met.  Ill, 
38  Am.  D(!c.  34(),  is  a  leading  case. 
Here  Shaw,  C.  J.,  says:  "The  de- 
fendants and  others  formed  them- 
selve;3  into  a  society,  and  agreed  not 
to  work  for  any  person  who  should 
employ  any  journeyman  or  other  per- 
son not  a  member  of  such  society  after 
notice  given  him  to  discharge  such 
workman.  The  manifest  intent  of 
the  association  is  to  induce  all  those 
engaged  in  the  same  occupation  to  be- 
come members  of  it.  Such  a  purpose 
is  not  unlawful.  It  would  give  them 
a  power  which  might  be  exerted  for 
useful  and  honorable  purposes,  or  for 
dangerous  and  pernicious  ones.  If 
the  latter  were  the  real  and  actual 
object,  and  susceptible  of  proof,  it 
should  have  been  specially  charged. 


Such  an  association  might  be  used  to 
afford  each  other  assistamc  in  times 
of  poverty,  sickness,  and  distress;  or 
to  raise  their  intellectual,  moral,  an. I 
social  condition;  or  to  make  improve- 
ment ia  their  art,  or  for  other  proper 
purposes;  or  the  association  might  be 
designed  for  the  purposed  of  oi>prc> 
sion  and  injustice.  But  in  order  to 
charge  all  those  who  become  members 
of  an  association  with  the  guilt  of  a 
criminal  conspiracy,  it  must  be  averred 
and  proved  that  the  actual  if  not  tlie 
avowed  object  of  the  association  was 
criminal.  An  association  may  be 
formed,  the  declared  objects  of  whieh 
are  innocent  and  laudable,  and  yet 
they  may  have  secret  articles,  or  a:i 
agreement,  communicated  only  to  the 
members,  by  which  they  are  banded 
together  for  purposes  injurious  to  the 
peace  of  society  or  the  rights  of  its 
members.  Such  would  undoubtedly 
be  a  criminal  conspiracy,  on  proof 
of  the  fact,  however  meritorious 
and  praiseworthy  the  declared  ob- 
jects might  be.  The  law  is  not  to  be 
hoodwinked  by  colorable  pretenses. 
It  looks  at  truth  and  reality,  through 
whatever  disguise  it  may  assume. 
But   to    make   such   an   association, 


290 


PRINCirAL   AND   AGENT. 


500 


has  boon  hold  that  an  agreement  hctwoon  members  of  a 
society  not  to  ship  sailors  below  a  spcoificd  rate  of  wages 
is  not  criminal/  nor  an  agreement  not  to  teach  a  new 
liand  the  trade  of  the  members  without  the  consent  of 
the  society."  But,  on  the  other  hand,  a  conspiracy  to  ob- 
tain a  sum  of  money  from  an  employer  by  inducing  his 
•workmen  to  leave  him,  and  deterring  others  from  en- 
gaging with  him,  is  illegal.^  Any  association,  in  short, 
designed  to  coerce  workmen  to  become  members,  or  to 
dictate  terms  to  employers  on  which  their  business  shall 
bo  conducted,  by  means  of  threats  of  loss,  interference 
with  their  property,  traffic,  or  lawful  employment  of  other 
persons,  is  pro  tanto  an  illegal  combination,  and  any  do- 
ings in  furtherance  of  such  design  accompanied  by  dam- 
ago  are  actionable."* 


oston8il)ly  innocent,  the  subject  of 
prosecution  as  a  criminal  conspiracy, 
the  secret  agreement  which  niakoa  it 
so  is  to  1)0  averred  and  proved  as  tlie 
gist  of  the  offense.  But  when  an 
association  is  formed  for  purposes 
actually  innocent,  and  afterward  its 
power.s  are  abused  by  those  who  have 
the  control  and  management  of  it  to 
purposes  of  oppression  and  injustice, 


it  will  bo  criminal  in  those  who  tlius 
niisuMO  it,  or  give  consent  tliereto,  but 
not  in  the  other  members  of  tlio  asso- 
ciation." 

'  Brown  v.  Matheson,  14  Allen,  •'503. 

"  Snow  r.  Wheeler,  113  Muss.  Ib5. 

^  Carew  ?'.  Rutherford,  100  Mass.  1; 
8  Am.  Rep.  287. 

*  Old  Dominion  S.  S.  Co.  i;.  Mc- 
Kenna,  30  Fed.  Rep.  48. 


500 


501 


LIABILITIES   OF   MASTEU   AND   SERVANT. 


§201 


CHAPTER   XXIII. 


S2')L 
§  2!)2. 
S  '2'X\. 

?  'Ji>r>. 
§  •:!»(). 

S  '->!)7. 
S  'JilS. 
<i  •-'<.»!). 
Ji  'M). 
{!.•(()  I. 
i5  'M)2. 
S  'Mi. 

s  :m. 
S  mi. 

Si  'Mi. 

^  :w7. 

!i  'MS. 
§  'MJ. 
S  310. 

§:in. 

§  :{i:{. 
§yi4. 

§  315. 

§310. 

§  317. 
§  318. 
§  319. 
§  320. 
§  321. 
§  322. 

§  323. 
§  324. 
§  325. 
§320. 


LIABILITIES  OF    MASTER  AND  SERVANT. 

Master  iu  litiMo  for  torts  of  servant. 

Williul  uiul  inalicidUH  acts  of  servant. 

'J'riiMpiiHauH  of  Murvuiit. 

Who  uro  "  .servants  "  witliin  proviouH  scctioiiH. 

MaHtor  not  liaMc  for  acts  of  indepcridoiit  contractor. 

Exciptions  —  VVliero  work  in  a  iiui-ianco  or  dangerous  per  se. 

Excrj>tion.s — Wiiuro  duty  in  iiniioHud  by  contract. 

Exc(;i)tions  —  Wlicro  duty  Ih  iinposodby  law. 

Kxceptions  — Where  enii>loyer  interforcH  with  or  directs  work. 

Excciitions  —  Other  cases  wiicro  employer  is  liable. 

Ma.ster  not  liable  for  injury  to  Hcrvaut. 

Ex(!cptious  — Defective  machinery,  buildings,  or  appliances. 

Exceptions  —  Latent  defects  and  dangers. 

]>uty  of  railroad  coni])anies  to  servants  employed. 

Knowledge  by  master  of  defect  necessary. 

Direct  negligence  of  master. 

C'oncurrent  negligence  of  master  and  fellow-servant. 

Unsuitable  or  incompetent  fellow-servants. 

Rule  where  servant  is  an  infant  or  minor.  ^ 

Statutory  provisions  as  to  liability  of  master  to  servant. 

Servant  waives  danger  by  entering  or  remaining  in  service  knowing  of  it. 

A  liter  where  ho  complains  and  master  promises  to  remedy. 

Contributory  negligence  of  servant  —  Failing  to  notify  master  of  defect. 

Contributory  negligence  of  servant  —  Going  into  dangerous  situation 

by  command  of  master. 
Contributory  negligence  of  servant  —  Other  cases  of  contributory  neg- 

ligence. 
Contributory  negligence  of  servant  —What  not  contributory  negligence 

in  servant. 
Doctrine  of  "  comparative  negligence." 
Contracts  between  master  and  servant  as  to  injuries. 
Who  are  "  fellow-servants  "  —  Common  employment  the  test. 
Who  are  not  "  fellow-servants." 

Superior  servant  having  control  of  inferiors  a  vice-principal. 
Servant  having  charge  of  construction  or  repair  of  macliinery  used  by 

other  servants. 
Servants  of  different  masters. 

When  relation  of  master  and  servant  does  not  subsist — Time. 
Volunteer  assisting  servant. 
Evidence  of  incompetence  of  fellow-servaat. 


§291 


PRINCIPAL  AND  AGENT. 


502 


8  ;V27.     Evidence  of  iii-gligonco  in  selecting  aud  maintaining  marhinefl  and  ap- 

plianecH  —  C'uaoa  wliure  it  wa8  held  aufiiciently  sliown. 
S  328.     Saino  —  Ciihoh  whuru  it  was  held  not  aufliciontly  sbowUi 
8  •H'ii).     Liability  of  ttervant  to  third  porson. 
$  3',iO,     Liability  of  Bcrvant  to  master. 
§  3.11.     Liability  of  servant  to  fellow-servant. 


§  291.  Master  is  Liable  for  Torts  of  Servant. — A  master 
i.s  liable  civilly  for  wrongs  eominittetl  by  his  servant  while 
acting  about  his  business.*  A  master  is  civilly  liable  to  a 
statutory  penalty  for  an  illegal  sale  of  intoxicating  liquor, 
made  by  his  servant  without  his  knowledge  or  consent, 
and  against  his  instruction."  A  railroad  company  is  liable 
for  its  servant's  negligence  in  leaving  down  the  bars  in 
a  fence,  v,  here  the  plaintiff's  horses  escaped  and  were  killed 
by  a  passing  train,  though  the  servant  was  employed  as  a 
day-luborer,  and  his  act  was  done  in  the  night-time,  and 


'  Yates  V.  Squires,  19  Iowa,  20;  87 
Am.  Dee.  418;  Zulitco  v.  Wing,  20 
Vfu.  40S;  yi  Am.  Dec.  425;  Hart  v. 
Railroad  Co.,  1  Hob.  (La.)  178;  30  Am. 
Dec.  089;  Johnson  v.  Barber,  5  Clilm. 
425;  CD  Am.  Dec.  410;  Powell  v.  Do- 
venoy,  3  Ciish.  T.OO;  50  Am.  Dec.  7.38; 
Pickona  v.  Dreckcr,  21  Ohio  St.  212;  8 
Am.  llcp.  55;  C'osgrovo  v.  Ogilen,  49 
N.  Y.  255;  10  Am.  llcp.  301;  Black  v. 
Pviilroad  Co.,  10  La.  Ann.  33;  03  Am. 
Dec.  580;  Mooro  ?».i'itcliburglt.  R.  Co., 
4  Gra^',  405;  04  Am.  Due.  83;  Corrigan 
V.  Union  Sugar  Relinery,  98  Mass.  577; 
9v)  Am.  Dec.  085;  Donaldson  v.  Rail- 
road Co.,  18  Iowa,  280;  87  Am.  Dec. 
391;  Satterficll  v.  Western  Union  Tel. 
Co.,  23  III.  App.  440;  Turbervillo  v. 
Stampe,  I  Ld.  Kaym.  20;  HilsJorf  v. 
St.  Louis,  45  Mo.  94;  100  Am.  Dec. 
352;  Mintcrn  Pacific R.  R.  Co.,  41  Mo. 
603;  97  Am.  Doc.  288;  Liuipus  v.  Lon- 
don etc.  Omnibus  Co.,  1  Hurl.  &  C. 
520;  Pennsylvania  etc.  Steam  Nav. 
Co.  V.  Hungerford,  0  Gill  &  J.  291; 
Illinois  etc.  R.  R.  Co.  v.  Reedy,  17 
111.  582;  Noble  v.  Cunningham,  74  111. 
51;  Cook  V.  Parham,  24  Ala.  21;  Don- 
aldson ?•.  Mississippi  eto.  R.  R.  Co.,  18 
Iowa,  280;  87  Am.  Dec.  391;  Arm- 
strong V.  Cooley,  10  111.  509;  Snyder 
t;.  Hannibal  etc.  R.  R.  Co.,  00  Mo.  413; 
Simons  v.  Mooier,  29  Barb.  420;  Gil- 


martin  V.  New  York,  55  Barb.  239; 
Lannen  v.  Albany  (im  Li^lit  Co.,  40 
Barb.  204;  44  N.  Y.  459;  Chapman  r. 
New  York  etc.  R.  R.  Co.,  31  Buili. 
399;  .33  N.  Y.  309;  88  Am.  Dec.  392; 
Courtney  v.  Baker,  00  N.  Y.  1;  D.iy 
V.  Brooklyn  etc.  R.  R.  Co.,  12  lluii, 
435;  Leviness  v.  Post,  G  Daly,  321; 
Tuel  V.  Weston,  47  Vt.  0.34;  Euos  /•. 
Hamilton,  24  Wis.  028;  MeCalull  r. 
Kipp,  2  E.  D.  Smith,  413;  Thomiis 
V.  Winchester,  0  N.  Y.  397;  57  A;n. 
Dee.  455;  Ryall  r.  Kennedy,  8  Joius 
&  S.  347;  Harriss  v.  Mabry,  1  Iretl. 
240;  Burns  v.  Poulsoni,  L.  R.  8  Com. 
P.  503;  Venables  v.  Smith,  L.  R.  2 
Q.  B.  Div.  279;  Whitcley  v.  Pepper, 
L.  R.  2  Q.  B.  Div.  270;  Pickard  v. 
Smith,  10  Com.  B.,  N.  S.,  470;  Bootii 
V.  Mister,  7  Car.  &  P.  00;  Sadler  v. 
Henlock.  4  El.  &  B.  7t>;  1  '  .  N. 
S.,  077;  24  L.  '  Q  .  13S;  Foivman 
V.   Canterbi"  •  ,    (>  Q.    B.    -14; 

Whatman  n,  L.  R.  3('o       P. 

422;  Mitcli.  Crassweller,  lil       'in. 

B.  235;  Wil.  ■.  v.  Rock'  uid  Mfg.  Co., 
2  Harr.  (Del.)  (^T;  IV  imtt  v.  Bristol 
etc.  R.  R.  Co.,  L.  R  0  Q.  B.  73;  1!) 
Week.  Rep.  383;  40  L.  J.  Q.  B.  78; 
Holmes  v.  Wakefield,  12  Allen.  580; 
90  Am.  Dec.  171. 

» George  v.  Gobey,  128  Mass.  289; 
35  Am.  Rep.  376. 


602 

inen  and  ap< 


503 


LIABILITIES   OF   >LVSTEU  AND   SEIIVANT. 


§201 


A  master 
lilt  while 
able  to  a 
g  liquor, 
consent, 
J  is  liable 
3  bars  ill 
3ro  killed 
)yed  as  u 
iiiio,  and 

Barb.  230; 

^ht  Co.,  4G 

L'hapiiimi  r. 

i.,  31   Barb. 

n.  Dec.  3i)2; 

i  Y.  1;  Day 

>.,  12  Hun, 

Daly,   321; 

34;  Euds  V. 

VlcCahill  V. 

'J;    Th(tiiia8 

97;  o?  Aiii. 

ly,  8  Jdiics 

■y,  1  Ii'L'il. 

R.  8  Com. 

L.   R.   2 

Pepper, 

Pickanl  v. 

470;  Bootli 

S.idlc'r  V. 

N. 

S;  i'di 

(J.    B. 

3C.. 

■,  i:i 

I  Mf|; 

:  •('.  Bristol 

B.  73;  1!) 

Q.  B.  78; 

Allen.  580; 

Mass.  289; 


mail 

■J14; 

P. 

>iii. 

Co., 


not  in  the  business  of  the  company.'  But  the  servant's 
act  must  bo  within  the  scopo  of  his  employment."  The 
master  is  not  liable  while  the  servant  is  acting  outside  of 
his  business.^  A  railroad  company  is  not  liable  for  dam- 
age to  property  adjoining  its  road,  by  a  lire  kindled  by  its 
section-men  for  the  purpose  of  cooking  their  meals  while 
engaged  in  repairing  the  track.'*  One  employed  to  sell 
goods  in  his  emi)loycr's  absence,  or  to  superintend  his 
employer's  business  at  a  particular  store,  has  no  implied 
authority  to  arrest  and  search  a  person  suspected  of  having 
stolen  goods  and  secreted  them  about  his  person  so  as  to 
render  the  employer  liable  in  damages  for  such  an  arrest 
and  search.''  The  owner  of  a  bridge  is  not  liable  for  in- 
jury caused  by  the  bite  of  a  dog  belonging  to  his  toll- 
keeper,  if  it  appears  that  he  did  not  authorize  or  require 
the  dog  to  be  kept,  and  that  it  was  not  needed  for  the 
conduct  or  protection  of  the  business  in  which  the  owner 
of  the  dog  was  employed."  A  master  who  permits  his  ser- 
vant to  go  to  a  fair  with  a  horse  and  cart  is  not  liable  for 
damage  arising  from  the  servant's  negligent  management 
of  the  horse.'     A  father  is  not  liable  for  injuries  caused 


»  Chapman  v.  Railroad  Co.,  33 N.  Y. 
309;  88  A  n.  Dec.  392. 

JReilly  v.  Railroad  Co.,  94  Mo. 
600. 

"  Mitchell  V.  Crass  waller,  13  Com. 
B.  230;  McManus  v.  Crickott,  1  East, 
100;  Wright »'.  Wilcox,  19  Wend.  343; 
32  Am.  Dec.  507;  Douglass  v.  Stephens, 
18  Mo.  302;  McClenagan  v.  Brock,  5 
Rich.  17;  Mali  j-.  Lord,  39  N.  Y.  381; 
100  Am.  Dec.  448;  McKenzio  v.  Mc- 
Leoil,  10  Bing.  385;  Snyder  v.  Hanni- 
bal etc.  R.  R.  Co.,  GO  Mo.  413;  Hudson 
V.  Missouri  etc.  R.  R.  Co.,  16  Kan. 
470;  Lamb  v.  Lady  Palk,  9  Car.  &  P. 
629;  Haack  v.  Fearing,  5  Robt.  528; 
35  How.  Pr.  459;  Wilson  v.  Peverly, 
2  N.  H.  548;  McCoy  v.  McKowen,  20 
Miss.  487;  59  Am.  Dec.  204;  Cavanagh 
V.  Dinsmore,  12  Hun,  405;  Cousins  v. 
Hannibal  etc.  R.  R.  Co.,  66  Mo.  572; 
6  Cent.  L.  J.  294;  Mitchell  r.  Crass- 
weller,  13  Com.  B.  236;  Cantrell  v. 
ColweU,  3  Head,  471;  Bard  v.  Yobn, 


26 Pa.  St.  482;  Campbell?'.  Providence, 
9  R.  L  262;  Storey  v.  A-ihton,  L.  R.  4 
Q. B.  476;  Rayiier  v.  M  itchell,  2 Com.  P. 
357;  Sleath  r.  Wilson,  9  Car.  k  P.  (507; 
Heath  v.  Wilson,  2  Muoily  &  R.  181; 
Joel  V.  Morrison,  G  Car.  &  P.  501; 
Goodn'.au  r.  Keiintll,  1  Car.  &  P.  107; 
Tatten  v.  Rea,  2  Com.  B.,  N.  S.,  606; 
Lyons  v.  Martin,  8  Ad.  &  E.  512; 
Yates  r.  Squires,  19  Iowa,  20;  87  Am. 
Dec.  418;  Porter  ?•.  Chicago  (.to.  R.  R. 
Co.,  41  Iowa,  358;  lliggins  ?•.  Chesa- 
peake etc.  Canal  Co.,  3  Ilarr.  (Del.) 
411.  Sue  the  sections  on  Liability  of 
Principal  for  Acts  of  Agent,  for  a  fuller 
exposition  of  this  principle;  also  Bail- 
ments, subtitle  Carriers. 

*  Morier  v.  Railroad  Co.,  31  Minn. 
351 ;  47  Am.  Rep.  793. 

»Mali  V.  Lord,  39  N.  Y.  381;  100 
Am.  Dec.  448. 

«  Baker  v.  Kinsey,  38  Cal.  631;  99 
Am.  Dec.  438. 

'  Bard  v.  Yohn,26  Pa.  St.  482. 


§291 


PRINCIPAL  AND  AGENT. 


504 


by  the  negligence  of  his  son,  who  was  also  his  hired  man, 
in  insecurely  fastening  a  liorse,  the  property  of  his  father, 
the  son  taking  the  horse  without  the  knowledge  of  his 
father,  and  not  being  engaged  in  his  business.*  If  a  car 
porter  throws  a  bundle  of  his  own  eflects  out  of  the  car 
window,  the  railroad  company  is  not  liable  to  one  struck 
byit.^ 

Illustrations. — Master  Held  Liable. — A  warehouseman 
employed  a  muster  porter  to  remove  a  barrel  from  his  ware- 
house. The  master  porter  employed  his  own  men  and  tackle. 
Through  the  negligence  of  one  of  his  men,  the  tackle  failed, 
and  the  barrel  fell  on  the  plaintiff.  Held,  that  the  warehouse- 
man was  liable:  Randleson  v.  Murray,  8  Ad.  &  E.  109.  The 
defendant,  owner  of  an  express  wagon,  employed  a  driver,  with 
authority  to  secure  and  transact  such  business  as  he  could. 
The  driver,  having  delivered  a  trunk,  on  his  return  got  a  load 
of  poles  for  himself,  and  while  carrying  them  home  on  the 
wagon  negligently  ran  over  and  injured  the  plaintiff's  child. 
Held,  that  the  defendant  was  liable:  Mulvehill  v.  Bates,  31 
Minn.  3G4;  47  Am.  Rep.  796.  Defendant  was  the  keeper  of  a 
gun  store.  His  servant,  a  clerk  in  the  store,  while  engaged, 
during  defendant's  absence,  in  exhibiting  a  gun  to  a  customer, 
loaded  it,  contrary  to  defendant's  orders.  In  so  doing  it  was 
accidentally  discharged,  and  shot  the  plaintiff,  who  was  on  the 
opposite  side  of  the  street.  Held,  that  the  defendant  was  liable 
for  the  injuries:  Garretzen  v.  Duenckel,  50  Mo.  104;  11  Am.  Rep. 
405.  A  toll-gate  keeper,  having  charge  of  the  gate  at  all  times, 
but  not  required  to  collect  toll  at  night  after  nin^^  o'clock,  let 
the  beam  of  the  gate  down  upon  the  plaintiflf,  who  "'us  endeav- 
oring to  pass  the  gate  after  that  hour,  and  injured  him.  Held, 
that  the  company  was  li  Vic:  Noblesville  etc.  Road  Co.  v.  Gausc, 
76  Ind.  142;  40  Am.  Lep.  224.  A  druggist's  clerk  gives  a 
customer,  by  mistake,  a  poisonous  drug  instead  of  the  prescrip- 
tion called  for,  whereby  the  latter  is  injured.  The  n)aster  ]s 
liable:  Fleet  v.  Hollcnkemp,  13  B.  Mon.  219;  56  Am.  Dec.  568. 
In  the  absence  of  his  master,  a  general  farm  servant,  working 
in  his  master's  cornfield  with  other  servants,  undertook  to  drive 
out  a  cow  of  the  plaintiff  which  had  broken  into  the  field,  and 
in  so  doing  negligently  struck  her  with  a  stone,  and  killed 
her  while  she  was  in  the  field.  Held,  that  the  master  was 
liable:  Evans  v.  Davidson,  53  Md.  245;  36  Am.  Rep.  400. 
The  plaintiff's  horse  was  killed  without  negligence  of  the  plain- 

'  Way  r.  Powers,  57  Vt.  135.  Sleeping   Car    Company,    139    Mass. 

'  Walton    V.    New    York    Central    556. 


504 


505 


LIABILITIES  OP   MASTER  AND  SERVANT. 


§291 


ed  man, 
i  father, 
e  of  his 
If  a  car 
the  car 
e  struck 


ouseman 
lis  ware- 
l  tackle, 
e  failed, 
rehouse- 
)9.     The 
^er,  with 
e  could. 
t  a  load 
•■  on  the 
's  child. 
^ates,  31 
per  of  a 
engaged, 
astomer, 
g  it  was 
s  on  the 
as  liable 
.m.  Rep. 
11  times, 
lock,  let 
cndcav- 

.  Held, 

.  Oaiisc, 
gives  a 
•rescrip- 
aster  js 
'oc.  568. 
tvorking 
to  drive 
!ld.  and 
1  killed 
ter  was 
p.  400. 
3  plain- 

>9    Mass. 


tiff's  servant,  who  had  charge  of  him,  by  reason  of  a  span  of 
horses  belonging  to  the  defendant,  which  had  run  away  with 
his  coachman,  running  against  a  feed  wagon  in  the  public 
street.  Held,  that  although  the  horses  might  have  run  away 
without  any  fault  or  negligence  of  the  defendant's  servant,  yet 
the  defendant  was  liable  if  the  servant  caused  the  injury  by 
running  against  the  feed  wagon,  although  he  ran  against  it 
solely  with  a  view  to  his  own  personal  safety,  provided  the  act 
was  a  prudent  one,  by  which  to  stop  the  defendant's  horses: 
Wolfe  V.  Mersereau,  4  Duer,  473.  The  owner  of  a  lot  of  land 
occupied  by  his  servant  directed  him  to  summer-fallow  a  part 
of  it,  and  in  order  to  prepare  the  land  for  the  plow,  the  ser- 
vant cut  down  and  placed  in  piles  on  one  side  the  brush  grow- 
ing upon  the  premises,  and  then  at  a  time  of  unprecedented 
drought,  when  the  act  was  negligent  in  itself,  directed  his  son, 
a  lad,  to  set  fire  to  the  brush  heaps,  which  he  di  1.  and  thereby 
fire  was  communicated  to  the  plaintiff's  wooUfi.  Held,  that 
the  removal  of  the  brush  was  within  the  scope  of  the  servant's 
employment;  that  the  act  of  firing  was  the  act  of  the  servant, 
and  that  the  master  was  liable:  Simons  v.  Monier,  29  Barb. 
419.  Defendant,  a  boiler-maker,  had  just  completed  a  boiler 
for  a  customer.  The  boiler  stood  in  the  street  in  front  of  de- 
fendant's manufactory,  and  defendant  told  his  superintendent 
to  test  it.  The  customer  asked  for  a  test  under  180  pounds 
pressure;  defendant  said  that  150  pounds  was  enough.  The 
superintendent  said  that  he  would  test  it  "200  anyhow." 
When  the  pressure  was  applied,  defendant  and  the  customer 
htid  walked  away.  After  a  pressure  of  198  pounds,  the  super- 
intendent took  hold  of  and  held  d&vvn  the  lever,  when  the 
boiler  exploded,  and  plaintiff,  who  was  standing  in  the  street, 
was  injured.  Held,  that  the  act  of  the  superintendent,  though 
reckless  and  fool-hardy,  was  within  defendant's  business: 
Ochsenbein  v.  Shapley,  85  N.  Y.  214.  The  servants  of  the  pro- 
pricitor  of  a  blacksmith-shop  were  guilty  of  negligence  and 
unskillfiilness.  He  left  them  in  charge  of  his  shop,  and  they 
were  intrusted  by  him,  in  the  proprietor's  absence,  with  the 
task  of  shoeing  his  horse,  although  they  were  not  employed  for 
the  purpose  of  shoeing  horses.  Held,  that  the  proprietor  was 
lia])le.  Finding  them  in  charge  and  at  work,  the  plaintiff  had 
a  right  to  assume  that  they  had  authority  and  sufiicient  skill: 
Levincss  v.  Post,  6  Daly,  321.  The  owner  of  a  steamboat,  the 
custom  on  which  was  to  notify  passengers  when  their  landings 
were  reached,  held,  to  be  liable  for  the  negligen,je  of  two  par- 
ties, one  representing  the  officers  of  the  boat,  and  the  other 
representing  the  clerk,  in  directing  a  lady  to  disembark  at  a 
wrong  landing  in  the  night:  Carson  v.  Leathers^  57  Miss.  G50. 


§291 


PRINCIPAL   AND   AGENT. 


506 


A  servant  employed  by  a  flour  merchant  to  deliver  goods,  hav- 
ing started  out  with  a  wagon  load  for  different  customers,  left 
by  the  roadside  several  bags  of  bran  while  he  went  upon  a 
bide  road  to  deliver  a  quantity  of  flour,  intending  to  take  the 
bran  on  his  return;  his  object  being  to  save  an  unnecessary 
transportation  of  the  bran,  and  thus  finish  the  delivery  sooner, 
and  thus  get  time  to  attend  to  some  private  business  of  his 
own.  Held,  that  in  leaving  the  bags  by  the  roadside  he  was 
to  be  regarded  as  acting  in  the  master's  employment,  and  that 
the  latter  was  liable  for  an  injury  caused  by  the  fright  of  a 
hcrse  driven  by:  Phelon  v.  Stiles,  43  Conn.  426.  The  occupant 
of  an  upper  tenement  held  to  be  liable  for  damages  done  to 
the  lower  one,  by  an  overflow  of  water,  caused  by  the  negligence 
of  his  servant  in  leaving  a  faucet  open:  Simontoa  v.  Loring,  68 
Me.  164;  28  Am.  Rep.  29.  Plaintiff's  husband,  while  drunk, 
lay  down  on  a  street-car  track,  and  the  driver  of  the  car, 
though  seeing  an  object  which  he  thought  to  be  a  bundle  of 
grain,  made  no  effort  to  stop  his  car,  in  which  ho  could  easily 
have  succeeded,  but  drove  directly  over  the  person,  and  so 
killed  him.  Held,  that  the  company  was  liable:  Werner  v. 
Citizens'  Wy  Co.,  81  Mo.  368.  A  master  instructed  his  servant 
to  go  to  a  certain  place  and  kill  a  beef,  and  the  servant  went, 
and  finding  no  animal  there  but  plaintiff's  bull,  killed  and 
dressed  that.  Held,  that  the  master  was  liable:  Maier  v.  Ran- 
dolph, 33  Kau.  340. 

Illustrations  Continued.  —  Master  Held  not  Liable. — 
A  coachman  after  having  gone  on  an  errand  for  his  master,  in- 
stead of  going  back  to  the  stable,  used  the  carriage  in  going  on 
some  business  of  his  own  without  his  master's  knowledge,  and 
while  so  driving  injured  a  person.  Held,  that  the  master  v^as 
not  liable:  Sheridan  v.  CharlicJc,  4  Daly,  338.  A  minor  son, 
who  had  been  permitted  to  use  his  father's  horse  and  wagon 
without  restriction,  took  them  in  the  absence  and  without  the 
knowledge  of  his  father  on  business  of  his  own,  left  the  horse 
unfastened  in  the  street,  and  the  horse  ran  away  and  injured 
the  plaintiff's  carriage.  Held,  that  the  father  was  not  liable: 
Maddox  v.  Brown,  71  Me.  432;  36  Am.  Rep.  336.  The  defend- 
ants ordered  their  teamster  to  deliver  a  wagon-load  of  paper  to 
Taylor  in  Glastonbury,  four  miles  distant,  and  to  return  by 
way  of  Nipsic  with  a  load  of  wood.  On  reaching  Taylor's  the 
latter  requested  the  teamster  to  carry  the  paper  to  Hartford, 
four  and  a  half  miles  farther,  and  at  the  railway  station  there 
to  get  some  freight  of  Taylor's  and  bring  to  him.  The  teamster 
consented,  and  while  he  was  paying  the  freight-bill  at  the  sta- 
tion, the  team,  being  left  unfastened,  ran  away  and  injured 


507 


LIABILITIES   OP   MASTER   AND   SERVANT. 


§  292 


plaintiff's  property.  Held,  that  defendants  were  not  liable  there- 
for: Stone  V.  mils,  45  Conn.  44;  29  Am.  Rep.  G;55.  The  plain- 
tiff put  his  marc  in  the  defendant's  livery-stable  for  keeping, 
instructing  r  servant  of  the  latter  to  exercise  her,  but  this  was 
not  part  of  the  contract  of  keeping.  The  mare  tlied  in  conse- 
quence of  immoderate  riding  by  the  servant.  Held,  that  the 
defendant  was  not  responsible:  Adams  v.  Cost,  G2  Md.  264;  50 
Am.  Rep.  211.  A  truck-driver  in  defendant's  employment  ran 
over  a  person  while  away  from  his  proper  course,  having  gone 
at  the  request  of  a  third  person,  a  friend  of  his  own,  to  deliver 
a  trunk  unconnected  with  defendant's  business.  Held,  that 
defendant  was  not  liable:  Cavanagh  v.  Dinsmore,  12  Hun, 
465.  A  master  of  a  ferry-boat  left  the  wharf  of  the  owners 
without  the  direction  of  their  agent,  who  alone  possessed  au- 
thority to  start  the  boat  upon  each  trip,  and  took  a  burning 
barge  in  tow.  After  towing  the  barge  some  distance,  he  was 
obliged  to  cut  it  loose,  and  it  drifted  against  a  yacht  and  dam- 
aged it.  Held,  that  the  master  of  the  ferry-boat  was  acting 
without  the  scope  of  his  employment,  and  the  owners  of  his  boat 
were  not  liable  for  the  injury  to  the  yacht:  Ayrrigg  v.  Uailroad 
Co.,  30  N.  J.  L.  460.  Defendant's  armed  watchman,  employed 
to  guard  his  brewery,  fatally  shot  C.  as  he  was  retreating  from 
the  brewery.  Held,  that  he  was  not  liable  in  damages  for  the 
servant's  act,  it  not  being  in  the  line  of  his  duty:  Golden  v. 
Newhmnd,  52  Iowa,  59;  35  Am.  Rep.  257.  A  servant  is  di- 
rected to  drive  cattle  out  of  a  certain  field,  and  ho  drives  them 
elsewhere  than  out  of  the  field,  and  one  of  them  dies.  The 
master  is  not  liable:  Oxford  v.  Peter,  28  111.  434. 

§  292.  Willful  and  IVIalicJous  Acts.— It  is  held  in  a 
number  of  decided  cases  that  where  the  servant  acts  will- 
fully and  maliciously  in  doing  a  wrong  to  another  the 
master  is  not  liable,  even  though  he  does  the  act  in  the 
pursuit  of  his  master's  business,^  unless  the  master  au- 
thorized the  particular  act  or  ratified  it  after  it  was  com- 


'  Vanderbilfc  v.  Turnpike  Co.,  2  N. 
Y.  479;  51  A'n.  Dec.  315;  Wright  v. 
Wilcox,  19  Wend.  343;  32  Am.  Dec. 
507;  Fraser  v.  Freeman,  43  N.  Y.  5GG; 
3  Am.  Rep.  740;  Garvey  v.  Denit;,  30 
How.  Pr.  315;  .Steele  v.  Smith,  2  E.  D. 
Smith,  :?21;  Puryear  v.  Thompson,  5 
Humph.  .397;  Haltz  v.  Markel,  44  111. 
2l5;  92  Am.  Dec.  182;  Pritchanl  v. 
Koefer,  53  111.  117;  luUer  v.  Voght, 
13  111.  277;  Johasoa  v.  Barber,  10  HI. 


425;  OxfonU'.  Peter,  28  111.  4:}4;  Mc- 
Coy V.  McKowon,  2G  Misa.  487;  59 
Am.  Dec.  204;  Richmond  Turnpike 
Co.  V.  Variderbilt,  1  Ildl,  481;  Cava- 
nagh r.  Diudinore,  12  Hun,  4(i8;  Ware 
V.  Canal  Co.,  15  La.  109;  .'?5  Am.  Dec. 
189;  Cox  V.  Keahcy,  3o  Ala.  ;;40:  70 
Am.  Dec.  .325;  ITa/erdtown  Buik  .•. 
Adamj  Express  Co.,  45  Pa.  .St.  419;  84 
Am.  Dec.  499. 


292 


PRINCIPAL   AND   AGENT. 


508 


mitled.*  This  doctrine  has  been  often  criticised  and 
condemned,  both  by  text-writers  and  by  courts;^  and  the 
later  and  better  rule  is,  that  a  servant  authorized  to  do  an 
act  is  liable  if  he  uses  excessive  force,  though  he  does  so 
willfully,  and  with  malice  towards  the  person  injured;^ 
and  the  master  is  liable,  although  the  servant  had  no 
orders  as  to  the  particular  act,  or  proceeded  in  the  matter 
contrary  to  orders.'*  The  principal  must  be  held  respon- 
sible where  his  employment  afforded  the  agent  the  means 
or  opportunity  which  he  used  while  so  employed  in  com- 
mitting an  injury  on  a  third  person ;  and  the  willful  tres- 
pass or  injury  of  the  agent  derived  from  the  authority 
confided  to  him  by  the  principal  as  a  source  of  power  in 
the  exercise  of  his  master's  employment  makes  the  prin- 
cipal responsible.® 

Illustrations.  —  A  trespasser  on  a  locomotive  was  thrown 
ofif  by  the  company's  servants,  while  the  train  was  running  at 
a  high  rate  of  speed,  and  injured.  Held,  that  the  company  was 
liable:  Carter  v.  7i'.  R.  Co.,  98  Ind.  552;  49  Am.  Rep.  780.  A 
was  the  owner  of  certain  premises  which  he  leased  to  B.  Sub- 
sequently A  and  his  servant,  C,  attempted  to  enter  upon  the 
premises  by  force,  and  in  the  conflict  which  ensued,  C  shot  B, 
who  soon  afterwards  died  of  the  wound.  In  a  civil  action  by 
the  rei^resentatives  of  B  to  recover,  under  the  statute,  damages 
for  the  wrongful  killing  of  their  intestate,  the  judge  refused  to 


'  McManua  v.  Crickett,  1  East,  106; 
Lindsay  v.  Grimii,  22  Ala.  629;  Brown 
V.  Purviance,  2  Har.  &  Cr.  310;  Moore 
V.  Sanbornc,  2  Mich.  519;  59  Am.  Dec. 
209.  Ill  a  Missouri  case  a  master  was 
held  liable  to  hid  laaiUord  for  the  wan- 
ton and  reckless  act  of  his  clerk,  which 
blew  up  and  destroyed  the  store:  Mason 
V.  Stiles,  21  Mo.  374;  04  Am.  Doc.  242. 

'^  See  Kcevo  on  Domestic  Relations, 
040;  Coolcy  on  Torts,  535;  2  Thomp- 
son on  Negligence,  sec.  4,  p.  880. 

*Hewett  i:  Swift,  3  Allen,  420; 
Moore  r.  Fitchburg  R.  R.  Co. ,  4  Gray, 
405;  64  Am.  Dec.  83;  Seymour  v. 
Greeawood,  0  Hurl.  &  N.  359;  Croft 
r.  Alison,  4  Barn.  &  Aid.  590;  Uowe  v. 
Newmarch,  12  Allen,  49;  Wolfe  v. 
Mersereau,  4  Duer,  473;  Hawes  v. 
Knowles,  114  Mass.  518;  19  Am.  Rep. 
383;  Sherley  v.  Billings,  8  Bush,  147; 


8  Am.  Rep.  451;  Hawkins  v.  Riley,  17 
B.  Mon.  101;  Duggins  v.  Watson,  15 
Ark.  118;  11  Am.  Dec.  500;  Buckley 
V.  Knapp,  48  Mo.  152;  Metcalf  v. 
Baker,  2  Jones  &  S.  10;  Bryant  ?'. 
Rich,  100  Mass.  180;  8  Am.  Rep.  311; 
Redding  v.  R.  R.  Co.,  3  S.  C.  1;  10 
Am.  Rep.  081;  Nashville  etc.  R.  R. 
Co.  V.  Starnes,  9  Heisk.  52;  24  Am. 
Rep.  297;  Korah  v.  Ottawa,  32  111. 
121;  83  Am.  Dec.  255. 

*  Page  V.  Defries,  7  Best  &  S.  137; 
Leviness  v.  Post,  0  Daly,  321 ;  Limpus 
V.  Omnibus  Co.,  1  Hurl.  &  C.  5'_'l); 
Southwicki>.  Estes,  7  Cush.  385;  Gar- 
retzen  v.  Duenckel,  50  Mo.  104;  11 
Am.  Rep.  405;  Powell  v.  Deveney,  3 
Cush.  300;  50  Am.  Dec.  738;  Duggins  ?•. 
Watson,  15  Ark.  118:  00  Am.  Dec.  660. 

^  New  Orleans  etc.  R.  R.  Co.  v.  All- 
brittou,  38  Miss.  242;  75  Am.  Dec.  98, 


508 

jd  and 

Lud  the 
:)  do  an 
does  so 
ijured;^ 
had  no 
matter 
respon- 
I  means 
in  cora- 
ful  tres- 
ithority 
ower  in 
be  prin- 

3  thrown 
nning  at 
pany  was 

780.  A 
Sub- 

pon  the 

shot  B, 
ction  by 
damages 

fused  to 

'.  Riley,  17 
[Vatson,  15 

i;  Buckley 
iMetcalf  V. 

Bryant  r. 

Rep.  311; 
C.  1;  IG 

stc.  R.  R. 
|2;  24  Am. 

■a,  32  111. 

&  S.  137; 
1>1;  Limpus 
|&   0.  5-JG; 

385;  Gar- 
104;  11 
Jeveney,  3 
iDuggins?'. 
I.  Dec.  500. 
fCo.  v.  Mi- 
ll. Dec.  98. 


509 


LIABILITIES   OF   MASTER  AND   SERVANT. 


§  293 


charge  that,  "if  the  jury  heheve  that  C  fired  the  shot  which 
caused  B's  death,  with  the  premeditated  design  to  eflect  his 
death,  A  is   not   liable  for  his  act."     Held,  error:    Frasrr  v. 
Freeman^  43  N.  Y.  566;  3  Am.  Rep.  740.     Defendant's  engine- 
man  wantonly  and  maliciously  sounded  the  locomotive  wliistle, 
so  as  to  frighten  the  horses  of  plaintiff,  whereby  he  was  injured. 
Helil,  that  defendant  was  liable:  Chicago  etc.  R.  li.  Co.  v.  Dicksov, 
63  111.  151 ;  14  Am.  Rep.  114.    A  servant  of  a  railway  company, 
employed  to  clean  and  secure  the  cars  and  keep  persons  out  of 
them,  kicked  the  hand  of  a  boy  eleven  years  old  from  a  railing 
while  the  car  was  in  motion,  causing  him  to  fall  and  ])e  run 
over  and    killed.     Held,  that  although  the  act   itself  was  in 
nobody's  line  of  duty,  yet  if  done  while  the  servant  was  in  the 
discharge  of  his  duty,  the  company  was  liable:  Northwestern  R. 
R.  Co.  v.  Hack,  66  111.  238.     A  horse  is  intentionally  fouled  in 
a  race,  or  purposely  run  against  or  interfered  with  by  the  rider 
of  anotlier  horse.     Held,  that  the  employer  of  such  rider  is  lia- 
ble for  the  damages  resulting:  McKay  v.  Irvine,  11  Biss.  168. 
Defendant  put  a  bag  containing  barley  into  his  wagon  under 
his  shed.     In  two  or  three  days  thereafter  his  hired  servant 
took  the  bag  from  the  wagon,  supposing  it  to  contain  oats,  and 
carried  it  to  a  place  where  he  was  drawing  logs  for  his  master, 
to  feed  his  horses  with  its  contents      Finding  his  mistake,  the 
servant  fed  some  of  the  barley,  and  then  put  an  iron  bolt  that 
he  had  been  using  as  a  clevice-pin  into  the  bag,  and  carried  the 
bag  home  and  put  it  into  the  wagon  where  he  found  it  with  the 
barley  and  bolt  in  it,  without  informing  his  master  of  what  he 
had  done.     Soon  after  the  de^'endant,  not  knowing  what  his 
servant  had  done,  nor  that  the  l)oU  was  in  the  bag,  filled  the 
bag  with  ears  of  corn,  and  carried  the  corn  to  plaintiff's  mill  to 
be  ground,  and  in  grinding,  the  bolt  got  into  the  corn-cracker 
and  injured  it.     Held,  that  defendant  was  liable  for  the  care- 
lessness of  his  servant:   Tticl  v.  Weston,  47  Vt.  634.     A  brake- 
man  willfully  dashed  a  jet  of  water  upon  a  passenger,  who  had 
refused  to  pay  the  brakeman  for  watering  the  passenger's  hogs. 
Held,  that  the  company  was  liable:   Terre  Haute  and  Indian- 
apolis R.  R.  Co.  V.  Jackson,  81  Ind.  19.     A's  servant,  in  charge 
of  his  horses  and  moving-machine,  abandoned  them  to  engage 
in  a  personal  encounter  with  B.     The  noise  of  the  fight  fright- 
ened the  horses,  and  they  ran  away,  injuring  the  machine.   Held, 
that  the  negligence  of  A's  servant  was  the  negligence  of  A,  and 
he  could  not  recover  against  B:  Page  v.  Hodge,  63  N.  H.  610. 

§  293.     Trespasses  of  Servant.  —  So  the  master  is  liable 
for  the  trespasses  of  the  servant,*  but  not  if  the  trespass 

'  Luttrell  V.    Hazen,    3  Sneed,  20;    v.  Piper,  9  Barn.  &  C.  691;  4  Man.  & 
Bath  V.  CatoD,  37  Mich.  199;  Gregory    R.  500;  Mackay  v.  Commercial  Biult . 


§  293 


PRINCIPAL   AND   AGENT. 


510 


bo  criminal  and  felonious.*  Thus  the  master  has  been 
held  liable  where  he  sends  his  servant  to  cut  timber  in  his 
wood,  witiiout  taking  care  to  advise  him  as  to  its  bounda- 
ries, and  he  thereby  accidentally  fells  a  tree  on  the  land 
of  another;''  or  where  he  directs  his  servant  to  pile  rub- 
bish in  a  certain  place,  and  it  accidentally  slides  down 
against  his  neighbor's  wall;'  or  where  a  servant,  in  order 
to  move  his  master's  barge  to  a  dock,  removes  the  plain- 
tiff's therefrom,  and  so  injures  it."*  If  a  servant,  in  the 
ordinary  course  of  his  business,  obstruct  a  highway,  from 
which  a  traveler  receives  injury,  the  master  is  liable," 
"Where  a  railroad  company  employs  a  detective  to  arrest 
and  prosecute  persons  obstructing  its  track,  and  he  arrests 
an  innocent  person,  the  company  is  responsible.*  The 
master  is  liable  if  the  servant,  while  engaged  in  his  mas- 
ter's service  of  pursuing  a  criminal,  arrest  illegally  an- 
other man,  supposing  him  to  be  the  fugitive,  though 
acting  in  disobedience  of  orders  in  further  pursuit.' 

Illustrations. — Laborers  in  the  employ  of  a  telephone  com- 
pany, in  erecting  the  line,  cut  trees  not  on  the  right  of  way,  in 
disobedience  of  the  company's  orders.  Held,  that  the  company 
was  not  liable:  Fairchild  v.  it.  R.  Co.,  60  Miss.  931;  45  Am. 
Rep.  427.  The  plaintiff  went  to  the  defendant's  store  in  New 
York  City  to  purchase  an  ulster  for  herself.  After  she  had 
examined  one  and  put  it  on  preparatory  to  its  purchase,  a  floor- 
walker in  the  employ  of  the  defendant  approached  and  told  her 
that  she  did  not  wish  to  purchase  the  ulster,  but  was  a  spy  from 
a  rival  establishment,  and  told  the  saleswoman  to  take  the 
cloak  from  the  plaintiff,  which  was  done.  Held,  that  this  con- 
stituted an  actual  assault,  and  that  the  defendants  were  liable 
for  it:  Geraty  v.  Stern,  30  Hun,  426.  The  defendant,  owner  of 
land  adjoining  the  plaintiff's  land,  employed  workmen  to  cut 


of  Brunswick,  L.  R.  5  P.  C.  394; 
Smith  V.  Webster,  23  Mich.  298;  Po- 
tuhii  V.  Saunders,  87  Minn.  517;  ront'-a, 
Bolingbroke  v.  Swindon  Local  Board, 
L.  R.  9  Coin.  P.  575. 

'  Golden  V.  Newbrand,  52  Iowa,  59; 
33  Am.  Rep.  257. 

»  Bath  V.  Caton,  37  Mich.  199. 

*  Gregory  v.  Piper,  9  Barn.  &  ('.  591. 


*  Page  V.  Defries,  7  Best  &  S. 
137. 

'•^  Harlow  v.  Humiston,  6  Cow. 
189. 

^  Evansville  etc,  R.  R.  Co.  v.  Mc- 
Kee,  99  Ind.  519;  60  Am.  Rep. 
102. 

'  Harris  v.  Louisville  etc,  R.  R.  Co., 
35  Fed.  Rep.  116. 


511 


LIABILITIES  OP   MASTER  AND  SERVANT. 


§294 


trees  on  his  own  land,  but  omitted  to  employ  conripetont  per- 
sons to  superintend  the  work,  or  properly  to  instruct  them,  so 
that  they  might  distinguish  his  boundaries.  JTehl,  that  de- 
fendant was  liable  for  trees  of  the  plaintiff  which  the  workmen 
ignorantly  cut  down  and  removed:  Carmen  v.  Mayor  etc.  of 
New  York,  14  Abb.  Pr.  301. 

§  294.    Who  are  Servants  within  Previous  Sections. — 

The  word  "servant"  in  this  connection  is  not  restricted 
to  domestic  servants;  it  includes  any  person  subject  to 
the  control  of  the  party  sought  to  be  charged;  the  test 
briefly  given  being,  Had  he  the  right  to  control  the  per- 
son's conduct,  and  to  discharge  him  from  his  employment 
for  disobedience  to  his  orders?'     Another  test  is  said  to 


'  Michael  v.  Stanton,  3  Hun,  462; 
Blackwell  v.  Wiswall,  24  Barb.  355; 
Pawlet  V.  R.  R.,  28  Vt.  297;  McGuire 
V.  Grant,  25  N.  J.  L.  357;  67  Am. 
Dec.  49;  Blake  v.  Ferris,  5  N.  Y.  48; 
55  Am.  Dec.  304;  Quarman  v.  Burnett, 
6  Mces.  &  W.  509;  Wood  v.  Cobb,  13 
Allen,  58;  Kimball  v.  Cushmau,  103 
Mms.  194;  4  Am.  Rep.  528;  Corbin  v. 
Am.  Mills,  27  Conn.  274;  71  Am.  Dec. 
63.  In  Brackett  v.  Lubke.  4  Allen, 
138,  81  Am.  Dec.  694,  in  holding  the 
tenants  of  a  house  liable  to  damages 
for  an  injury  to  a  pedestrian,  caused 
by  the  negligence  of  a  carpenter  em- 
ployed by  him  on  the  building,  the 
court  say:  "The  defendants  are  lia- 
ble because  it  appears  that  the  negli- 
gent act  which  caused  the  injury  was 
done  by  a  person  who  sustained 
towards  them  the  relation  of  servant. 
There  was  no  contract  to  do  a  certain 
specified  job  or  piece  of  work  in  a  par- 
ticular way  for  a  stipulated  sum.  It 
is  the  ordinary  case  where  a  person 
was  employed  to  perform  a  service 
for  a  reasonable  compensation.  The 
defendants  retained  the  power  of  con- 
trolling the  work.  They  might  have 
directeil  both  the  time  and  manner  of 
doing  it.  If  it  was  unsafe  to  make 
the  repairs  or  alterations  at  an  hour 
when  the  street  was  frequented  by 
passers,  it  was  competent  for  the 
defendants  to  require  the  person  em- 
ployed to  desist  from  work  until  this 
danger  ceased  or  was  diminished.  If 
the  means  adopted  to  gain  access  to 


the  awning  were  unsuitable,  the  de- 
fendants might  have  directed  that  an- 
other mode  should  be  used.  In  short, 
if  the  work  was  in  any  respect  con- 
ducted in  a  careless  or  negligent  man- 
ner, the  defendants  had  lull  power  to 
change  the  manner  of  doing  it,  or  to 
stop  it,  and  to  discharge  the  person 
employed  from  their  service.  The 
mere  fact  that  the  work  was  done  by 
one  who  carried  on  a  separate  and  in- 
dependent employment  does  not  ab- 
solve the  defendants  from  liability. 
If  such  were  the  rule,  a  party  wouhl 
be  exempt  from  responsibility  evea 
for  the  negligent  acts  of  his  domestic 
servants,  such  as  his  cook,  coachman, 
or  gardener.  This  point  was  disti  nctly 
adjudicated  in  Sadler  v.  Henlock,  4 
El.  &  B.  570.  The  distinction  on 
which  all  the  cases  turn  is  this:  If 
the  person  employed  to  do  the  work 
carries  on  an  independ  ent  employ  men  t, 
and  acts  in  pursuance  of  a  contract 
with  his  employer  by  which  ho  has 
agreed  to  do  the  work  on  certain 
specified  terms,  in  a  particular  man- 
ner, and  for  a  stipulated  sum,  then  the 
employer  is  not  liable.  The  relation 
of  master  and  servant  does  not  subsist 
between  the  parties,  but  only  that  of 
contractor  and  contractee.  The  power 
of  directing  and  controlling  the  work 
is  parted  with  by  the  employer  and 
given  to  the  contractor.  But,  on  the 
other  hand,  if  work  is  done  under  a 
general  employment,  and  is  to  be  per- 
formed for  a  reasonable  compensation 


§294 


PRINCIPAL  AND  AGENT. 


512 


be,  Was  the  employee  working  by  the  job,  or  at  wages  by 
the  day,  week,  or  month?  If  the  latter,  he  is  a  "servant," 
and  the  master  is  responsible  for  his  acts.*  Where  the 
hirer  of  a  team  with  a  driver  agrees  with  the  owner  that 
he  will  temporarily  furnish  his  own  driver,  the  hirer 
is  bound  to  ordinary  care  toward  the  owner,  and  the 
driver  is  his  servant.'^  A  lessor  is  not  liable  to  a  servant 
of  the  lessee  for  an  injury  resulting  from  the  negligence 
of  the  latter,  nnless  it  arose  from  some  unperformed  duty 
remaining  upon  the  lessor,  even  though  the  servant  was 
originally  the  servant  of  the  lessor,  was  ignorant  of  the 
lease,  and  supposed  himself  still  in  the  lessor's  employ.^ 
Whether  a  teamster  through  whose  negligence  in  deliver- 
ing coal  one  falls  into  a  coal-hole  and  is  injured  is,  in  an 
action  therefor,  to  be  considered  as  ihe  servant  of  the 
occupant  of  the  building,  depends  on  whether  such  occu- 
pant had  the  right  to  control  the  manner  of  delivery.* 
One  engaged  in  selling  and  delivering  wood  to  the  pro- 
prietor of  a  mill  at  so  much  per  cord  is  not  an  employee 
of  the  proprietor  so  as  to  put  him  in  the  situation  of  one 
who  takes  the  risk  upon  himself  of  negligence  in  those 
running  the  raill.^  A  contractor  for  a  job,  by  accepting 
and  paying  for  work  done  thereon  by  a  mechanic  without 
his  prior  order  or  authority,  does  not  render  himself 
liable  for  injuries  caused  to  a  third  person  by  a  negligent 
act  committed  by  the  mechanic  while  doing  the  work,  not 


or  for  a  stipulated  price,  the  employer 
remains  liable,  becauae  ho  retains  the 
right  and  power  of  directing  and  con- 
trolling the  time  and  manner  of  exe- 
cuting the  work,  or  of  refraining  from 
doing  it  if  he  deems  it  necessary  or 
expedient.  This  distinction  is  recog- 
nized in  the  cases  adjudged  by  this 
court:  Sproul  v.  Hemmingway,  14 
Pick.  1;  25  Am.  Dec.  350;  Stone  v. 
Codman,  15  Pick.  299;  Hilliard  v. 
Richardson,  3  Gray,  349;  C3  Am.  Dec. 
743;  Liutoui;.  Smith,  8  Gray,  147." 

'  2  Thompson  on  Negligence,  912; 
Schular  v.  B.  E.  Co.,  38  Barb.  653; 


Brackett  v.  Lubke,  4  Allen,  13S;  81 
Am.  Dec.  C94.  See  Moore  z;.  Sanliorne, 
2  Mich.  519;  59  Am.  Dec.  209;  City 
of  Tiffin  V.  McCormack,  34  Oliio  St. 
638;  32  Am.  Rep.  408.  But  it  lias 
been  held  in  Conecticut  that  this  test 
is  not  always  decisive:  Corbint-.  Anier- 
ican  Mills,  27  Conn.  274;  71  Am.  Dec. 
63. 

»  Hofer  V.  Hodge,  52  Mich.  372;  50 
Am.  B,ep.  256. 

3  Crusselle  v.  Pugh,  67  Ga.  430;  44 
Am.  Rep.  724. 

*  Clajipv.  Kemp,  122  Mass.  481. 

*  Wadsworth  v.  Duke,  50  Ga.  91. 


512 


513 


LIABILITIES   OP   MASTER  AND   SERVANT. 


294 


vages  by 
iervaiit," 
here  the 
ner  that 
he  hirer 
and  the 
I  servant 
igligence 
ned  duty 
vant  was 
it  of  the 
employ.' 
1  deliver- 

is,  in  an 
nt  of  the 
ach  occu- 
delivery.'* 
•  the  pro- 
employee 
)n  of  one 

in  those 
accepting 
c  witiiout 
himself 
negligent 
work,  not 

len,  138;  81 
V.  8aii1)orne, 
c.  200;  City 
34  Ohio  St. 
But  it  has 
that  this  test 
bin  V.  Ar.icr- 
71  Am.  Dec. 

(lich.  372;  50 

Ga.  430;  44 

lass.  481. 
50  Ga.  91. 


a  part  or  result  of  the  work  itself,  e.  g.,  carelessly  letting 
fall  a  brick.'     The  relation  of  master  and  servant  docs  not 
exist  between  a  contractor  in  a  penitentiary  and  a  con- 
vict; and  the  contractor  is  not  liable  to  a  third  person  for 
injuries  resulting  from  the  negligence  of  the  convict  in 
the  course  of  his  employment.''     A  fireman  in  the  city  in 
which  he  lives  has  no  such  relation  to  it  as  a  servant  as  to 
prevent  his  maintaining  an  action  to  recover  special  dam- 
ages occasioned  by  defects  in  a  highway  in  such  city,*^  nor 
has  a  police  officer.*     The  inmates  of  a  county  hospital  are 
not  servants  of  the  superintendent,  and  he  is  not  respon- 
sible for  their  acts.*     A  gas  company  is  not  responsible 
for  injuries  sustained  in  consequence  of  the  carelessness, 
in  letting  on  gas,  of  a  person  who,  though  formerly  an 
agent  of  the  company,  is  no  longer  such,  but  is  permitted 
by  the  company  to  let  on  gas  when  a  consumer  requests 
it.®    A  party  who  avails  himself  of  the  use,  temporarily, 
of  the  services  of  a  servant  regularly  employed  by  another 
person  may  be  liable,  as  master,  for  the  acts  of  such  ser- 
vant during  the  temporary  service.'    Whether  the  relation 
of  master  and  servant  or  principal  and  agent  exists  be- 
tween defendants  jointly  prosecuted  for  a  tort,  is  a  question 
of  fact  for  the  jury.® 

Illustrations. — G.  and  S.  occasionally  exchanged  labor 
with  their  teams.  On  one  occasion  G.  sent  a  driver  with  a 
team  to  draw  some  material  for  S.  Ildd,  that  while  so  employed 
the  driver  was  the  servant  of  G.,  and  S.  was  not  liable  for  the 
negligence  of  such  driver:  Michael  v.  Stanton,  5  Thonip.  &  C. 
634;  3  Ilun,  402.  A  storekeeper,  having  sold  merchandise, 
permitted  or  directed  the  purchaser's  servant  to  remove  it  by 
throwing  it  from  an  upper  window  into  the  street.  The  ser- 
vant did  this  carelessly,  and  injured  the  plaintiff.     Held,  that 

*  Coomes  v.  Houghton,    102   Mass.         ♦  Kimball  r.  Boston,  1  Allen,  417. 
211.  sSchrubbe    v.    Connell,     C'J    Wis. 

-  Cunningham  v.  Bay  State  Shoe  and  476. 

Leather  Co.,  25  Hun,  210;  Hartwig  v.  *  Flint  v.  Gloucester  Gaslight  Co.,  9 

Bay  State  Shoe  and  Leather  Co.,  43  Allen,  652. 

Hun,  425.  '  Wood  v.  Cobb,  13  Allen,  55. 

*  Palmer  v.  Portsmouth,  43  N.  H.  »  Banfiell  w.  Whipple,  10  Allen,  27; 
265.  87  Am.  Dec.  618. 

Vol.  L— 83 


§  204 


PRINCIPAL  AND   AGENT. 


514 


tlie  storekeeper  was  not  liable:  McCullough  v.  Shoneman,  105 
Pa.  St.  UU);  51  Am.  Rep.  194.     The  owners  of  a  foundry  for 
years  had  given  tlio  ashes  to  their  engineer  in  consideration  of 
his   removing  tiiem   after  working   hours.     The  engineer  de- 
posited them,  to  the  knowledge  of  his  employers,  on  an  unin- 
closed  lot  opposite  the  foundry,  owned  by  third  persons,  whaso 
permission  ho  h«d  obtained,  and  sold  the  ashes  to  third  per- 
fcons,  and  to  the  defendants.     A  young  child,  running  across 
that  ht,  fell  into  a  (quantity  of  the  hot  ashes,  and  was  burned. 
Held,  that  the  owners  of  the  foundry  were  not  liable  there  fur: 
Burle  V.  Sluiw,  59  Miss.  443;  42  Am.  Rep.  370.     A  and  B  were 
partners.    A  owned  individually  a  horse  and  carriage,  which  ho 
sent  with  his  own  servant  to  the  station  to  meet  B  and  bring 
him  to  the  store.     While  going  to  the  store  with  B,  the  servant 
recklessly  ran  against  C  and  injured  him.     Held,  that  the  ser- 
vant was  not  the  servant  of  B,  and  that  B  was  not  liable:  Mu(:r, 
V.  Stern,  82  Va.  33;  3  Am.  St.  Rep.  77.     In  an  action  against 
A  for  the  negligence  of  B,  it  having  been  shown  that  A  was 
Avorking  under  a  contract  to  haul  sand  at  so  much  a  load  from 
B's  lot,  held,  that  to  determine  whether  the  relation  of  master 
and  servant  existed  between  A  and  B,  a  witness  might  be  asked 
by  whose  orders  A  quit  drawing  sand  from  another  lot  pf  B, 
and  whether  B  could  have  directed  A  to  stop  hauling  from  the 
lot  in  question:  Fink  v.  Missouri  Furnace  Co.,  10  Mo.  App.  01. 
Defendant  was  the  owner  of  a  certain  building,  and  after  it  was 
burned  he  allowed  certain  persons  to  enter  on  the  premises  fur 
the  purpose  of  removing  the  debris,  which  they  did  so  unskill- 
fully  that  they  knocked   down   the  walls  of  the  house   onto 
plaintiff's  premises.     Held,  to  show  the  rehation  of  master  and 
servant,  making  defendant  liable:  Dillon  v.  Hunt,  82  Mo.  150. 
V.  was  a  passenger  on  a  street-car,  drawn  by  horse-power,  and 
on  its  arrival  at  a  point  of  intersection  with  a  steam  railroad, 
the  crossing  was  occupied  by  a  train  of  cars  belonging  to  the 
latter  company,  and  the  horse-car  stopped  to  wait  the  passage 
of  the  train.     After  the  train  had  crossed  the  street,  the  flag- 
man of  the  steam  railroad  company  signaled  the  driver  of  tlie 
car  to  go  forward,  and  he  did  so,  and  at  the  same  time  the 
train  backed  and  struck  the  car  before  it  had  quite  crossed 
the  track,  injuring  V.    Held,  in  an  action  against  the  horse-rail- 
road company,  that  the  fact  that  the  driver  of  the  horse-car  had 
been  directed  by  his  superior  to  obey  the  signals  of  the  flagman, 
and  did  so  obey  them,  did  not  convert  the  flagman  into  an 
agent  of  the  horse-railroad  company:  Chicago  etc.  R.  R.  Co.  v, 
Volk,  45  111.  175.    A  bought  a  heavy  article  of  B,  at  his  store, 
and  sent  a  porter  to  get  it,  and  the  porter,  by  permission  of  B, 
ur  ing  his  tackle  and  fall,  through  negligence  suffered  the  article 


515 


LIABILITIES   OF   MASTER   AND  SERVANT. 


§295 


to  fall,  by  which  C  was  injured.    Held,  that  the  porter  acted  as 
the  servant  of  A,  and  that  B  was  not  answerable:  Stevens  v. 
Armstrong,  6  N.  Y.  4;>5.     A  contractor,  engaged  in  repairing  a 
bridge  upon  a  railroad  for  tiie  company,  employs  men  to  work 
thereon  by  the  day.    Ilrhl,  that  the  latter  are  the  servants  of 
the  contractor,  and  not  of  the  r-ompany;  and  between  them  and 
the  company  there  is  no  privity  whatever:   Yovng  v.  Railroad 
Co.,  30  Barb.  229.     A  public  licensed  drayman  was  employed 
to  haul  a  quantity  of  salt  from  a  warehouse,  and  deliver  at  tho 
store  of  tho  employer  at  so  much  per  barrel,  and  while  in  tho 
act  of  delivering  the  salt,  one  of  the  barrels,  through  the  care- 
lessness of  tho  drayman,  rolled  against  and  injured  a  person 
passing  on  the  sidewalk.     Held,  that  the  employer  was  not  lia- 
ble for  the  injury:  De  Forrest  v.  Wright,  2  Mich.  3G8.    A  railroad 
company  undertook  to  remove  a  cargo  of  coal  from  a  vessel  to 
its  freight-cars,  and  having  had  some  difficulty  with  the  gang 
of  shovelers,  who  were  on  a  strike,  made  an  arrangement  witli 
its  weigh-master  to  allow  him  a  certain  sum  per  ton  for  shovel- 
ing and  dumping  tho   coal,  and  that  he  should  employ  the 
shovelers,  and  if  he  could  employ  them  for  less  than  the  sum 
allowed  him,  the  difference  should  be  his  perquisite,  indepen- 
dent of  his  regular  wages  as  weigh-master.    The  weigh-master 
then  hired  a  gang  of  shovelers,  made  his  returns  weekly  to 
the  company  of  the  number  of  tons  shoveled,  received  tho 
amount  allowed  him,  and  paid  the  shovelers.    The  regular  pay- 
rolls of  the  employees  of  the  company,  including  the  weigh- 
master,  did  not  embrace  the  shovelers.    Held,  that  the  shovelers 
were  not  the  servants  of  the  company:  Burke  v.  Railroad  Co., 
34  Conn.  474. 

§  295.  Master  not  Liable  for  Acts  of  Independent  Con- 
tractor.— Where  a  person  contracts  with  another  exercis- 
ing an  independent  employment  to  do  a  work  for  him,  ac- 
cording to  the  contractor's  own  methods,  and  not  subject 
to  his  control  or  orders  except  as  to  the  results  to  be  ob- 
tained, the  former  is  not  liable  for  the  wrongful  acts  of 
such  contractor  or  his  servants.'     ^So  a  contractor  is  not 


*  Hilliard  v.  Richardson,  3  Gray, 
349;  03  Am.  Dec.  743;  Harkins  r. 
Standard  Sugar  Co,  122  Mass.  400; 
Forsyth  v.  Hooper,  11  Allen,  419; 
Lurton  v.  Smith,  8  Gray,  147 ;  Coomes 
V.  Houghton,  102  Mass.  211;  Mor- 
gan V.  Bowman,  22  Mo.  538;  Clark 
V.  Haunibal  B.  R.  Co.,  36  Mo.  202; 


Barry  v.  St.  Louis,  17  Mo.  121;  Bos- 
well  V.  Laird,  8  Cal.  469;  68  Am.  Dec. 
345;  Fanjoy  v.  Scales,  29  Cal.  243; 
Du  Pratt  V.  Lick,  38  Cal.  631;  Schuler 
V.  Hudson  R.  R.  Co.,  38  Barb.  653; 
Blake  v.  Ferris,  5  N.  Y.  48;  55  Am. 
Dec.  304;  Detroit  v.  Corey,  9  Mich. 
165;  80  Am.  Dec.  78;  Darmstaetter  v. 


§  205 


PRINCIPAL  AND  AOKNT. 


510 


liable  for  tho  wrongs  of  an  independent  subcontractor;' 
nor  tho  subcoutructor  for  tlio  acts  of  his  subcontractor, 
and  so  on.'*  If  a  person  hires  a  wagon  or  carriage,  hordes 
and  driver,  to  another,  tho  former  is  alone  liable  for  the 
iio^ligonco  of  tho  driver  which  injures  a  third  person,''  or 
wiiieh  damages  tho  vehicle.*  One  who  contracts  with  a 
f/.rnaco  company  to  dig  sand  on  its  land  and  d^a^v  it  to 
iLi  furnace  at  a  fixed  price  per  load,  there  being  no  i)ro- 
visions  as  to  tho  manner  of  the  performance  of  the  work, 
is  not  a  servant  for  whose  negligence  tho  company  is 
liable.'*    The  lessee  of  land  is  not  tho  servant  of  his  les- 


Moynahan,  27  Mich.  188;  Allen  v. 
Willard,  57  Pa.  St.  374;  Erie  v.  Caul- 
kins,  85  Pa.  St.  247;  P.iulet  v.  Rut- 
lan«l  R.  R.  Co  ,  28  Vt.  297;  Robinson 
V.  Webb,  11  Buah,  4G4;  Kellogg  v. 
Payne,  21  Iowa,  575;  Callahan  v, 
Burlington  etc.  R.  R.  Co.,  2.3  Iowa, 
5G2;  Wood  v.  School  District,  4-I-  Iowa, 
27;  Kansas  etc.  R.  R.  Co.  v.  Fitzsini- 
inons,  18  Kan.  .34;  Schewickhanlt  r. 
St.  Louis,  2  Mo.  App.  571;  Harrison 
V.  VaWim,  80  Pa.  St.  15.3;  27  Am.  Rep. 
690;  Cincinnati  v.  Stone,  5  Oliio  St. 
38;  Clark  v.  Fry,  8  Ohio  St.  358;  72 
Am.  Dec.  590;  Kepperly  v.  Ramsilen, 
83  III.  854;  Scammon  v.  Chicago,  25 
111.  424;  79  Am,  Dec.  334;  West  v.  St. 
Louia  etc,  R.  R.  Co.,  C3  111.  545; 
Prairie  State  Co.  v.  Dorg,  70  111.  62; 
Hale  V.  Johnson,  80  111.  185;  Conners 
V.  Hennessey,  112  Mass.  90;  Wright 
V.  Holbrook,  52  N.  H,  120;  13  Am, 
Rep.  12;  Pack  v.  New  York,  8  N.  Y. 
222;  Painter  v.  Pittsburgh,  40  Pa,  St. 
213;  Hunt  r.  Pennsylvania  R.  R.  Co,, 
51  Pa,  St.  475;  Roedi;.  Allegheny  City, 
79  Pa.  St.  300;  Wray  v.  Evans,  83  Pa. 
St.  102;  Ryder  v.  Thomas,  13  Hun, 
290;  Clark  v.  Vermont  etc.  R.  R.  Co., 
28  Vt.  103;  Van  Wert  v.  Brooklyn,  28 
How,  Pr.  451 ;  Benedict  v.  Martin,  30 
Barb.  288;  Barrett?'.  Singer  Mfg.  Co., 

I  Sweeny,  545;  McCafferty  v.  Spuytcn 
Duyvil  etc.  R.  R.  Co.,  61  N.  Y.  178; 
19  Am.  Rep.  207;  O'Rourke  v.  Hart,  7 
Bosw.  511;  9  Bosw.  .301;  Potter  it.  Sey- 
mour, 4Bosw.  140;  Kelly  w.  New  York, 

II  N.  Y,  432;  4  E.  D.  Smith,  291; 
Gent  V.  New  York,  Sold.  Notes,  240, 
Gardner  V,  Bennett,  6  Joaes&  S,  197; 


King  V.  New  York  etc.  R.  R.  Co.,  Cli 
N.  Y,  182;  23  Anu.Rep.  37;  Picrpdiit 
('.  Loveless,  72  N.  Y.  211;  Li.itou  r. 
Smitii,  8(iray,  147;  Eiitoa  v.  Raihoad 
Co.,  59  Mu.  520;  8  Am.  Rep.  4;i0; 
Cutf  V.  Riilroad  Co.,  35  N.  J.  L.  17; 
10  Am.  Rep.  205;  Mcltuiro  r.  Cra:it, 
25  N.  J.  L.  350;  07  Am.  Dec.  50; 
Mulcahy  v.  Dock  Co.,  8  Daly.  !):i; 
Lancaster  etc.  Improvement  Co.  r. 
Rhoads,  110  Pa.  St.  377;  2  Am.  St. 
Rep,  008;  Mayor  v.  McCa.iy,  84  Al:i. 
409;  Brown  r.  McLeiish,  71  Iowa, , "SI. 
"If  the  person  employed  to  do  the 
work  carrici  on  an  indcpendeut  em- 
ployment, and  acts  in  pursuance  of  a 
contract  with  his  employer,  by  whit!i 
he  has  agreed  to  do  the  work  on  cer- 
tain specilicd  terms,  in  a  purlicular 
manner,  and  for  a  stipulated  price, 
then  the  employer  ii  not  liable.  Tlie 
relation  of  master  and  servant  does 
not  subsist  between  tho  partiey,  but 
only  that  of  contractor  and  eo:i- 
tractee":  Bigelow,  C.  J.,  in  Brackett 
V.  Lubke,  4  Allen,  138;  81  Am.  D:c. 
694.  But  see  Stone  r.  Cheshire  ];.  11. 
Co.,  19  N.  H.  427;  51  Am.  Dec. 
192, 

I'CufiFv.  Newark  Co.,  .35  N.  J.  L. 
17;  10  Am.  Rjp.  205;  Slit  r  r. 
Mesereau,  04  N.  Y.  138;  5  Daly,  445; 
Holt  V.  Whatley,  51  Ala.  509. 

••*  Knight  V.  Fox,  5  Ex.  721. 

*  Quarman  v.  Burnett,  0  ^lees.  &,  W. 
499;  Crockett  r.  Calvert,  8  lad.  1-27. 

*  Ames  V.  Jordan,  71  Me.  540;  36 
Am,  Rep.  352. 

*  Fink  V.  Furnace  Co.,  82  Mo.  27C; 
52  Am.  Rep.  370. 


517 


LIABILITIES  OP   MASTER  AND  SERVANT. 


§295 


sor;  *  nor  the  vendee  in  possession  the  servant  of  the  ven- 
dor;' so,  also,  the  receiver  of  a  corporation  is  not  its  servant 
>vithin  this  rule.'  So  as  between  the  owner  and  charterer 
of  u  vessel,  the  owner  is  liable  for  the  acts  of  the  crew  if 
he  provides  them  and  controls  them;*  the  charterer  is 
liable  if  the  whole  matter  is  given  into  his  control  for  a 
certain  term.*  A  ship-owner  is  not  liable  for  an  injury  to 
his  employee  by  the  negligence  of  a  stevedore  in  loading 
the  vessel  *  A  licensed  pilot  voluntarily  employed  by  the 
owner  of  a  vessel  is  his  servant,  for  whose  acts  he  is  re- 
sponsible/ And  where  it  is  compulsory  by  law  for  tho 
master  to  take  a  particular  pilot,  his  acts  are  not  tho  acts 
of  the  owner  or  of  the  master." 

Illustrations. — Master  Held  not  Liable. — Tho  plaintiff 
was  injured  by  tho  negligent  driving  of  the  defendant's  team 
by  tho  defendant's  driver,  both  team  and  driver  being  hired  by 
a  third  person,  who  had  requested  the  services  of  that  particu- 
lar driver.  Held,  that  the  defendant  was  not  liable:  Jodin  v. 
Grand  Rapida  Ice  Co.,  50  Mich.  51G;  45  Am.  Rep.  54.  The  de- 
fondant  contracted  to  have  T.  cut  timber  from  defendant's  land 
at  a  specified  price  per  foot,  and  deliver  it  at  tho  mouth  of  u 
certain  river,  using  the  defendant's  dams  in  the  driving  of  the 
logs,  if  he  chose.  T.  used  the  defendant's  dam  in  the  business 
in  an  unreasonable  manner,  to  the  plaintiff's  injury,  but  tiie 
defendant  had  nothing  to  do  with  the  cutting,  hauling,  or  driv- 
ing of  the  logs.  Held,  that  tho  defendant  was  not  liable:  Carter 
v.  Berlin  Mills,  68  N.  H.  52;  42  Am.  Rep.  572.  The  defendant, 
owning  a  saw-mill,  employed  master  machinists  to  repair  tiio 
water-wheel,  and  the  machinists  sent  the  plaintiff  with  others 
to  do  the  work.     It  was  understood  between  the  workmen  and 


'  Fidko  V.  Manufacturing  Co.,  14 
rick.  4i)I;  BLic'vWell  v.  Wiswall,  24 
Barb.  355;  14  How.  Pr.  257;  Norton 
V.  Wiswall,  2G  Barb.  618;  14  How. 
I'r.  4'J. 

■'  Earle  v.  Hall,  2  Met.  353. 

» '  »liio  etc.  R.  R.  Co.  v.  Davis,  23 
Inil  55.3;  85  Ain.  Dec.  477. 

» Aiuiett  V.  Bister,  1  Daly,  502; 
Fen  ton  v.  Duhliu  Steam  Packet  Co.,  1 
Pcnv  &  D.  103;  8  Ad.  &  E.  835;  Dal- 
yell  r.  Tyrer,  El.  B.  &  E.  908. 

^  Ablxitt  on  Shipping,  sec.  65;  Korah 
V.  Ottowa,  32  111.  121;  83  Am,  Dec.  255. 


•Rankin  v.  Trans.  Co.,  73  Ga.  229; 
54  Am.  Rep.  874. 

'  Yates  V.  Brown,  8  Pick.  23;  Sliaw 
V.  Reed,  9  Watts  &  S.  72;  Bu8.sy  v. 
Donaldson,  4  Dall.  206;  The  Killar- 
ney,  1  Lush.  427;  Neptune  the  Sec- 
ond, 1  Dod.  467. 

*  Snellw.  Rich,  1  Johns.  305;  Bennet 
V.  Moita,  7  Taunt.  258;  Tlie  Annapo- 
lis, 1  Lush.  295;  The  Maria,  1  Win. 
Rob.  106;  General  Steam  Navigation 
Co.  V.  British  Navigation  Co.,  L.  R.  3 
Ex.  330. 


§295 


PRINCIPAL   AND   AGENT. 


518 


the  defendant  that  the  mill  should  be  run  when  they  were  not 
working  on  the  wheel.  While  they  were  so  at  work,  the  de- 
fendant's engineer  negligently  started  the  wheel,  injuring  the 
plaintiff.  Held,  that  defendant  was  not  liable:  Ewan  v.  Lip- 
pincott,  47  N.  J.  L.  192j  54  Am.  Rep.  148.  When  the  plaintiff 
was  driving  on  a  highway,  his  horse  became  frightened  at  a 
steam-shovel  in  use  on  the  defendant's  lands  near  the  road,  and 
ran  away,  and  the  plaintiff  was  hurt.  The  shovel  was  operated 
and  controlled  by  an  independent  contractor,  although  the 
defendant  contemplated  its  use  when  the  contract  was  m?'ic. 
Held,  that  the  defendant  was  not  liable:  Bailey  v.  Railroad 
Co.,  57  Vt.  252;  52  Am.  Rep.  129.  An  owner  of  land  contracts 
with  a  person  to  clear  it.  In  doing  so  the  contractor  starts  a 
fire,  which  communicates  to  adjoining  land.  Held,  that  the  em- 
ployer is  not  responsible:  Ferguson  v.  Hubbell,  97  N.  Y.  507;  49 
Am.  Rep.  544.  A  ship  was  chartered  to  the  commissioners  of 
the  royal  navy  as  an  armed  vessel,  and  navigated  by  a  master 
and  Bailors  provided  by  the  owner.  Held,  that  he  was  liable  for 
damage  done  to  another  vessel  by  the  misconduct  of  such  crew, 
although  a  commander  of  the  royal  navy  and  a  king's  pilot  were 
on  board:  Fletcher  v.  Braddick,  2  Bos.  &  P.  N.  R.  182.  The 
plaintiff  was  injured  by  the  carelessness  of  men  occupied  in 
repairing  the  roof  of  defendant's  building.  The  men  were 
employees,  and  under  the  orders  of  one  who  carried  on  the  busi- 
ness of  slating  roofs,  and  who  was  engaged  by  the  defendant  to 
do  the  job  in  question.  Held,  that  the  elater  carried  on  an  in- 
dependent employment,  and  ihe  defendant  was  not  liable:  Mc- 
Carthy V.  Second  ParWn  of  Portlaad,  71  Me,  318;  36  Am.  Rep. 
320.  One  of  the  defendants,  a  painter,  contracted  to  paint  the 
interior  of  a  dome,  und  having  no  knowledge  of  building  scaf- 
folds, contracted  with  the  other  defendant,  an  experienced 
Bcaffold-builder,  to  erect  a  first-rate  scaffold  therefor.  The 
builder  defectively  constructed  the  scaffold,  and  it  gave  way 
and  caused  the  death  of  the  plaintiff's  intestate,  who  was  at 
work  upon  it  in  the  master  painter's  employ.  It  did  not  appear 
that  the  master  knew  or  had  reason  to  know  of  the  defect. 
Held,  that  the  master  was  not  liable,  but  that  the  builder  was: 
Devlin  v.  Saith,  89  N.  Y.  470;  42  Am.  Rep.  311.  A  beinj;  noti- 
fied by  the  authorities  of  the  city  ^o  take  down  his  house,  or  to 
make  it  safe,  thereupon  entered  mto  a  verbal  contract  with  B, 
whereby  B  agreed  "to  take  the  building  down."  In  doing  so, 
B  negligently  weakened  a  party-wall,  and  caused  the  house  of 
C  to  fall.  Held,  that  A  was  not  liable  to  C:  Earl  v.  Beadlcdnn, 
10  Jones  &  S.  294.  A  town  contracted  with  a  person  to  clear 
off  a  strip  of  land  surrounding  a  pond,  which  it  had  purchased 
for  the  purpose  of  supplying  its  inhabitants  with  water.    In  so 


518 


519 


LIABILITIES   OP   MASTER    AND    SERVANT. 


§295 


'  were  not 
k,  the  de- 
uring  the 
m  V.  Lip- 
e  plaintiff 
jned  at  a 
road,  and 
i  operated 
ough  the 
ras  m^'de. 

Railroad 
contracts 
p  starts  a 
it  the  em- 
r.507;  49 
3ioners  of 

a  master 
liable  for 
uch  crew, 
pilot  were 
82.  The 
^upied  in 
Qen  were 
the  busi- 
endant  to 
on  an  in- 
ible:  Mc- 
A.m.  Rep. 
paint  the 
ing  ecaf- 
lerienced 
'or.  The 
;ave  Avay 
o  was  at 
3t  appear 
e  detect. 
der  was: 
dm;  noti- 
ise,  or  to 

with  B, 
doing  BO, 
house  of 
^adleston, 

to  clear 
archased 
".     In  so 


doing  he  negligently  set  fire  to  the  timber  and  fences  of  an  ad- 
jacent owner.     Held^  that  the  town  was  not  liable:   Wright  v. 
HolbrooL  52  N.  H.  120;  13  Am.  Rep.  12.     A  well-borer  con- 
tracted %vith  a  school  district  to  bore  a  well  in  the  school-house 
yard.     He  left  his  machine  unguarded,  whereby  one  of  the 
school  children  was  injured.    Held,  that  the  school  district  was 
not  liable;   Wood  v.  Independent  School  District,  44  Iowa,  27.     A 
enters  into  a  contract  to  protect  B's  farm  from  fire,  and,  in  carry- 
ing it  out,  sets  fire  to  the  field  of  C.    Held,  that  A,  and  not  B,  must 
pay  damages  to  C;  Kellogg  v.  Pai/ne,  21  Iowa.  575.     A,  the  pro- 
prietor of  a  pinery,  contracted  with  B  that  B  should  cut  all  the 
logs  A  had  on  certain  land,  and  deliver  them  to  A  at  a  place 
named,  A  to  have  no  part  in  the  running  of  the  logs  until  they 
reached  the  place  named,  and  not  to  render  B  any  assistance 
in  the  prosecution  of  the  work,  pecuniary  or  otherwise.     Held, 
that  B  was  not  the  servant  of  A,  and  A  was  not  liable  for  B's 
negligence  in  obstructing  the  navigation:  Moore  v.  Sanborne, 
2  Mich.  519;  59  Am.  Dec.  209.     A  employed  B  to  construct  a 
drain  in  a  public  highway;  B  emplo}   d  C  to  fill  in  the  earth 
over  the  brick- work,  and  to  carry  away  the  surplus.     C,  in 
performing  his  work,  left  the  earth  raised  so  nmch  above  the 
level  of  the  road  that  D,  driving  in  the  dark,  was  thereby 
upset  and  injured.     A  was  held  not  responsible  for  the  neg- 
ligence of  C:   Peachey  v.  Rowland,  13  Com.  B.  182.     1).  and 
M.  had  an  absolute  contract  with  a  railroad  company  to  draw 
their  cars,  furnishing  the  horses  and  drivers,  and  assuming 
the  entire  ccntrol      Held,  that  the  company  was  not  liable  for 
injury  arising  fn     >  the  negligence  of  I),  and  M.'s  employees 
in  this  work:   Schular  v.    Railroad   Co.,  38   Barb.  G53.     The 
defendant,  who  was  an  undertaker,  was  employed  by  a  third 
person    to   superintend  a   funeral,  it  being  arranged   that  he 
should  furnish  carriages  for  various  persons,  among  "''^oi.j  was 
the  plaintiff,  who  were  to  attend  thi  funeral.     While  returning 
from  tlie  funeral,  the  driver  of  the  j  l.iintiff's  carnage  stopped  at 
and  entered  a  hotel,  leaving  his  horses,  which  ran  away  and 
injured  the  plaintiff.     There  was  evidence  that  the  driver  had 
entered  the  hotel  at  the  invitation  of  defendant.  •  The  carriage 
and  horses  were  owned  by  the  driver.     Held,  that  the  defend- 
ant was  not  liable  for  the  injury:    Boniface  v.  Rehjc.a,  G  llobt. 
397;  5  Abb.  Pr.,  N.  S.,  259.    The  owner  of  a  building  employed 
a  plumber  to  repair  the  water-pipes  in  his  own  way.    Held,  not 
liable  for  aa  injury  produced  to  a  third  person  by  his  negligence 
in  that  work:  Bennett  v.  Truelmly,  06  Cal.  509;  56  Am.  Rep.  1 17. 
A  was  employed  to  paint  a  church,  and  he  gave  to  B  a  contract 
for  frescoing.     A  lent  B  two  competent  men,  who  were  sent  up 
to  place  the  planks,  etc.     A  painter  employed  by  B  sustained 


§295 


PRINCIPAL   AND   AGENT. 


520 


injury  from  the  breaking  of  one  of  these  planks.  The  planks 
were  furnished  by  the  church.  The  painter  who  was  injured 
sued  A  on  the  ground  that  the  men  sent  to  do  B's  work  should 
have  detected  the  imperfection  in  the  plank.  Held,  that  the 
action  could  not  be  maintained:  Ditherner  v.  Rogers,  66  How. 
Pr.  35;  13  Abb.  N.  C.  436.  Plaintiff  was  injured  by  a  falling 
fence  built  by  a  contractor  whom  defendant  had  employed  to 
construct  a  vault  for  a  new  building  to  be  erected.  Held,  that 
defendant  was  not  liable:  Martin  v.  Tribune  Ass'n,  30  Hun,  391. 
B  agreed,  for  a  specified  sum,  to  dig  a  ditch  and  lay  a  pipe  for 
A,  A  to  furnish  pipe  and  boxing,  but  to  have  no  further  connec- 
tion with  the  work.  Held,  that  B  was  an  independent  con- 
tractor, for  whose  negligence  in  leaving  the  ditch  unT>rot'  cd, 
whereby  C  sustained  injury,  A  was  not  responsible;  ^luith  v. 
Simmons,  103  Pa.  St.  32;  49  Am.  Rep.  113.  A  was  employed  to 
paint  a  building,  and  not  being  able  himself  to  build  a  scaffold, 
employed  a  skillfnl  and  competent  person  to  build  it.  It  broke, 
and  one  of  A's  workmen  was  injured.  Held,  that  A  was  not 
liable:  Devlin  v.  Smith,  25  Hun,  206.  A  canal-boat  came  to 
the  dock  of  A,  who  was  bound  to  unload  her.  He  employed 
shovelers,  who,  at  the  request  of  the  captain  of  the  boat,  and  ^'''' 
the  convenience  of  all,  moved  a  scow,  to  her  injury.  Held,  hat 
A  was  not  liable:  Morrell  v.  Rheinfrank,  24  Fed.  Rep.  94.  A 
railway  company  contracted  with  certain  parties  to  construct 
its  road  and  its  appurtenances.  The  contractors  hired  the 
plaintiff  to  work  upon  a  freight-house  they  v/ere  building  for 
the  company.  A  poisonous  mixture,  in  which  corrosive  subli- 
mate was  an  ingredient,  was  applied  to  the  timber  to  prevent 
decay.  The  plaintiff  was  injured  by  breathing  the  exhalations 
of  this  substance,  and  by  handling  the  timber  to  which  it  had 
been  applied.  Held,  that  the  railway  company  was  not  liable 
to  tho  plaintiff  for  the  injury  he  received,  but  that  the  contrac- 
tors were  solely  responsible,  and  were  not  in  this  respect  the 
servants  of  tho  company:  West  v.  St.  Louis  etc.  R.  R.  Co.,  63  111. 
545.  A  railway  company  employs  a  contractor  to  build  its 
road,  and  agrees  to  furnish  the  motive  power  and  operate  the 
construction  trains,  the  contractor  to  handle  all  material,  and 
build  a  certain  number  of  miles  per  month.  Held,  that  tho 
company's  engineer  on  a  construction  train  is  not  under  the 
control  of  the  company,  but  under  that  of  the  contractor,  and 
the  company  is  not  liable  for  injuries  caused  by  negligence  of 
the  engineer  in  too  rapidly  operating  the  train:  Miller  v.  Min- 
nesota etc.  R'y  Co.,  Iowa,  1888. 

Illustrations  Continued.  —  Master  Held  Liable. — The 
defendant's  horse  kicked  a  loose  shoo  through  the  plaintiff's 


520 

he  planks 

s  injured 

rk  should 

,  that  the 

,  66  How. 

a  falling 

ployed  to 

'Icld,  that 

Hun,  391. 

I  pipe  for 

r  connec- 

lent  ron- 

>rot'    ,,d, 

'^titdh  V. 

ployed  to 

.  Bcaffold, 

It  broke, 

.  was  not 

came  to 

miployed 

;,  and  for 

hid,    f,a.t 

).  94.    A 

construct 

ired  the 

ding  for 

vo  Bubli- 

prevent 

lalations 

it  had 

at  liable 

contrac- 

pect  the 

.,  63  111. 

>uild  its 

rate  the 

■ial,  and 

hat  the 

der  the 

tor,  and 

;encc  of 

V.  Min- 


—  The 
lintiflf's 


621 


LIABILITIES   OP   MASTER  AND   SERVANT. 


296 


n 


window-glass.     The  horse  was  being  driven  by  a  person  paid 
by  the  defenda'  t,  and  by  the  latter  let  with  a  wagon  by  the 
day  to  a  city  in  the  work  of  paving  streets.     It  was  under  the 
solo  njanagement  of  that  person,  whose  duty  it  was  to  keep  it 
properly  shod.     Held,  that  the  driver  was  at  the  time  the  ser- 
vant of  the  defendant,  and  the  defendant  was  liable  for  the  in- 
jury: Ilnffx.  Ford,  126  Mass.  24;  30  Am.  Rep.  645.   A  railroad 
company  let  certain  work  to  a  contractor,  furnishing  him  a  con- 
struction train,  with  an  engineer  to  run  it.     Except  in  respect 
to  speed  and  side-tracking  for  other  trains,  the  train  was  under 
the  control  of  the  contractor.     The  company  was  bound  to  dis- 
charge the  engineer  on  the  contractor's  complaint;  otherwire, 
the  company  controlled  him;   and  it  paid  his  wages,  but  de- 
ducted them  from  the  amount  due  the  contractor.     Held,  that 
the  engineer  was  the  servant  of  the  company:  New  Orleans  etc. 
n.  R.  Co.  V.  Nonoood,  62  Miss.  565;  52  Am.  Rep.  191.     The 
owner  of  cars  used  by  the  railroad  company  agreed  to  clean 
tlicm.     Ills  employee,  while  crossing  the  track  in  the  discharge 
of  his  duty,  was  injured  by  a  car  negligently  and  suddenly  set 
in  motion  by  employees  of  the  railroad  company.     Held,  that 
the  employee  had  a  right  of  action  against  the  railroad  com- 
pany:  Harold  v.  New  York  Central  etc,  R.  R.  Co.,  13  Daly,  89; 
Young  v.  New  York  Central  etc,  R.  R.  Co.,  13  Daly,  294.    A  rail- 
road furnishc^d  platform  cars  to  shippers  of  lumber,  allowing 
shippers  to  furnish  stakes  or  standards  to  set  in  the  iron  sockets 
and  support  the  lumber.     A  stake  so  furnished  broke,  i)recipi- 
tating  a  brakeman,  on  the  lumber,  to  the  ground.     Held,  that 
the  brakeman  had  an  action  against  the  railroad:  Bushhy  v. New 
York,  Lake  Erie  etc.  R.  R.  Co.,  107  N.  Y.  374.     An  employee  of 
a  railroad  permittee'  an  i  \competent  engineer  to  take  charge  of 
a  train,  and  an  accident  ensued.     Held,  that  the  company  was 
liable  to  a  passenger  injured:  Lakin  v.  R.  R.  Co.,  15  Or.  220. 

§296.  Exceptions— Where  Work  is  a  Nuisance  or 
Dangerous  per  Se. — An  exception  to  this  rule  exists 
where  the  work  is  wrongful  per  se,  and  must  result  in  a 
nuisance.  Hero  the  original  employer  will  be  liable  for 
any  injury  done  to  third  perpons,  although  the  work  is 
emoloyed  by  an  ind^jpendent  contractor,  employing  his 
own  servants.'     If  o;ic  employs  a  contractoi-  to  enter  upon 

»  Ellis  ".  SheflFeia  Gas  Co.,  2  El.  &  Robbins,  2  Black,  418;  Cuff  r.  New- 

B.  7GG;  lleegan  r.  Western  R.R.  Co.,  ark  R.    R.   Co.,   35  N.   J.    L.    17;    10 

8  N.  Y.  17o;  5<J  Am.  Deo.  470;  Lock-  Am.  Rep.  205;  Kellogg  r.  Payne,  21 

wood  v.  New  York,  2  Hilt.  (Hi;  Water  Iowa,  578;  liuadhiiubcn  v.   Boiul,   36 

Co.  V.  Ware,  10  Wall.  500;  Chicago  v.  Wia.  29;  Clark  v.  Fry,  8  Ohio  8t.  358; 


296 


PRINCIPAL  AND  AGENT. 


522 


land  and  do  certain,  work,  and  it  turns  out  that  the  entry 
is  a  trespass,  the  employer  is  liable  for  a  trespass  thus 
committed  by  a  subcontractor.*  One  who  employs  an- 
other to  fill  his  ice-house  by  the  cord,  and  obtains  license 
from  the  municipal  authorities  to  encumber  the  street 
for  that  purpose,  cannot  shield  himself  from  liability  for 
injuries  caused  by  unlawfully  obstructing  the  street  with 
blocks  and  fragments  of  the  ice,  under  an  objection  that 
his  employee  was  a  contractor  and  alone  liable.'*  So,  too, 
where  the  work  is  per  se  dangerous  to  others,  the  pro- 
prietor is  required  to  foresee  such  dangers  and  provide 
against  them.'  So,  where  the  injury  is  caused  by  defective 
construction  which  was  inherent  in  the  original  plan  of 
the  employer.*  He  cannot  relieve  himself  from  liability 
to  third  persons  by  any  contract  he  may  make  with  the 
contractor.^ 

Illuste  ytions.  —  A,  a  proprietor,  employed  B,  a  contractor, 
to  tear  down  and  rebuild  his  house,  committing  the  entire 
work  to  B,  who  assumed  the  risk  of  supporting  the  adjacent 
house  of  C,  which  was  entitled  to  support  from  the  house  of  A. 
The  house  of  C  was  injured,  through  the  negligence  of  B  in 
failing  properly  to  sup'^ort  it.  A  was  held  answerable  in  dam- 
ages toC:  Bowery.  Peate,  L.  R.  1  Q.  B.  Div.  321;  Brown  v.  Werner, 
40  Md.  15.  Defendant  employed  B,  who  was  engaged  in  "the 
roofing  and  cornice  business,"  to  repair  the  cornice  of  his  hotel, 
in  the  city  of  New  York.  No  price  or  plan  was  specified;  and 
the  mode  of  repair  and  the  means  to  be  employed  were  left  en- 
tirely to  the  judgment  ui'  B.  The  employees  of  B  suspended  a 
ladder  from  the  roof,  upon  which  planks  were  placed  to  serve 
as  a  scaffold.     A  heavy  wind  caused  one  of  the  planks  to  fall, 


72  Am.  Dec.  590;  Carman  v.  Steuben- 
ville,  4  Oh.o  St.  399;  Treadwell  v. 
New  York,  1  Daly,  128;  Creed  v. 
Hartni.ann,  29  N.  Y.  591;  80  Am.  Dec. 
341;  Lowell  v.  Boston  etc.  R.  R.  Co., 
23  Pick.  24;  34  Am.  Dec.  33;  Deford 
V.  State,  30  Md.  179;  City  of  Tiffin  v. 
McCormack,  34  Ohio  St.  638;  32  Am. 
Rep.  408.  One  M'ho  cuploys  a  con- 
tractor to  do  an  unlawful  act  is  re- 
sponsible for  any  damage  arising  from 
the  negligent  manner  in  which  the 
■work  is  performed:  Cougreve  v.  Mor- 
gan, 5  Duer,  495. 


'  Leber  v.  Minneapolis  and  North- 
western R'y  Co.,  29  Minn.  256. 

^  Darmstaetter  v.  Moynahan,  27 
Mich.  188. 

''  Robbins  v.  Chicago,  4  Wall.  057; 
Chicago  V.  Robbin.s,  2  Black,  418. 

•Boswell  V.  Laird,  8  Cal.  469;  08 
Am.  Dec.  345;  Lancaster  v.  Conn. 
Mut.  Ins.  Co.,  92  Mo.  460;  1  Am.  St. 
Rep.  739. 

'■>  Ellis  V.  Gas  Co.,  2  El.  &  B.  770; 
Carman  v.  Steubonville,  4  Ohio  St. 
399. 


523 


LIABILITIES   OP   MASTER   AND   SERVANT. 


§  297 


and  it  struck  and  injured  the  plaintiff,  who  was  passing.  De- 
fendant was  not  in  the  city  during  the  repairs,  and  had  no 
knowledge  of  the  manner  in  which  they  were  being  done.  The 
building  was  separated  from  the  sidewalk  by  an  area  fifteen 
feet  wide.  Held^  that  the  scaffold  was  not  a  nuisance,  and  the 
defendant  was  not  liable:  Ilexamer  v.  Webb,  101  N.  Y.  377;  54 
Am.  Rep.  703. 


§  297.  Where  Duty  is  Imposed  by  Contract. — So,  also, 
where  a  person  contracts  to  do  a  certain  thing,  he  cannot 
evade  liability  by  giving  over  to  another  the  work  he  has 
agreed  to  perform.^  Thus  where  a  mining  company  con- 
tracts for  the  removal  of  ore,  but  assumes  the  duty  of 
making  arrangements  to  protect  the  workmen,  it  is  liable 
to  the  contractor's  employees  for  injury  in  couseauence 
of  neglect  of  that  duty.* 

Illustrations.  —  A  company  undertook  to  lay  water-works 
in  a  city,  agreeing  with  the  municipality  that  it  would  "protect 
all  persons  against  damages  by  reason  of  excavations  made  by 
them  in  laying  pipes,  and  to  be  responsible  for  all  damages 
which  might  occur  by  reason  of  the  neglect  of  their  employees 
in  the  premises."  The  company  let  out  the  work  to  a  contractor, 
who  used  a  steam-drill  in  such  a  manner  as  to  frighten  a  trav- 
eler's horse  and  injure  the  traveler.  Held,  that  the  company 
was  liable  to  the  traveler:  Water  Co.  v.  Ware,  16  Wall.  566.  O. 
contracted  to  put  a  cornice  on  defendant's  mill,  defendant  agree- 
ing to  erect  the  scaffolding  necessary  for  the  purpose,  free  of 
cost  to  0.  Defendant  erected  the  scaffolding  so  negligently 
that  it  fell,  killing  plaintiff's  intestate,  a  servant  of  0.,  who  was 
at  work  upon  it.  Held,  that  defendant  was  liable:  Coughfry  v. 
dkhc  Woolen  Co.,  56  N.  Y.  124;  15  Am.  Rep.  387.  A  contracted 
with  the  owners  of  a  mine  to  excavate  the  ore,  they  agreeing  to 
erect  such  supports  and  props  as  would  render  the  miners  safe 
whenever  notified  by  the  contractor  that  the  same  were  neces- 
sary. Held,  that  even  in  the  absence  of  such  notice  the  owners 
were  liable  to  a  miner  for  injury  caused  by  the  lack  of  proper 
supports,  if,  having  actual  knowledge  of  the  necessity,  they 
failed  to  erect  them:  Kelly  v.  Howell,  41  Ohio  St.  438. 

•  Langridge  v.  Levy,  2  Mees.  &  W.  odist  Soc,  6  Rep.  751;   Campbell  v. 

519;  4  Id.  .337;  Siilzbacher  v.  Dickie,  Somerville.  114  Mass.  SM. 

()  Daly,  469;  Francis  v.  Cockrell,  L.  "  Lake  Superior  Iron  Co.  v.  Erick- 

K.  5  Q.  B.  184,  501;  Mulchey  v.  Meth-  son,  39  Mich.  492;  33  Am.  Rep.  423. 


§298 


PRINCIPAL   AND    AGENT. 


524 


298. 


Where  Duty  is  Imposed  by  Law. — And  where 
a  duly  is  imposed  upon  a  person  by  a  statute,  ho  is  liable 
for  au}^  injury  in  performing  it,  whether  by  himself  or 
by  a  contractor  employed  by  him.^  Where  a  municipal 
ordinance  requires  the  owner  of  materials  forming  an 
obstruction  in  a  street  to  prepare  and  place  lights  thereon, 
with  such  care  and  diligence  as  reasonably  to  secure  their 
burning  till  daylight,  such  owner  is  liable  to  third  per- 


'  Gray  r.  Pullen,  5  ..est  &  S.  970. 
But  sec  Eaton  v.  Kailroad  Co.,  69  Me. 
520;  8  Am.  Hep.  430.  Lowell  v.  Bos- 
ton etc.  R.  R.  Co.,  23  Pick.  24,  34  Am. 
Dec.  33,  13  an  instructive  case  in  this 
connection.  See  statement  by  Thomas, 
J,  in  Hilliard  v.  Richardson,  3  Gray, 
341):  "In  a  previous  suit  the  town  of 
Lowell  (Currier V.  Lowell,  IGPick.  170) 
had  been  coinp''''"d  to  pay  damages 
sustained  by  Currier  by  reason  of  a 
detect  in  one  of  the  highways  of  the 
town.  The  defect  was  caused  in  the 
construction  of  the  railroad  of  the 
Boston  and  Lowell  company.  It  con- 
sisted in  a  deep  cut  through  the  high- 
way made  i:i  the  construction  of  the 
railroad.  Barriers  had  been  placed 
across  the  highway  to  prevent  travel- 
ers from  falling  into  the  chasm.  It 
became,  in  tlie  construction  of  tlie 
railroa  1,  necessary  to  reuiove  the  bar- 
riers, for  the  purpose  of  carrying  out 
stone  and  rubbish  from  the  deep  cut. 
They  were  removed  by  persons  in  the 
employ  of  the  corporation,  who  ne- 
glected to  replace  them.  Currier  and 
another  person,  drivmg  along  the  high- 
way in  the  night-tmie,  were  precipi- 
tated into  the  deep  cut  and  seriously 
injured.  Currier  brought  his  action 
against  the  town  of  Lowell,  and  re- 
covered damages.  This  action  was  to 
recover  of  the  railroad  corporation  the 
amount  the  town  had  been  so  com- 
pelled to  pay.  The  raUroad  corpora- 
tion denii  d  their  responsibility  for  the 
negligeui-  of  the  persons  employed  in 
the  coiiscructiou  of  that  part  of  the 
railroad  where  the  accident  took  place, 
because  that  'jectiou  of  the  road  had 
been  lei  out  to  one  Noonan,  who  ha-.l 
contracted  to  make  the  same  for  a 
strpulated  sum.  ami  imd  employed  the 
wurkmeu.     This  deieuse  was  not  sus- 


tained, nor  should  it  have  l)een.  The 
defendants  had  been  authorized  by 
their  charter  to  construct  a  railroad 
from  Boston  to  Lowell,  four  rods  wide 
through  the  whole  length.  They  were 
authorized  to  cross  turnpikes  or  other 
highways,  with  power  to  raise  or 
lower  such  turnpikes  or  liighwaj's  so 
that  the  railroad,  if  necessary,  might 
pass  conveniently  over  or  under  the 
same.  Now,  it  is  plain  that  it  is  the 
corporation  that  are  intrusted  by 
the  legislature  with  the  execution  of 
these  public  works,  find  tliat  they  are 
bound,  in  the  construction  of  them, 
to  protect  the  public  against  danger. 
It  is  equally  plain  that  they  cannot 
escape  this  responsibility  by  a  delet;a- 
tion  of  this  power  to  others.  The 
work  was  done  on  laud  appropriated 
to  the  purpose  of  the  railroad,  and 
under  authority  of  the  corporation 
vested  in  them  by  law  for  the  pur- 
pose. The  barriers,  the  omission  to 
replace  which  was  the  occasion  of  the 
accident,  were  put  up  and  maintained 
by  a  servant  of  the  corporation,  and 
by  their  express  orders;  and  that  ser- 
vant had  tlie  care  and  supervision  of 
them.  The  accident  occurred  from 
the  negligence  of  a  servant  of  the  rail- 
road ccn-poration,  acting  under  their 
express  orders.  The  case,  then,  of 
Lowell  V.  Boston  and  Lowell  11.  R. 
stands  perfectly  well  upon  its  cvn 
principles,  and  is  clearly  di.stinguish- 
able  from  the  case  at  bar.  The  crmrt 
might  well  say  that  the  fact  of  Noojiaa 
being  a  contractor  for  this  section  did 
not  relieve  the  cor[)oration  from  the 
duties  or  responsibility  imposed  on 
them  by  their  charter  and  the  law, 
especially  as  the  failure  to  replace  the 
bajriers  waa  the  act  of  their  immedi- 
ate servant,  acting  under  their  orders."' 


524 


625 


LIABILITIES   OP  MASTER  AND  SERVANT. 


299 


sons  for  injuries  incurred  through  negligence  in  the 
performance  of  this  duty,  either  by  himself  or  by  a  con- 
tractor in  his  employ,  and  even  if  the  lights  were  extin- 
guished by  an  unknown  cause.* 

Illustrations. — A  railroad  company  was  empowered  by 
act  of  Parliament  to  construct  a  bridge  across  a  navigable 
river.  The  act  provided  that  it  should  not  be  lawful  to  detain 
any  vessel  navigating  the  river,  for  a  longer  time  than  suffi- 
cient to  enable  any  carriages,  animals,  or  passengers  ready  to 
traverse,  to  cross  the  bridge,  and  to  open  it  to  admit  such  vessel. 
The  company  employed  a  contractor  to  construct  the  bridge,  in 
conformity  with  the  act;  but  before  the  works  were  completed, 
the  bridge,  from  some  defect  in  its  construction,  could  not  be 
opened,  and  the  vessel  of  A.  was  prevented  from  navigating  the 
river.  Held,  that  the  company  was  liable  to  A:  Hole  v.  Sitting- 
bourne  R.  R.  Co.,  6  Hurl.  &  N.  488.  A,  by  statute,  was  em- 
powered to  make  a  drain  from  hie  premises  to  a  sewer,  by 
cutting  a  trench  across  the  highway.  The  statute  provided, 
in  careful  terms,  that  where  the  surface  of  a  highway  should  be 
thus  broken,  the  person  so  breaking  it  should  restore  it  to  its 
former  condition,  or  be  subj'^ct  to  a  penalty  for  failing  so  to  do. 
A  employed  to  do  this  work  a  contractor,  by  whose  negligence 
the  drain  was  filled  improperly,  in  consequence  of  which  dam- 
ages ensued  to  B.  Held,  that  A  was  liabli  to  B:  Grey  v.  Pul- 
len,  5  Best  &  S.  970;  City  of  Detroit  v.  Corey,  9  Mich.  1G5;  80 
Am.  Dec.  78. 


§  299.  Where  Employer  Interferes  with  or  Directs 
Work. — The  proprietor  may  make  himself  liable  by 
retaining  the  right  to  direct  and  control  the  time  and 
manner  of  executing  the  work  or  by  interfering  with  the 
contractor  and  assuming  control  of  the  work,  or  of  some 
part  of  it,  so  that  the  relation  of  master  and  servant  arises, 
or  so  that  an  injury  ensues  which  is  traceable  to  his  in- 
terference."    But   merely   taking   steps   to   see   that   the 


'  Wilson  V.  White,  71  Ga.  506;  51 
Am.  Rep.  269. 

'^  2  Thompson  on  Negligence,  p.  913, 
sec.  40;  Gilbert  v.  Beach,  4  Duer,  423; 
5  Bosw.  445;  16  N.  Y.  608;  Jones  v. 
Chantry,  4  Thoiiip.  &,  C.  G.J;  Griffiths 
V.  Wolfram,  22  Minn.  185;  Burton  v. 
Kailroad  Co.,  61  Tex.  526;  Brackett  v. 


Lubke,  4  Allen,  138;  81  Am.  Dec.  694; 
Faren  v.  Sellers,  39  La.  Ann.  1011;  4 
Am.  St.  Rep.  256.  If  an  owner  molli- 
fies in  any  respect  his  contract  with 
those  contracting  to  erect  a  building, 
so  that  in  doing  any  particular  act 
they  are  obeying  the  directions  of  the 
owner,  if  that  act  is  negligent,  and 


299 


PRINCIPAL  AND  AGENT. 


526 


contrnctor  carries  out  his  agrectnent,  as,  having  the  work 
supervised  by  an  architect  or  superintendent,  does  not 
make  the  employer  liable;*  nor  does  reserving  the  right 
to  dismiss  incompetent  workmen." 

Illustrations — A  contractor  agreed  with  trustees  of  an 
estate  to  take  down  a  building  for  them  carefully,  and  under 
their  direction,  and  subject  to  their  approval.  Held,  that  the 
trustees  were  liable  for  injury  to  a  third  person  by  the  con- 
tractor's negligence  in  the  work:  Linnchan  v.  Rollins,  137  Mass. 
123;  50  Am.  Rep.  287.  A  contract  stipulated:  "The  work  to 
be  done  under  the  direction  of  the  city  civil  engineer,  or  agent 
appointed  by  the  city  council  for  the  same,  who  shall  have 
entire  control  over  the  manner  of  doing  and  shaping  all  or  any 
part  of  the  same,  and  whose  directions  must  be  strictly  obeyed." 
Held,  that  the  city  was  liable  for  the  negligence  of  the  contractor 
in  depositing  a  pile  of  stones  so  as  to  obstruct  the  flow  of  sur- 
face water  and  flood  the  premises  of  an  adjacent  owner:  Cincin- 
nati v.  Stone,  5  Ohio  St.  38.  The  charter  of  a  city  gave  the 
street  commissioners  authority  to  "  direct  and  control  the  per- 
sons employed  "  on  the  streets,  and  it  was  stipulated  in  the 
contract  that  the  work  was  to  be  done  "  under  the  direction  of 
the  street  commissioners."  Held,  that  the  city  was  responsible 
for  an  injury  to  a  traveler  by  the  negligence  of  the  contractor: 
St.  Paul  V.  Seitz,  3  Minn.  297.  Defendant,  a  railroad  corpora- 
tion, made  a  contract  with  A,  whereby  he  was  to  have  entire 
charge,  in  defendant's  freight-car  yard,  of  the  work  of  making 
up  freight  trains,  etc.,  and  to  be  paid  a  certain  sum  per  ton  of 
freight  and  for  each  car  hauled  from  the  yard.  Defendant's 
superintendent  was  authorized  to  see  that  the  work  was  done 
satisfactorily,  and  if  it  were  not,  defendant  could  terminate  the 
contract  at  twenty-four  hours'  notice.  The  men  employed  in 
the  yard  were  paid  by  A.  B  sued  defendant  for  injuries  re- 
ceived through  the  negligence  of  train-men  in  the  employ  of  A. 


damage  ensues,  the  owner  is  liable. 
In  such  a  case,  it  is  his  duty  to  see 
that  what  is  done  under  his  special 
orders  is  not  negligently  done:  Heffer- 
nan  v.  Benkard,  1  Robt.  4.36.  The 
owner  of  a  mine  who  furnishes  the 
operating  machinery  and  engages  an- 
other persun  to  open  the  mine  sustains 
the  relation  of  master  to  an  employee 
of  the  person  so  engaged :  Fell  v.  Rich 
Hill  Coal  Mining  Co.,  23  Mo.  App. 
216. 

•  Clark  V.  Hannibal  R.  R.  Co.,  36 
Mo.  202;  Callahan  v.  Railroad  Co.,  23 


Iowa,  562;  City  of  Erie  v.  Caulkins, 
85  Pa.  St.  247;  Novina  v.  Peoria,  41 
111.  502;  89  Am.  Doc.  392;  Robinson 
V.  Webb,  11  Bush,  464;  Pacic  v.  New 
York,  8  N.  Y.  222;  Hunt  v.  .■^Kiilroad 
Co.,  61  Pa.  St.  475;  Samueisou  v. 
Cleveland  Mining  Co.,  49  Mich.  Ifrt, 
43  Am.  Rep.  456;  contra,  Schwartz  v. 
Gilmore,  45  111.  455;  92  Am.  Dec.  227; 
Camp  V.  Churchwardens,  7  La.  Ann. 
321;  Harper  v.  Milwaukee,  30  Wis. 
365. 

»  Reedie  v.  Railroad  Co.,  4  Ex.  244; 
Schular  v.  Railroad  Co.,  38  Barb.  Co3. 


526 


527 


LIABILITIES   OP   MASTER   AND   SERVANT. 


300 


Ing  the  work 
snt,  does  not 
ng  the  right 


rtjstees  of  an 
ly,  and  under 
Held,  that  the 
I  by  the  con- 
ins,  137  Maes. 
'  The  work  to 
neer,  or  agent 
lo  shall  have 
ing  all  or  any 
ictly  obeyed." 
the  contractor 

0  flow  of  Bur- 
wner:  Cincin- 
city  gave  the 
itrol  the  per- 
iilated  in  the 
e  direction  of 

18  responsible 
le  contractor: 

oad  corpora- 
have  entire 
k  of  making 
;m  per  ton  of 
Defendant's 
)rk  was  done 
erminate  the 
employed  in 
r  injuries  re- 
employ of  A. 

rie  V.  Caulkins, 

19  V.  Peoria,  41 
392;  F4,obinsoa 

4;  Pacic  v.  New 
unt  V.  .Railroad 
Samuelsoii  v. 
,  49  Mich.  16^, 
ra,  Schwartz  v. 

1  Am.  Dec.  227; 
ns,  7  La.  Ann. 
lukee,  30  Wis. 

Co.,  4  Ex.  244; 
.,  38  Barb.  Cd3. 


Held,  that  A  was  the  servant  of  defendant,  and  not  an  indepen- 
dent contractor:  Speed  v.  Railroad  Co.,  71  Mo.  303.  The  contract 
between  a  railroad  company  and  a  contractor  for  building  its 
road  stipulated  that  if  at  any  time  the  contractor  failed  to  em- 
ploy men,  tools,  implements,  and  machinery  in  kind  and  quality 
to  the  satisfaction  of  the  chief  enfjjineer  of  the  company,  the 
company,  after  written  notice  to  the  contractor,  should  have  the 
right  to  annul  the  contract.  Held,  that  tliis  did  not  show  such 
a  right  of  selection  of  the  contractor's  servants  as  to  make  the 
company  responsible  for  an  injury  sustained  from  the  fall  of  a 
chain  used  by  a  servant  of  the  contractor:  liurvicister  v.  New 
York  Elevated  R.  R.  Co.,  47  N.  Y.  Sup  Ct.  2G4. 

§  300.  Other  Gases  where  Employer  is  Liable. — Other 
circumstances  may  render  the  proprietor  liable,  as,  for 
instance,  knowingly  selecting  an  incompetent  contractor.^ 
Judge  Thompson  says:''  "  Notwithstanding  the  injury  may 
have  happened  while  the  work  was  being  prosecuted  by 
an  independent  contractor,  yet  the  proprietor  will  be 
liable  if  it  is  traceable  to  his  previous  negligence, — as,  if 
a  building  falls  down  in  process  of  erection,  in  conse- 
quence of  the  plans  furnished  to  the  contractors  requiring 
the  use  of  materials  which  are  unsafe.^  Again,  a  contrac- 
tor may  be  employed  to  do  a  particular  job,  under  cir- 
cumstances which  leave  the  proprietor  charged  with  the 
duty  which  regularly  attaches  to  him  to  see  that  the  work 
does  not  endanger  the  safety  of  others.  A  builder  may 
make  lawful  and  necessary  excavations  in  the  street;*  a 
blacksmith  may  remove  a  grating  in  the  sidewalk  to 
repair  it;^  a  coal  merchant  may  make  an  opening  in  the 
sidewalk  to  deliver  coal  to  his  customer.''  In  all  these 
cases,  the  liability  to  guard  the  excavation  may  remain 
upon  the  proprietor,  and  he  may  be  chargeable  for  any 
damages  resulting  from  his  failure  so  to  do.  It  has  been 
well  laid  down,  that  if  the  building  of  a  house  is  split  up 

'  2  Thompson  on  Negligence,  p.  908.  4  Wall.  657;  Homan  v.  Stanley    66 

'  2  Thompson  on  Negligence,  sec.  29,  Pa.  St.  464;  5  Am.  Rep.  389. 

p.  907.  *  McCleary  v.  Kent,  3  Duer,  27. 

'  Horner  v.  Nicholson,  56  Mo.  220.  '  Pickard  v.   Smith,    10    Com.   B., 

*  Robbins  v.  Chicago,  2  Black,  418;  N.  S.,  470. 


301 


PRINCIPAL  AND  AGENT. 


628 


into  several  different  contracts,  and  the  owner  undertakes 
to  supply  the  materials,  and  no  provision  is  made  for  the 
supervision  of  the  work,  or  for  maintaining  guards,  the 
duty  of  protecting  the  public  remains  on  the  owner.*  If 
the  proprietor  interferes  with  the  work  of  the  contractor, 
and  directs  a  particular  thing  to  be  done,  from  which 
injury  results,  obviously  he  will  be  liable,  for  it  is  his 
own  personal  act.'"* 

Illustuations. — 0.  and  M.  contracted  with  defendant  to 
put  a  cornico  on  its  mill,  any  scafFolding  required  for  that  pur- 
pose to  be  erected  free  of  cost  to  them.  Plaintiff's  intestate,  u, 
workman  in  the  employ  of  0.  and  M.,  while  engaged  in  the 
work,  was  killed  by  the  fall  of  a  scaffold  erected  by  defendant 
for  that  purpose.  In  an  action  to  recover  damages,  plain  tifT 
was  nonsuited,  upon  the  ground  that  defendant  owed  no  duty 
to  deceased  in  respect  to  the  construction  of  the  scaffold.  Held, 
error;  that  the  scaffold  being  erected  by  defendant  upon  its 
own  premises  for  the  express  purpose  of  accommodating  the 
workmen,  a  duty  was  imposed  upon  it  toward  them  to  use 
proper  diligence  in  constructing  and  maintaining  the  structure; 
and  that  this  dutv  existed  independently  of  the  contract: 
Couijhtry  V.  Globe  Woolen  Co.,  56  N.  Y.  124;  15  Am.  Rep.  387. 

§301.    Master  not  Liable  for  Injury  to  Servant. — As 

a  general  rule,  subject  to  certain  exceptions  to  bo  after- 
wards  noticed,  a  master  is  not  liable  for  an  injury  to  a 
servant  while  in  his  service,  caused  by  the  negligence  of  a 
fellow-servant.  This  important  exception  to  the  maxim 
respondeat  superior  is  generally  said  to  be  founded  upon  an 
implied  contract  on  the  part  of  the  servant  in  entering 
the  employment  that  he  will  assume  the  ordinary  risks 
thereof,  one  of  which  is  the  risk  of  being  injured  by  the 
negligence  of  a  fellow-servant.^     The  rule  that  a  servant 


1  Homan  v.  Stanley,  66  Pa.  St.  464; 
5  Am.  Rep.  389. 

*  Jones  V.  Chantry,  4  Thomp.  &  C. 
63. 

*  Priestley  v.  Fowler,  3  Mees.  &  W.  1, 
is  regarded  as  the  leading  English  case 
on  this  topic,  and  Farwell  v.  Boston  R. 
R.  Co.,  4  Met.  49, 38  Am.  Dec.  339,  the 
leading   American   adjudication.     In 


Priestley  v.  Fowler,  Lord  Abingcr,  C, 
B.,  said:  "If  the  master  be  liahlu  to  the 
servant  in  this  action,  the  principle  of 
that  liability  will  be  found  to  carry  us 
to  an  alarming  extent.  He  who  is  re- 
sponsible by  its  duty  or  by  the  terms 
of  his  contract  for  all  the  consequeiicqa 
of  nsgligence  in  a  matter  in  which  he 
is  a  principal  is  responsible  for  the 


628 


529 


LIABILITIES   OF    MASTF.U    AND    SERVANT. 


§  301 


lertakes 
I  for  the 
rds,  the 
lor.'  If 
itractor, 
1  which 
t  is  his 


idant  to 
that  pur- 
tcBtatc,  i), 
d  in  the 
efcndant 
plaintifT 
no  duty 
1.  Held, 
upon  its 
iting  the 
n  to  use 
tructurc; 
contract: 
Dp.  387. 

nt. — As 
je  after- 
ury  to  a 
nco  of  a 

maxim 
upon  an 
'ntering 
ry  risks 

by  the 
servant 

Linger,  G. 
able  to  the 
rinciple  of 
o  carry  us 
who  is  re- 
tho  terms 
isequeiiCQS 
which  he 
for  the 


cannot  recover  of  his  master  for  damage  sustained  from 
the  negligence  of  his  fellow-servant  docs  not  prevent  his 


negligence  of  all  his  inferior  agents. 
If  the  owner  of  the  carriage  id  there- 
fore resiMinsildo  for  tlie  sutliciency  of 
Ilia  carriage  to  hia  servant,  he  is  re- 
Bponsiblo    for  tlie  negligence  of    his 
coach-nuikur,  or  his  harness-maker,  or 
his  coaoliinan.     Tiio   footman,   there- 
fore,  who  ritles   behind  the  carriage 
may  have  an  action  against  his  master 
fur  a  defect  in  the  carriage,  owing  to 
tile  neyligence  of  the  coach-maker,  or 
for  a  delect   in    the   harness,   arising 
from  the  negligence  of   the  harnesa- 
iiiaker,   or  for  drunkenness,  neglect, 
or  want  of  skill  in  the  coachman;  nor 
ii  there  any  reason  wliy  the  principlo 
sliould  not,  if  applicable  in  this  class 
of  cases,  extend  to  many  others.     The 
master,   lor  example,  would  be  liable 
to  the  servant  for  the  negligence  of 
t'le  chambermaid,  for  putting  him  into 
a  damj)  bed;  for  that  of   the  uphol- 
sterer for  sending  in  a  crazy  bedstead, 
wlicreby  he  was  made  to  fall  down 
while  asleep   and  injure   himself;  for 
the  negligence  of  the  cook  in  not  prop- 
erly cleiuiing  the  copper  vessels  used 
v.\  the  kitchen;  of  the  butcher  in  sup- 
plying the  family  with  meat  of  a  qual- 
ity  injurious   to   the  health;  of    the 
buiUler  for  a  defect  in  the  foundation 
of  the  house  whereby  it  fell,  and  in- 
jured botii  the  master  and  the  servant 
by  the  ruins.     The  inconvenience,  not 
to  say  the  absurdity,  of  these  conse- 
quences affords  a  suiiicient  argument 
ag;iin;jt  the  application  of  this  principle 
to  tlie  present  case.     But  in  truth  the 
i;iere  relation  of  the  master  and  the 
sarvant  nover  can  imply  an  obligation 
on  the  part  of  the  master  to  take  more 
care  of  tlio  servant  than  he  may  rea- 
sonably be  expected  to  do  of  himself, 
lie  is,  no  doubt,  bound  to  provide  for 
the  safety  of  his  servant  in  the  course 
of  his  employment  to  the  best  of  his 
juilgnient,    information,    and    belief. 
Tlio  servant  is  not  bound  to  risk  his 
safety  in  the  service  of  his  master,  and 
in:iy,  if  he  thinks  fit,  decline  any  ser- 
vice in  which  he  reasonably  apprehends 
injury  to  liimself;  and  in  most  of  the 
caaes  in  which  danger  may  be  incurred, 
if  not  in  all,  he  is  just  as  likely  to  be 
acquainted  with  the  probability  and 
extent  of  it  as  the  master.     lu  that 
Vol.  L— 31 


sort  of  employment,  especially,  wliicli 
is  described  in  the  declaration  in  this 
case,  the  plaintiff' nnist  have  known  as 
well  as  his  master,  and  iirobalily  Ijct- 
ter,  wlietlior  the  van  was  snllicicnt, 
whetlKr  it  was  overloaded, and  whetlior 
it  wan  liliely  to  carry  him  safely.  In 
fact,  to  allow  tliissort  of  action  to  pre- 
vail woul  1  be  an  encouragement  to  tiie 
servant  to  omit  that  diligence  and  cau- 
tion which  he  ij  in  <luty  bound  to  exer- 
cise on  the  behalf  of  his  master,  to 
protect  him  tigainst  the  misconduct  or 
negligence  of  others  who  serve  him; 
and  wiiich  diligence  and  caution,  while 
tliey  protect  the  master,  are  a  niucli 
better  security  against  any  injury  tlie 
servant  may  sustain  by  the  neLsligence 
of  otliers  engaged  under  the  same  mas- 
ter, than  any  recourtio  against  bis  mas- 
ter for  damages  could  poHsi])ly  afford." 
In  Farwell  i'.  Boston  11.  R.  Co.,  Chief 
Justice  Shaw  urgcj  similar  reasons 
against  such  a  liability.  He  say.': 
"The  general  rule  resulting  from  con- 
sideration* a.i  well  of  ju.itice  as  of  pol- 
icy is,  tliat  he  who  cngage3  in  the 
employment  of  another  for  the  per- 
formance of  specified  unties  and  ser- 
vices, for  compensation,  takes  upon 
liimself  the  natural  ami  f)rilinary  risks 
and  perils  incident  to  the  performance 
of  such  services;  and,  in  legal  pre- 
sumption, the  compenjation  is  adjusted 
accordingly.  And  we  arc  not  aware  of 
any  principle  which  should  except  the 
perils  arioing  from  the  careh^ssne.ss  and 
negligence  of  those  who  are  in  the  sai.ie 
employment,  'ihose  arc  perils  which 
the  servant  is  as  likely  to  kiuiw,  and 
against  which  he  can  as  effectually 
guard, a.s  the  master.  They  are  i)eril.;  in- 
eiilent  to  the  service,  and  which  can  lie 
as  distinctly  foreseen  and  provided  for 
in  the  rate  of  compensation  as  any  f)lli- 
ers.  To  say  that  the  master  shall  be  re- 
sponsible because  the  damage  is  caused 
by  his  agents,  is  assuming   the  very 

point  which  remains  to  be  proved 

Where  several  persons  are  employed 
in  the  conduct  of  one  common  enter- 
prise or  undertaking,  and  *'•  safety 
of  each  depends  much   on  -lare 

and  skill  with  which  each  ot..jr  .shall 
perform  his  appropriate  duty,  each  is 
an  observer  of  the  conduct  of  the  oth- 


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§301 


rRINX'IPAL    AND    AGENT. 


530 


maintaining  an  action  against  his  master  for  consequen- 
tial damages  by  liim  sustained  through  an  injury  to  his 
wife  from  such  negligence.*  The  rule  is  also  in  no  way 
affected  by  the  fact  that  both  servants,  at  the  time  of  the 
accident,  were  illegally  employed,  the  day  being  Sunday.^ 

Illustrations.  —  Plaintiff  was  employed  by  defendant  to  re- 
move tlic  sand  or  "  form  "  from  a  largo  oven  recently  built  by 
defendant's  lessor.  The  oven  fell  in,  injuring  plaintiff.  There 
was  no  evidence  of  knowledge  on  defendant's  part  of  the  danger- 
ous condition  of  the  oven,  and  there  was  notliing  charging  de- 
fendant with  negligence  in  not  possessing  knowledge.  7/(7'/, 
that  a  verdict  for  pkiintifT  must  be  set  aside:  Nawn  v.  Wrst,  78 
Me.  2r)3.  An  elevator  boy,  engineer,  and  plaintiff  were  in  do- 
F  ndant's  employ.  The  engineer's  duty  was  to  furnish  the  nio- 
;i  •"  ^;Owcr  for  an  elevator,  which  the  boy  ran,  and  which  carried 
plaiiiiiff  to  his  work.  The  engineer  always  took  the  elevator  on 
f.  fri.'il  trip  every  morning  with  nobody  on  board.  On  one  occa- 
aion  plaintiff  entered  the  elevator  in  the  morning,  shortly  before 
the  hour  when  he  was  required  to  go  to  work,  just  as  the  en- 
gineer was  making  the  trial  trip.  The  elevator  boy  was  not 
there,  and  plaintiff  was  injured.     Held,  that  if  the  injury  was 


ers,  can  give  notice  of  any  miscontluct, 
incapacity,  or  neglect  of  duty,  and 
leave  the  service  if  the  cominoa  em- 
ployer will  not  take  such  precautions 
and  employ  such  agents  as  the  safety 
of  the  whole  party  may  require.  By 
these  means  the  safety  tif  each  will  be 
much  more  efli'cctually  secured  than, 
could  bo  done  by  a  resort  to  the  com- 
mon employer  for  indemnity  in  case 
of  loss  by  the  negligence  of  each  other. " 
These  positions  are  supported  and  fol- 
lowed by  a  host  of  authorities,  both 
in  this  country  and  in  England.  The 
rule  in  the  text,  in  its  broadest  state- 
ment, is  30  v.-cll  settled  that  it  will 
servo  no  purpose  to  set  out  the  mass 
of  authoritiea  iu  this  note.  They  may 
bo  found  collected  and  arranged  ac- 
cording to  states  up  to  the  year  1880 
in  2  Thompson  on  Negligence,  p.  9(59, 
sec.  1;  and  see  Murray  v.  South  Caro- 
lina R.  R.  Co.,  1  McMull.  E(i.  385;  36 
Am.  Dec.  2G9;  Shields  v.  Yoiige,  15 
Ga.  349;  GO  Am.  Dec.  698;  Slater  v. 
Jewett,  So  N.  Y.  61 ;  2  Am.  Rep.  627; 
Fox  V.  Sandford,  4  Sneed,  36;  67  Am. 
Dec.  587;  Illinois  etc.  R.  R.  Co.  v. 
Cox,   21   111.   20;  71   Am.   Dec.   298; 


Ohio  etc.  R.  R.  Co.  v.  Tindal,  13 
lud.  366;  74  Am.  Dec.  259;  McCoi- 
ker  V.  R.  R.  Co.,  84  N.  Y.  77; 
Sykes  v.  Packer,  99  Pa.  St.  465;  Piii- 
greer.  Leyland,  135  Mass.  398;  Yeaton 
V.  R.  R.  Co.,  1.35  Mass.  418;  Frazier 
V.  R.  R.  Co.,  38  Pa.  St.  104;  80  Am. 
Dec.  461;  Louisville  etc.  R.  R.  Co.  i'. 
Collins,  2  Duvall,  114;  87  Am.  Dec. 
486;  Oilman  v.  R.  R.  Co.,  10  Allen, 
233;  87  Am.  Dec.  035;  Fiak  v.  Cent. 
Pac.  R.  R.  Co.,  72  Cal.  .38;  1  Am.  St. 
Rep.  22;  Casey  v.  R.  R.  Co.,  84  Ky. 
79;  Fort  Hill  Stone  Co.  v.  Orm.  84 
Ky.  183;  Hoar  v.  Merritt,  62  -Mich. 
386;  CoUyer  v.  R.  R.  Co.,  49  N.  J.  L. 
59;  Alleghany  Heating  Co.  v.  Rohan, 
1 18  Pa.  St.  223;  Moran  v.  Brown,  '-'7 
Mo.  App.  457.  A  female  servant  can- 
not bring  an  action  against  her  master 
for  persuading  her  to  have  sexual  iu- 
tercourse  with  an  infant  fellow-ser- 
vant: Jordan  v.  Hovey,  72  Mo.  574; 
37  Am.  Rep.  447. 

'Gannon  v.  R.  R.  Co.,  112  Mass. 
234;  ^7  Am.  Rep.  82. 

'  Houston  etc.  R.  R.  Co.  v.  Rider, 
62  Tex.  267. 


530 


531 


LIABILITIES   OF   MASTER   AX' 


ERVANT. 


302 


isequen- 
y  to  liis 
I  no  way 
10  of  the 
Sunday.'^ 

ant  to  re- 
built by 
F.  There 
c  dangor- 
irging  (le- 
;c.  lIcJ'J, 
.  West,  78 
ore  in  de- 
li the  1110- 
:h  carried 
levator  on 
one  occa- 
■tly  before 
IS  the  en- 
^  was  not 
iijury  was 

Tiiulal,    13 

59;   McCoi- 

N.   Y.    77; 

t.  4G5;  Piu- 

398;  Yeatou 

H8;  Frazier 

0-1;  80  Am. 

R.  R.  Co.  I'. 

Am.  Dec. 

10  Allen, 

k  V.  Cent. 

1  Am.  St. 

o.,  84  Kv. 

Orm.  84 

G'2  Mich. 

49  N.  J.  L. 

V.  Rohan, 

Brown,  '27 

servant  can- 

her  master 

G  sexual  iu- 

fellow-ser- 

2  Mo,  574; 

112  Mass. 

0.  V.  Rider, 


caused  by  negligence  other  than  that  of  plaintiff,  it  wa^;  the 
neg'igence  of  the  elevator  boy  or  the  engineer,  who  were  plain- 
tiff's fellow-servants,  for  which  defendant  was  not  liable:  Wol- 
cott  V.  Studehaker,  34  Fed.  Hep.  8.  A  fireman  was  killed  while 
cleaning  the  ash-pan  of  his  locomotive,  by  the  running  of  a 
work-train,  contrary  to  the  rules  of  the  road,  into  the  fireman's 
train.  Held,  that  this  was  one  of  the  ordinary  hazards  of  his 
employment,  for  which  his  administrator  could  not  recover: 
Wabash,  St.  Louis  etc.  R.  R.  Co.  v.  Conkling,  IT)  111.  App.  157. 
A  transportation  company  paid  a  stevedore  to  load  a  ship. 
Through  the  stevedore's  negligence  one  of  his  men  received  an 
injury.  Held,  that  he  could  not  recover  against  the  company: 
Rankinw.  Merchants^  and  Miners^  Trans.  Co.,  73  Ga.  220;  54  Am. 
Rep.  874.  Two  distinct  corporations  operated  two  separate  por- 
tions of  a  through-line  of  travel  connecting  at  a  common  ter- 
minus. Each  sold  tickets  over  the  entire  route,  but  divided  the 
receipts  between  them  proportionately.  Held,  that  there  was  no 
such  legal  identity  between  them  as  would  render  their  respect- 
ive employees  servants  of  a  common  master  so  as  to  prevent 
the  maintenance  of  an  action  by  the  employee  of  one  of  them 
against  the  other  for  personal  injuries  occasioned  through  the 
negligence  of  its  servants:  Carroll  v.  Railroad  Co.,  13  Minn.  30j 
97  Am.  Dec.  221. 

§  302.  Exceptions  —  Defective  Machiuery,  Buildings, 
or  Appliances.  —  But  the  rule  in  the  last  section  is  sub- 
ject, as  before  said,  to  many  qualifications.  The  first  of 
these  is,  that  the  master  being  by  law  bound  to  take 
reasonable  care  not  to  subject  the  servant  to  extraordi- 
nary danger,  he  will  be  liable  for  an  injury  to  the  servant, 
caused  by  defective  or  unsafe  buildings,  machinery,  or 
appliances.*     The  master  is  not  a  warrantor  of  the  safety 


*  See  cases  cited  in  2  Thompson  on 
Negligence,  973;  Connolly  v.  Poillon, 
41  Barb.  36G;  Keegan  v.  Railroad 
Co.,  8  N.  Y.  175;  59  Am.  Dec.  470; 
Chicago  etc.  R.  R.  Co.  v.  Jackson,  55 
111.  492;  8  Am.  Rep.  661;  Noyes  v. 
Smith,  28  Vt.  59;  65  Am.  Dec.  222; 
McMillan  v.  Union  Press  Brick  Works, 
6  Mo.  App.  434;  Buzzell  v.  Laconia 
Mfg.  Co.,  48  Me.  113;  77  Am.  Dec. 
212;  and  see  note  to  this  case  in  77 
Am.  Dec.  218-225;  Nashville  etc. 
R.  R.  Co.  V.  Elliott,  1  Cold.  611;  78 
Am.  Dec.   506;   Ryan  v.    Fowler,  24 


N.  Y.  410;  82  Am.  Dec.  315;  Thayer 
V.  Railroad  Co.,  22  Ind.  20;  85  Am. 
Dec.  409;  Snow  v.  Railroad  Co.,  8 
Allen,  441 ;  85  Am.  Dec.  720;  Rogers 
V.  Ludlow  Mfg.  Co.,  144  Mass.  198; 
69  Am.  Rep.  68;  Rice  v.  King  Phillip 
Mills,  144  Mass.  229;  59  Am.  Rep.  80; 
Boardman  r.  Brown,  44  Hun,  336; 
Pennsylvania  etc.  R.  R.  Co.  r.  Mason, 
109  Pa.  St.  2JM5;  58  Am.  Rep.  722; 
Brossman  v.  Railroad  Co.,  113  Pa.  St. 
490;  67  Am.  Rep  479;  Goodman  i:. 
Richmond  R.  i\.  Co.,  81  Va.  576; 
Wormell  v.  Maine  Cent.  R.  R.  Co., 


§302 


PRINCIPAL  AND  AGENT. 


532 


and  sufficiency  of  his  machinery  and  appliances.  He  is 
required  but  to  use  reasonable  and  ordinary  care  in 
selecting  and  maintaining  them.*  It  is  not  a  univer- 
sal rule  of  law  that  it  is  always  an  employer's  duty  to 
furnish  suitable  appliances;  and  an  instruction  assuming 
this  affords  ground  for  reversal.'^  To  render  the  master 
liable  for  an  injury  to  his  employee,  caused  by  defective 


79  Me.  397;  1  Am.  St.  Rep.  321; 
Robertson  r:  Coriielsoii,  .It  Foil.  Rej>. 
71G;  Little  Rock  etc.  R.  R.  Co.  v. 
Lcvcrett,  48  Ark.  333;  Krucger  v. 
R.  R.  Co.,  Ill  Ind.  51;  rcnnsylvania 
Co.  V.  Wliitcomb,  111  Ind.  212;  Covey 
r.  R.  R.  Co.,  27  Mo.  App.  170. 

'  Daubert  v.  riukel,  4  Mo.  App.  590: 
Whaleii  i:  Coiitcnary  Church,  02  Mo. 
S27;  Cayzer  v.  Taylor,  10  Gray,  274; 

69  Am.  Dec.  317;  Fort  Wayiic  etc. 
R.  R.  Co.  V.  Gilderslecve,  33  Mich, 
133;  Jones  1'.  Yeagcr,  2  Dill.  04;  Seaver 
r.  Boston  etc.  R.  R.  Co.,  14  Gray,  407; 
Locke  V.  Sioux  City  ct«.  R.  R.  Co.,  46 
Iowa,  109;  Cooper  v.  Iowa  Central 
R.  R.  Co.,  44  Iowa,  134;  St.  Louis 
etc.  R.  R.  Co.  V.  Valiriu^  53  Ind.  511; 
Camp  Point  Mfg.  Co.  v.  liallou,  71  III. 
417;  Nashville  etc.  R.  R.  Co.  v.  Jones, 
9  Heisk.  27;  Connolly  v.  PoiUon,  41 
Barb.  300;  Houston  etc.  R.  R.  Co.  v. 
Oram,  49  Tex.  341;  International  etc. 
R.  R.  Co.  V.  Doyle,  49  Tex.  190;  King 
V.  R.  R.  Co.,  9Cu3h.  112;  Mad  River 
R.  R.  Co.  V.  Barber,  o  Ohio  St.  541; 

07  Am.  Dec.  312;  Leonard  r.  Collins, 

70  K  Y.  90;  Indianapolis  etc.  R.  R. 
Co.  V.  Love,  10  lad.  5r)4;  Shanny  v. 
Androscoggin  Mills,  GO  Mo.  420;  Gib- 
son V.  Pacitic  U.  R.  Co.,  40  Mo.  103; 
2  Am.  Rep.  497;  Lawler  v.  Railroad 
Co.,  02  Me.  403;  10  A'n.  Rep.  492; 
Hough  r.  Itailroad  Co.,  100  U.  S.  213; 
Do  Graff  r.  Railroad  Co.,  70  N.  Y.  125; 
Chicago  R.  R.  Co.  ^\  Mahnney,  4  111. 
App.  202;  Painton  v.  Railroad  Co.,  83 
N.  Y.  7;  Jones  v.  Railroad  Co.,  22 
Hun,  284;  Little  Rock  R.  R.  Co.  v. 
Duffey,  35  Ark.  002;  Kranz  v.  White, 

8  111.  App.  583;  Mansfiela  Coal  Co.  v. 
McEnery,  91  Pa.  St.  185;  King  v. 
R.  R.  Co.,  14  led.  Rep.  277;  Buckley 
V.  Mining  Co.,  14  Fed.  Rep.  833; 
Payne  v.  Reese,  100  Pa.  St.  301 ;  Jlis- 
souri  R.  R.  Co.  v.  Lyde,  67  Tex.  5C5; 
Wabash  etc.  R.  R.  Co.  v.  Fcnton,  12 


ni.  App.  417;  Chicago  etc.  R.  R.  Co. 
V  Bragonier,  11  III.  App.  510;  Armour 
V.  Hahn,  111  U.  S.  313;  Bajua  r.  Rail- 
road  Co.,  103  N.  Y.  312;  57  Am.  Rq). 
723;  Allison  Mfg.  Co.  r.  McCornsick, 
118  Pa.  St.  519;  4  Am.  St.  Rop.  (513; 
Moynihan  v.  Hills  Co.,  140  Maos.  580; 
4  Am.  St.  Rep.  348;  \Vei)ber  r. 
Piper,  109  N.  Y.  490.  In  Baker  v. 
Railroad  Co.,  95  Pa.  St.  211,  40  Am. 
Rep.  034,  the  rule  of  law  is  con- 
cisely stated  by Sharawood,  C.  J. :  "A 
servant  assumes  all  tho  ordinary  ri.sk.s 
of  Lis  employment.  Ho  cannot  hold 
tho  master  responsible  for  an  injury 
which  cannot  be  traced  directly  to  iiis 
negligence.  If  it  hn?  resulted  from 
tho  negligence  of  a  follow-servant  in 
tho  same  employment,  he  must  look 
to  him,  and  not  to  tho  master,  for  re- 
dress. The  master  does  not  warrant 
him  against  such  negligence.  The 
duty  which  tho  master  owes  to  his 
servants  i.s  to  provide  them  with  safe 
tools  and  machinery  where  that  is 
necessary.  Vv'hea  ho  does  this,  he 
does  not,  however,  engage  tiiat  they 
will  always  continue  ia  tlic  same  con- 
dition. Any  defect  which  may  be- 
come apparent  ia  their  use,  it  is  tho 
duty  of  tlio  servant  to  observe  and  re- 
port to  hii  employer.  Tlio  servant 
haa  tho  meann  of  discovering  any  suoh 
defect  which  the  master  doe.?  not  pos- 
sess. It  is  not  negligence  in  the  ma.iter 
if  the  tool  or  machine  breaks,  whether 
from  an  internal  original  fault,  not 
apparent  whea  tho  tool  or  maciiino 
was  at  first  provided,  or  from  an  ex- 
ternal apparent  one  produced  by  time 
and  use,  not  brought  to  the  master's 
knowledge.  These  are  the  ordinary 
risks  of  the  employment  which  tiio 
servant  takes  upon  himself." 

^  Robinson  v.  George  F.  Blake  Mfg. 
Co.,  143  Mass.  528. 


532 


533 


LIABILITIES   OP   MASTER   AND   SERVANT. 


§302 


.     He  is 

care   in 

unirer- 

,  duty  to 

issuming 

0  master 
defective 

:.  R.  R.  Co. 

16;  Armflur 
Ajus  V.  liail- 
>7  Am.  Run. 
McCoriniek, 
b.  Rep.  ()13; 
[>  Miios.  MO; 
\Vui)ber  r. 
In  Baker  v. 
211,  40  Am. 
law  is  c(in- 
l,  C.  J.:  "A 
•tliaary  risks 
cannot  liiiM 
)r  an  injury 
rectly  to  liis 
sulteil  from 
i\--servant  in 
e  must  look 
istur,  for  rc- 
not  warrant 
fence.  The 
owes  to  his 
m  with  safe 
lero  that  is 
jes  this,  he 
rn  that  they 
le  same  con- 
ch may  l)e- 
se,  it  is  tlie 
icrvo  ami  re- 
The  servant 
ng  any  siuli 
oe3  not  [KH- 
n  the  ma.ster 
iks,  whether 

1  fault,  not 
or  maciiine 
from  an  ex- 
ceil  by  time 
the  urdster'a 
Lhe  oriUiiaiy 
t  which  the 
f." 

Blake  Mfg. 


machinery,  it  must  appear  that  the  master  knew,  or  by 
the  exercise  of  proper  diligence  ought  to  have  known,  of 
its  unfitness,  and  that  the  servant  did  not  know,  or  could 
not  reasonably  be  held  to  have  known,  of  the  defect.* 
The  danger  must  be  shown  to  be  such  as  to  suggest  itself 
to  a  man    of  ordinary  prudence.''     As   between  master 
and  servant,  the  fact  that  the  appliance  is  defective,  and 
the  servant  is  injured,  does  not  raise  a  presumption  of 
negligence  in  the  master.'     The  master  is  not  compelled 
to   provide   the   safest   and    newest   machinery,   or    the 
newest  inventions.*     The  owner  of  a  mine  is  not  bound 
to  employ  tho  most  expensive  precautions  against  fire- 
damp, but  only  to  use  reasonable  efforts  for  ventilation.** 
A  master,  in  the  absence  of  a  statute,  is  not  bound  to 
provide  means  of  escape  from  a  factory  where  the  fire  is 
not  caused  by  his  neglect.'    A  railroad   is   not   bound 
to  discard  cars  of  an  old  pattern  because  the  coupling  of 
them  with  cars  of  a  new  pattern  is  attended  with  more 
danger  than  the  coupling  of  new  cars  with  each  cther.^ 
Nor  to   adopt  what   is  known  as   the  "target  switch," 
simply  beer  ise  this  kind  of  switch  guards  more  effectu- 
ally against  the  negligence  of  switchmen  than  tho  com- 
mon switch,  it  appearing  that  the  latter  is  safe  when 
properly  operated.^     Nor  is  it  bound  to  pursue  a  system 
of  inspection  of  its  cars  and  locomotives  which  would 
embarrass  the  operation  of  the  road,  but  simply  to  exercise 


»Hu11d.  Hall,  78  Me.  114. 


'^  Nelson  i\  Allen  Paper  Car-wheel    Rep.  227. 


Railroad  Co.,  C9  Iowa,  450;  68  Am. 


Co.,  29  Fed.  Rep.  840. 

^  Bowen  v.  Railroad  Co.,  95  Mo. 
2f.H;  Cahill  v.  Hilton,  100  N.  Y.  613; 
IMuiadclphia  etc.  R.  R.  Co.  v.  Hughc}, 
Hi)  Pa.  Nt.  301. 

«  Fort  Wayne  R.  R.  Co.  v.  Gilder- 
sleeve,  33  Mich.  133;  Botsford  v.  Rail- 
road Co.,  33  Mich.  256;  Jones  v. 
Granite  Mills,  126  Mass.  84;  30  Am. 
Rup.  001;  Ttdedo  etc.  R.  R.  Co.  v. 
Aslmry,  84  111.  429;  Wonder  v.  Rail- 
road Co.,  32  Md.  411;  3  Am.  Rep. 
143;  Philadelphia  etc.  R.  R.  Co.  r. 
Kecnau,   103  Pa.   St.   124;   Euros  v. 


''  Bcrns  v.  Gaston  Gas  Coal  Co.,  27 
W.  Va.  285;  55  Am.  Rep.  304.  Bub 
see  St.  Louis  etc.  R.  R.  Co.  v.  Valirius, 
56Ind.  511;  Nashville  etc.  R.  R.  Co. 
V.  Elliott,  1  Cold.  611;  78  Am.  Dec. 
506. 

•  Jones  V.  Granite  Mills,  126  Mass. 
84;  30  Am.  Rep.  661;  Keith  v.  Gran- 
ite Mills,  126  Mass.  90;  30  Am.  Rep. 
666. 

•  Fort  Wayne  etc.  R.  R.  Co.  v. 
Gildersleeve,  33  Mich.  133. 

^  Saltera  v.  Canal  Co.,  3  Hun, 
33S. 


§302 


PRINCIPAL  AND  AGENT. 


534 


ordinary  care.^     The  master  must  establish  proper  rules 
for  the  guidance  of  his  employees  and  their  safety .'^ 

iLLUSTR-iTiONs. — A  railroad  engineer  was  killed  by  the  ox- 
plosion  of  a  locomotive  boiler.     The  boiler  was  made  of  the  best 
material,  and  by  first-class  manufacturers;  it  had  not  been  used 
long  enough  to  create  a  reasonable  suspicion  of  its  unsafe  condi- 
tion, the  defect  could  not  have  been  discovered  by  any  of  the 
usual  tests,  and   its  appearance  did  not  indicate  its  unsafe 
condition.     Held,  that  the  company  waa  not  answerable,  being 
bound  only  to  provide  machinery  of  good  material,  constructed 
in  a  workmanlike  manner:  Indianapolis  etc.  R.  R.  Co.  v.  Toy, 
91  111.  474;  33  Am.  Rep.  57.     The  proprietor  of  an  establish- 
ment, in  one  room  of  which  about  twenty  girls  *vere  employed, 
removed  an  engine  from  one  room  of  the  factory  to  another. 
Being  pressed  with  business,  they  made  the  change  in  the  night- 
time; and  in  the  morning  the  machine  was  left  in  such  a  posi- 
tion that  the  main  shaft  projected  through  the  wall  into  this 
room  from  four  to  six  feet.     In  this  state,  the  machinery  was 
put  in  motion.     One  of  the  gir'  ,  in  passing  near  the  revolving 
shaft  about  her  work,  was  ca    ,ht  by  it  and  fatallv  injured. 
Held,  that  the  proprietors  were  liable  for  damages:  FairbanJ:  v. 
Haentzsche,  73  111.  237.     A  hook  in  an  iron  foundiy,  which  a 
careful  inspection  would  have  shown  to  be  weak,  broke,  and  a 
heavy  weight  hung  on  it  fell  and  injured  a  workman.     Held, 
that  he  could  maintain  an  action  against  his  employer,  whose 
duty  required  an  inspection  of  the  hook:  Spicer  v.  South  Boston 
Iron  Co.,   138  Mass.  426.     A   corporation   believed,  and  was 
justified  in  believing,  that  a  certain  quantity  of  grain  could  bo 
safely  stored  on  a  floor  of  their  building.     Held,  that  the  fact 
that  the  floor  gave  way,  without  warning,  was  not  sufficient  to 
render  the  corporation  liable  in  damages  to  one  of  its  employees 
who  was  injured  by  the  fall:  Dillon  v.  Sixth  Av.  R.  R.  Co.,  48 
N.  Y.  Sup.  Ct.  283.     A  factory  girl  was  injured  by  the  fall  of  a 
privy  attached  to  the  factory  and  rendered  insecure  by  certain 
circumstances,  which^  with  this  natural  consequence  thereof, 
were  proved  to  have  been  known  to  and  unremedied  by  the 
owner.     Held,  that  the  girl  might  recover  from  the  owner,  her 
employer,  damages  for  her  injuries:  Ryan  v.  Fowler,  24  N.  Y. 
410;  82  Am.  Dec.  315.     A  hoisting  apparatus  consisting  of  sev- 
eral pieces,  and  set  up  on  the  ground,  fell  because  of  careless- 
ness in  setting  an  anchor-post.     Held,  that  the  apparatus  was 
not  to  be  deemed  a  single  machine,  for  a  defect  in  which  the 
master  was  liable  to  the  servant  injured  by  the  fall,  but  tiiat 

*  Smoot  V.  Railroad  Co.,  67  Ala.  13.     Pennsylvania  Co.  v.  Whitcomb,  111 
a  Schmidt  v.    Block,  76  Ga.    823;    Ind.  212. 


534 


535 


LIABILITIES   OF   MASTER   AND   SERVANT. 


§303 


per  rules 

y  the  ox- 

»f  the  best 
been  used 
afe  con  (li- 
ny of  the 
ts  unsafe 
ble,  being 
n  strut' ted 
0.  V.  Toij, 
establish- 
sm  ployed, 

another, 
the  night- 
^h  a  posi- 

into  this 
inery  was 
revolving 
r  injured. 
lirbanJ:  v. 
,  which  a 
ke,  and  a 
n.  Held, 
er,  whose 
(th  Boston 

and  was 

could  bo 
the  fact 
Iicient  to 
mployecs 
R.  Co.,  48 
e  fall  of  a 
)y  certain 

;  thereof, 

d  by  the 
wner,  her 

24  N.  Y. 
ng  of  sov- 

carelcss- 
ratus  was 
vhich  the 

but  tiiat 

fccomb,  111 


the  case  was  that  of  the  negligence  of  a  fellow-servant:  Pcschcl 
V.  liniliodd  Co.,  G2  Wis.  3o8.  The  engineer  and  firen)an  were 
killed  by  the  explosion  of  a  locomotive  boiler,  which  had  been 
recently  and  insufficiently  repaired  in  the  shops  of  the  railroad 
company.  IlcJd,  that  the  company  is  not  relieved  from  liabil- 
ity by  the  fact  that  the  repairers  and  the  deceased  were  fellow- 
servants,  although  under  the  same  sui)erint('ndent:  /Vhh.  etc. 
II.  li.  Co.  V.  Mason,  109  Pa.  St.  2DG;  58  Am.  llep.  723.  Plain- 
tiff, conductor  on  a  freight  train,  was  injured  by  the  giving  way 
of  a  defective  ladder  on  one  of  tlie  cars.  The  negligence  of  the 
defendant  railroad  company  was  clearly  sliown,  and  the  plaintiff 
lestified  that  he  had  no  suspicion  of  the  unsafe  condition  of  the 
ladder.  Held,  that  a  verdict  for  plaintitF  should  not  be  set 
aside:  Goodman  v.  Richmond  and  L'anvillc  R.  R.  Co.,  81  Va.  57G. 
A  laborer  was  killed  by  something,  supposed  to  be  a  brick, 
falling  on  his  head  from  above.  There  was  evidence  tending 
to  show  a  want  of  protection  against  such  an  accident.  Held, 
that  a  verdict  against  the  owner  of  the  building  should  not  be 
disturbed:  Ford  v.  Lyons,  41  llun,  512. 

§  303.  Latent  Defects  and  Banj^ers.  —  The  servant 
takes  the  risk  of  "seen  dangers,"  but  tho  master  is  under 
a  duty  to  exercise  reasonable  care  in  protecting  him  from 
latent  defects  in  the  machinery  or  appliances  which  he 
uses/  or  dangerous  services  unknown  to  him."  It  is  tho 
duty  of  a  proprietor  of  a  limo-kiln  to  warn  an  inexperienced 
laborer  on  tho  kiln  of  tho  danger  of  falling  into  the  lire 
by  the  removal  of  the  stone  at  the  base,  and  the  conse- 
quent subsidence  of  the  mass  above,  upon  which  he  is 
employed  to  work.^  The  tendency  of  a.  board,  when 
warped,  to  spring  back  during  the  operation   of  being 


>  Paiilinier  v.  Erie  R.  R.  Co.,  34  N. 
J.  L.  151;  Sliaiiny  v.  Androscogcjin 
Mills,  CO  Me.  417;  Georgia  R.  K.  Co. 
V.  Keuiiey,  58  (Ja.  483;  International 
R.  R.  Co.  V.  Doyle,  41)  Tox.  11)0; 
bowling  V.  Allen,  6  Mo.  Ai>p.  105; 
Houston  etc.  R.  R.  Co.  v.  McNainara, 
5'J  Tex.  255;  Texas  etc.  R.  R.  Co.  v. 
McAteo,  Gl  Tex.  (.i95;  Bean  v.  Steam- 
ship Nav.  Co.,  24  Fed.  Rep.  124; 
Atkins  r.  Threa.l  Co.,  142  Mass.  431; 
Smith  V.  Peninsular  Car  Works,  60 
Mich.  501;  1  Am.  St.  Rep.  542;  Cra- 
ver   V.   Christian,   3G  Minn.    413;    1 


Am.  St.  Rep.  G75;  Little  Rock  etc. 
R.  R.  Co.  r.  Lovcrott,  48  Ark.  3.">3;  3 
Am.  .St.  llL'p.  230;  Faren  v.  Sellers,  i-O 
La.  Ann.  1011;  4  Am.  St.  lie]).  25(i; 
Clapp  I'.  Minnesota  etc.  II.  Co..  3(3 
Minn.  (5;  Stoen  r.  St.  Paul  etc.  11.  R. 
Co.,  37  Minn.  310;  Wuoiilla r.  Riilroad 
Co.,  Ti  Minn.  l.".l 

^  Baxter  r.  Roberts,  44  Cal.  187;  13 
Am.  Rup.  100;  Jones  v.  Mi  ii:ig  (,'o., 
CO  Vri;.  208;  57  Am.  Rep.  2JU;  Olsea 
r.  McMullon,  34  Minn.  94. 

^  Parkliurst  v.  Johnson,  50  Mich.  70; 
45  Am.  Rep.  28. 


003 


PRINCIPAL   AND   AGENT. 


536 


sawed  by  a  circular  saw  is  not  so  obvious  that  an  inex- 
perienced workman  must  bo  held  necessarily  to  take 
cognizance  ol"  it  witiiout  being  warned.* 

Illuhtuations. — The  plaintiff  engaged  in  the  service  of  a 
corporation  as  a  miner.  At  that  time  ordinary  blasting-powder 
was  used.  Subsequently  giant-powder,  a  more  dangerous  ex- 
plosive, was  substituted  by  order  of  the  president.  The  plaintiff 
was  not  informed  of  the  proper  mode  of  using  it,  although  the 
corporation  had  printed  directions.  The  plaintiff  was  injured 
by  an  explosion.  Held,  that  the  corporation  was  liable:  Smith  v. 
Oxford  Iron  Co.,  42  N.  J.  L.  467;  36  Am.  Rep.  535.  Defendant 
claimed  title  to  land  occupied  by  other  persons,  who  threat- 
ened to  resist  by  force  any  interference  with  their  possession. 
Defendant,  knowing  this,  but,  without  communicating  it  to 
plaintiff,  employed  plaintiff  to  go  with  him  to  the  land  to  do 
some  work,  in  doing  which  plaintiff  was  shot  by  the  persons  in 
possession.  Held,  that  he  might  recovcT  against  defendant  for 
the  damage  so  suffered  by  him:  Baxter  v.  Roberts,  44  Cal.  187; 
13  Am.  Rep.  160.  An  employee,  Avho  was  not  a  ship-carpenter 
or  a  joiner,  or  a  mechanic  of  any  kind,  and  who  knew  nothing 
about  the  construction  of  scaffolding,  or  the  forces  which  it 
would  be  required  to  resist,  was  put  into  the  hold  of  a  gunboat 
by  his  employer,  to  remove  the  chips  and  rubbish  from  beneath 
a  scaffold.  Ileld,  that  ho  had  a  right  to  rely  upon  the  superior 
knowledge  of  his  employer,  who  was  a  ship-builder,  and  his  care 
and  prudence  that  the  scaffolding  was  of  sufficient  and  adequate 
strength  to  insure  him  against  all  harm:  Connolly  v.  Poillon,  41 
Barb.  366.  A's  business  of  hauling  for  B  required  him  to  drive 
under  a  revolving  shaft,  which,  Without  his  knowledge,  was  re- 
paired between  two  of  liis  trips  in  such  a  manner  that  there 
was  not  room  to  drive  under  it  without  injury.  The  change 
was  not  apparent,  and  A  was  not  warned  thereof.  Held,  that 
B  was  liable  for  injuries  sustained:  Hawkins  v.  Johnson,  105  Ind. 
39;  55  Am.  Rep.  169.  Plaintiff  was  employed  as  "inside 
helper"  at  defendant's  furnace  for  smelting  ores.  One  of  plain- 
tiff's duties  was  to  take  the  hot  slag  from  the  furnace.  In 
front  of  the  furnace  was  a  slight  depression  in  the  floor,  in  which, 
usually,  water  lay.  Plaintiff  was  not  warned  of  the  certainty 
uf  a  powerful  explosion  in  case  of  the  hot  slag  coming  in  contact 
with  water.  On  the  third  day  of  plaintiff's  employment,  as  he 
was  removing  a  pot  of  slag  from  the  furnace^the  pot  tipped 
over,  the  slag  came  in  contact  with  the  water,  a  powerful  ex- 
plosion followed,  and  plaintiff  sustained  the  injury  to  recover 
damages  for  which  he  sued  his  employer.    Held,  that  defendant 

>  Wheeler  v.  Wasoa  Mfg.  Co.,  135  Mass.  294. 


■.-* 


5G6 


537 


LIABILITIES    OF    MASTER    AND   SERVANT. 


303 


an  incx- 
to   take 


vice  of  a 
ig-powdor 
erous  cx- 
c  plaintiff 
ougli  tho 
s  injured 
:  Smith  v. 
)cfendant 
lO  threat- 
ossession. 
ing  it   to 
ind  to  do 
>erson8  in 
ndant  for 
Cal.  187; 
carpenter 
V  nothing 
which  it 
I  gunboat 
1  beneath 
'  superior 
1  his  care 
adequate 
*oillon,  41 
■  to  drive 
',  was  re- 
lat  there 
e  change 
MJ,  that 
105  Ind. 
"inside 
of  plain- 
ace.     In 
n  which, 
crtainty 
contact 
it,  as  he 
t  tipped 
rful  ex- 
recover 
jfeudant 


was  at  fault  for  not  warning  plaintiff,  and  that  a  recovery  might 
be  had:    Mr(Jnimn  v.  La  Plata    Muiinri  and    Smelting  Co.,  3 
McCrary,   8t)3.      A   "helper"   of    considerable   expori-^nco   in 
coupling  cars  was  injured  in  attempting  to  couple  a  car  con- 
structed in  a  peculiar  and  dangerous  manner,  which  he  had 
never  seen,     lie  was  not  warn(!d  concerning  it.     Held,  that  ho 
could  recover  for  the  injury:  Mismiiri  Pacific.  JVyCo.v.  Callhrcath, 
GO  Tex.  526.     Plaintiff,  a  laborer,  was  called  in  to  assist  defend- 
ant in  moving  a  heavy  safe,  and  was  told  the  appliances  were 
safe.     Defendant  supervised   their  arrangement,  and  plaintiff 
did  as  he  was  told.     The  framework  gave  way  and  plaintiff 
was  injured.     Held,  that  his  action  was  maintainable:  Bradbury 
v.  Goodwin,  108  Ind.  28G.     Plaintiff,  a  carpenter  in  defendant's 
employ,  was  sent  by  it  to  remove  one  of  its  electric  lamps,  and 
connect  the  wires  with  tho  circuit.     Tho  evidence  showed  that 
the  usual  time  for  turning  on  the  electric  current  was  4:30,  r.  m., 
on  cloudy  days,  and  4:45,  p.  m.,  on  clear  days.     Plaintiff  testified 
that  when  he  reached  the  lamp,  and  began  work,  it  was  barely 
4:15,  p.  M.,  and  that  the  day  was  clear;  that  he  knew  noth- 
ing about  electric  wires,  the  work  assigned  him  being  outside 
the  scope  of  his  employment;  that  while  handling  the  wires  the 
current  was  turned  on,  and  he  received  a  shock,  producing  the 
injuries  sued  for.     Held,  that  a  nonsuit  was  properly  refused; 
tho  questions  of  negligence  and  contributory  negligence  being 
for  the  jury:  Colorado  Electric  Co.  v.  Luthers,  Col.,  1888.     A  rail- 
road company  used  an  engine,  which,  from  being  out  of  repair, 
was  accustomed  to  move  automatically  and  without  warning. 
Plaintiff,  an  engine-cleaner  in  the  employ  of  the  company,  was 
ordered  to  go  into  the  pit  under  the  engine  to  clean  it.     He  did 
not  know  of  the  defect  in  the  engine,  nor  was  he  informed  of  it. 
While  he  was  cleaning  it,  it  suddenly  moved  back  three  feet 
automatically,  cutting  off  his  fingers.     Held,  that  the  company 
was  liable:  Atchison,  Topeha  etc.  R.  R.  Co.  v.  Holt,  29  Kan.  149. 
Plaintiff,  a  detective  in  the  employ  of  defendant  railroad  com- 
pany, was  directed  to  go  from  one  station  to  another  on  a  hand- 
car belonging  to  the  company,  and  was  ordered  by  the  man  in 
cliarge  of  the  hand-car  to  sit  with  his  feet  hanging  over  the  rear 
end.     He  was  injured  by  reason  of  planks  being  between  the 
rails.     No  harm  would  have  happened  had  his  feet  been  inside 
the  car.     Held,  that  a  verdict  for  the  plaintiff  would  not  be 
disturbed:  Pool  v.  Railroad  Co.,  56  Wis.  227.     An  employee,  a 
green  hand,  was  put  in  charge  of  machinery,  which  outwardly 
indicated  no  danger,  ae  attendant  upon  the  wiping  of  a  certain 
plate  attached  to  it,  and  was  directed  by  the  superintendent  to 
wipe  such  plate,  without  any  caution,  whereby  he  was  injured. 
Held,  that  be  was  not  negligent  in  failing  to  so  examine  the 


§304 


PRINCirAL  AND   AGENT. 


538 


machinery  as  to  have  perceived  the  danger:  Howard  Oil  Co.  v. 
Farmer,  50  Tex.  301.  A  railroad  company  furnished  its  em- 
ployee a  hand-car  with  a  handle  of  brash,  brittle  wood,  which 
from  its  being  painted,  and  because  of  his  ncur-sightednegsi, 
plaintilT  could  not  see  to  bo  defective.  Held,  that  the  company 
was  liable  for  an  injury  caused  by  the  handle's  breaking  while 
being  properly  used:  Siela  v.  Railroad  Co.,  82  Mo.  430. 

§  304.  Duty  of  Railroad  Companies  to  Servants  Em- 
ployed. — Railroad  companies  must  keep  their  machin- 
ery, roadway,  and  bridges  —  their  appliances  for  the 
carrying  on  of  their  business — in  such  a  safe  and  good 
condition  as  care  and  foresight  are  able  to  accomplish.* 
But  a  railroad  is  not  bound  to  furnish  absolutely  safe 
appliances.^  A  railroad  company  is  under  no  obligation 
to  build  its  bridges  so  high  that  a  man  standing  on  a 
box-car  or  on  the  top  of  a  car  may  pass  under  safely.'^ 
Nor  is  it  liable  for  the  death  of  a  brakcman,  caused  by 
his  falling  through  a  bridge  in  process  of  repair,  upon 
which  the  train  had  stopped  at  night.*  A  railroad  com- 
pany receiving  a  loaded  car  from  another  company,  to  bo 
run  over  its  road,  is  not  bound  to  test  the  safety  of  the 
car  for   its  servants,  but  may  assume  its  safety  unless 


1  Toleilo  etc.  R.  R.  Co.  v.  Conroy,  61 
111.  lG-2;  Lj  111.  5(v;  Chicago  etc.  R. 
R.  Co.  V.  Swctt,  45  111.  201 ;  92  Am. 
Dec.  20r.;  Illinoia  etc.  R.  R.  Co.  v. 
Welch,  5'J  111.  18.3;  Illinois  etc.  R.  R. 
Co.  V.  Phillips.  4')  111.  234;  Pittsburg 
etc.  R.  R.  Co.  V.  Thompson,  uG  111. 
138;  Houston  etc.  R.  R.  Co.  v. 
Oram,  49  Tex.  341;  Fliko  r.  Riiilroad 
Co.,  r)3  N.  Y.  549;  13  Am.  Rep.  545; 
Chicago  etc.  R.  11.  Co.  v.  Tavlor,  01) 
111.  4G1;  18  Am.  Rep.  G2G;  Branu  r. 
Railroad  Co.,  53  Iowa,  595;  3G  Am. 
Rep.  243;  Fuller  v.  Jcwett,  80  N.  Y. 
4G;  .30  Am.  R-jp.  575;  Hoklenr.  Fitch- 
burg  R.  R.  Co.,  129  Mass.  208;  37  Am. 
Rep.  343;  Baker  r.  Railroad  Co.,  95 
Pa.  St.  211;  40  Am.  Rep.  G34;  Trask 
V.  California  R  R.  Co.,  03  Cil.  96; 
Thayer  v.  .St.  Louis  etc  It.  R.  Co.,  22 
Ind.  20;  85  Am.  Dec.  409;  St.  Louis 
etc.  R.  R.  Co.  V.  Irwin,  37  Kan.  701 ; 
1  Am.  St.  Rep.  266j  Clapp  v.  Railroad 


Co..  36  Minn.  6;  1  Am.  St.  Rep.  020; 
Little  Rock  etc.  R.  R.  Co.  i:  Lover- 
ett,  48  Ark.  333;  3  Am.  St.  Rep.  2:il; 
Little  Rock  etc.  R.  R.  Co.  i\  Eubanlcs, 
48  Ark.  400;  3  Am.  St.  Rep.  215; 
Franklin  v.  Railroad  Co.,  .37  Miua. 
409;  Huha  v.  Railroad  Co.,  92  Aio. 
440;  Parsons  v.  Railroad  Co.,  94  .Mo. 
230;  CoUyer  V.  Radroad  Co.,  49  N.  J. 
L.  59;  Biishby  v.  Railroad  Co.,  107 
N.  Y.  374. 

^  Tabler  v.  Railroad  Co.,  93  Mo.  79; 
Gutridge  v.  Railroad  Co.,  94  Mo.  4t)8; 
4  Am.  St.  Rep.  392;  Bowen  v.  Rail- 
road Co.,  95  Mo.  208. 

3  Baylor  v.  Railroad  Co.,  40  N.  J. 
L.  23;  29  Am.  Rep.  209;  Rains  v.  Rail- 
road Co.,  71  Mo.  101;  30  Am.  Rep. 
459;  Dovitt  v.  Railroad  Co.,  50  Mo. 
302;  Baltimore  etc.  R.  R.  Co.  v. 
Strieker,  51  Md.  47;  34  Am.  Rep.  201. 

*  Koontz  V.  Railroad  Co.,  65  Iowa, 
224;  54  Am.  Rep.  5. 


638 


539 


LIABILITIES   or   MASTER   AND   SERVANT. 


§304 


I  Oil  Co.  V. 
ed  its  cra- 
ootl,  which 
:ghtcdnog«i, 
0  company 
king  while 
JO. 

rants  Em- 

'  machin- 
j  for  tho 
and  good 
iomplisli.' 
utely  safe 
obligation 
ling  on  a 
or  safely.* 
caused  by 
)air,  upon 
•cad  com- 
iny,  to  be 
Ljty  of  the 
ty  unless 

St.  Ren.  C29; 

o.  V.  Levcr- 
St.  Rep.  2:;i; 

V.  E«bau!c.s, 
Rep.    2Jj; 

.,  37  Miua. 
Co.,  92  Aio. 

Co.,  94  Mo. 

o.,  49  N.  J. 
>ad   Co.,  107 

.  9.3  .Mo.  79; 

94  Mo.  408; 

wen  V.  Rail- 

o.,  40  N.  .J. 
laius  V.  Kail- 
G  Am.  Rfp. 
Co.,  50  Mo. 
R.  Co.  V. 
m.  Rep.  291. 
o.,  05  Iowa, 


tho  contrary  appears.'  Where  a  railroad  company  buys 
tho  lino  of  another  company,  embracing  a  bridge  obvi- 
ously unsafe  in  plan  and  construction,  and  fails  to  correct 
the  defects,  and  one  of  its  employees  is  injured  by  the  fall 
of  the  bridge,  tho  company  is  liable,  although  the  bridge 
had  been  in  use  for  several  years  before  tho  purchase 
without  accident."  A  railroad  company  is  liable  for  an 
injury  to  a  brakeman  in  carefully  coupling  cars,  occa- 
sioned by  its  negligently  leaving  sticks  of  firewood  scat- 
tered along  beside  tho  track  at  the  station."  But  that  a 
brakeman  is  required  to  couple  cars  having  dissimilar 
draw-heads  does  not  necessarily  make  tho  company  lia- 
ble for  any  injury  sustained  by  liim  while  coupling  such 
cars.*  Railroad  companies  must  use  ordinary  prudence 
in  making  and  publishing  to  their  employees  sufficient 
and  necessary  rules  and  regulations  for  tho  safe  running 
of  their  trains,  and  for  the  government  of  their  employees. 
For  an  injury  to  one  of  their  employees,  arising  from  tho 
want  of  such  regulations,  they  are  liable.^ 

Illustrations.  —  A  brakeman  in  coupling  freight-cars  for 
the  defendant  was  injured  by  a  loose  dead-wood  on  a  car  which 
had  come  from  another  road.  The  defendant  had  competent 
inspectors,  whose  business  it  was  to  reject  such  cars.  Held, 
that  the  brakeman  could  not  recover  of  the  defendant:  Smith 
v.  Railroad  Co.,  4G  Mich.  2o8;  41  Am.  Rep.  IGl.  A  railroad 
brakeman,  sudddenly  called  to  supper  by  the  conductor, 
slipped  on  snow  and  ice  accumulated  near  the  station  platform, 
and  was  injured.  Held,  that  the  company  was  not  liable: 
Piqucgno  v.  Railroad  Co.,  52  Mich.  40;  50  Am.  Rep.  243.  A 
brakeman  in  defendant's  employ,  descending  the  ladder  of  a 
moving  freight-car  to  throw  a  switch,  was  struck  by  a  tcdcgraph 
pole  standing  only  eighteen  inches  from  the  car,  and  killed. 


'  Ballou  V.  Chicago,  Minneapolis,  & 
St.  P.  R.  R.  Co.,  54  Wi3.  259;  41  Am. 
Rep.  31.  But  see  Gutriclge  v.  Mis- 
souri Pacific  R.  R.  Co.,  94  Mo.  468; 
4  Am.  St.  Rep.  392. 

'  Vosburgh  v.  Railroad  Co.,  94  N. 
Y.  374;  46  Am.  Rep.  148. 

'  Hulehan  v.  Railway  Co.,  58  Wis. 
319. 


*  Wood  worth  v.  Railway  Co.,  18 
Fed.  Rep.  282. 

'  Cooper  V.  Railroad  Co. ,  44  Iowa, 
134;  Chicago  etc.  R.  R.  Co.  v.  Tavlor, 
69  111.  401;  Bushby  v.  Railroad 'Co., 
107  N.  Y.  374;  1  Am.  St.  Rep.  844; 
Lewis  V.  Seifert,  116  Pa.  St  028;  2 
Am.  St.  Rep.  C31;  Reagan  v.  Railroad 
Co.,  93  Mo.  348;  3  Am.  St.  Rep.  542. 


305 


PRINCIPAL  AND   AGENT. 


540 


Tho  polo  had  boon  Buffered  to  remain  in  that  position  three 
years,  but  there  was  no  evidonco  that  defendant  put  it  there  or 
knew  of  its  existenee.  Tiiere  was  no  cvideneo  tl'at  the  hrake- 
nuui  knew  of  it.  JIcUl,  tliat  an  action  for  danmges  for  the  kill- 
ing was  maintainable:  Chiengo  etc.  R.  li.  Co,  v.  liunMll,  1)1  111. 
2S)8;  o.'5  Am.  Ilep.  54.  A  brakeman  caught  his  foot  in  a  frog 
and  wan  injured.  Held,  that  tho  company  incurred  no  special 
liability  for  not  having  blocked  its  frogs,  it  not  being  shown 
that  greater  risks  might  not  thereby  bo  incurred  than  thobo 
averted:  McGinnis  v.  Canada  Southern  Bridge  Co.,  49  Mich. 
4GG.  One  of  three  railroad  companies  employed  a  switchman  to 
work  in  their  union  yard.  Held,  that  all  were  jointly  and  sever- 
ally liable  to  him  for  the  negligence  of  onoof  the  companies,  and 
that  tho  company  which  employed  him  could  not  deny  the  re- 
lation of  master  and  servant:  GulJ,  Colorado,  etc.  IVy  Co.  v. 
Dorscy,  GG  Tex.  148.  A  railroad  company  used  on  its  cars  tho 
same  kind  of  oil  that  was  generally  used  upon  cars,  and  had  no 
knowledge,  and  by  tho  exercise  of  ordinary  care  would  not  have 
obtained  any  knowledge,  of  anything  poisonous  connected  there- 
with. Held,  that  plaintiff  employee  could  not  recover  for  being 
poisoned  thereby:  Kitteringham  v.  Railway  Co.,  G2  Iowa,  285. 
A  track-repairer  was  run  over  after  nightfall  by  a  locomotive 
furnished  with  a  proper  head-light,  which,  however,  was  not 
lighted.  Held,  that  while  failure  to  provide  a  head-light  would 
have  made  the  company  liable,  it  was  not  liable  to  the  person 
irjured  for  the  failure  to  light  tho  one  provided,  tho  neglect 
being  that  of  his  fellow-servant:  Collins  v.  Railroad  Co.,  30 
Minn.  31.  A  brakeman  was  injured  because  of  defective  buffers. 
Held,  that  he  might  maintain  an  action  against  the  railroad 
company:  Ellis  v.  Railway  Co.,  95  N.  Y.  54G.  A  section-hand 
in  the  employ  of  defendant  company,  while  in  performance  of 
his  duties,  took  a  hand-car  off  tho  track  to  allow  a  train  to  pass, 
and  while  standing  near  it  was  struck  in  the  eye  by  steam  and 
water  thrown  from  the  passing  engine.  Held,  that  he  had  a 
cause  of  action:  Atchison  etc.  R.  R.  Co.  v.  Thnl,  32  Kan.  255; 
49  Am.  Rep.  484.  Defendant  company  put  a  freight-car  into 
tho  train  at  night,  tho  handle  to  the  ladder  of  which  had  been 
broken  for  some  time,  and  plaintiff's  intestate,  in  attempting  to 
descend,  grasped  at  the  handle,  missed  it,  fell,  and  was  killed. 
Held,  that  the  company  was  liable:  Richmond  etc.  R.  R.  Co.  v. 
Moore,  78  Va.  93. 


§305.    Knowledge  by  Master  of  Defect  Necessary.— 

Knowledge  on  the  part  of  the  master  of  the  defect  is 
necessary  to  fix  his  liability.     Unless  tho  master  knew  of 


541 


LIABILITIES   OF   MASTER   AND   SEUVAXT. 


8  305 


tlio  defect  which  produced  the  injury  or  ought  to  liiivo 
known  it,  he  cannot  ho  hold  liable.*  Negligent  ignorance 
is  c(iuivalont  to  knowledge.^  "  Notice  of  a  given  defect  to 
tiiat  servant  or  agent  of  the  common  master  whose  duty 
it  is  to  keep  the  particular  machinery  in  repair,  or  guard 
against  the  injurious  consequences  of  any  defects  therein, 
if  given  while  such  servant  or  agent  is  acting  about  such 
business  of  tho  master,  will  bo  notice  to  the  master;'  and 
it  has  been  so  held  in  cases  of  corporations.*  Under  this 
rule,  notice  of  a  defect  in  a  railway  track  to  tno  superin- 
tendent and  foreman,*  to  tho  assistant  superintendent,* 
to  the  foreman  of  a  gang  of  men  eiji ployed  by  the  com- 
pany to  repair  its  track,'  to  an  enginixr  in  charge  of  an 
engine  engaged  in  pushing  frei'.'-bt-cars  up  nn  incline,* 
has  been  held  notice  to  tho  coni|)any.  So,  notice  of  tho 
condition  of  a  defective  railway  locon;  /tivc  is  notice  to 


>  Elliott  V.  Railroad  Co.,  67  Mo, 
27'2;  Tolcilo  etc.  K.  K.  Co.  r.  Conroy, 
(51  111.  162;  Columbus  etc.  R.  R.  Co.  t-. 
Troescli,  68  111.  545;  18  Am.  Rep.  679; 
Hayileii  v.  Smithvillo  Mfg.  Co.,  29 
Conn.  548;  Faulkner  v.  Railroad  Co., 
49  Barl).  324;  Cliicago  etc.  R.  R.  Co. 
V.  Shannon,  43  111.  3S8;  Chicago  etc. 
R.  R.  Co.  V.  riatt,  89  III.  141;  HufiF- 
man  v.  Railroad  Co.,  78  Mo.  50. 

"  Noyc3  V.  Smith,  28  Vt.  59;  64  Am. 
Dec.  222;  Toledo  etc.  R.  R.  Co.  v.  Con- 
roy, 61  111.  164:  68111.  560,  569;  Walsh 
t'.  IVct  Valve  Mfg.  Co.,  110  Mass.  23; 
Mobile  etc.  R.  R.  Co.  v.  Thomas,  42 
Ala.  672;   Wri<{ht  v.  New  York  etc. 

II.  R.  Co.,  25  N.  Y.  562;  Sullivan  v. 
Louiyville  Bridge  Co.,  9  Bu.sh,  81,  90; 
Ryan  r.  Fowler,  24  N.  Y.  410,  414;  82 
Am.  Dec.  315;  Chicago  etc.  R.  R.  Co. 
1'.  Swett,  45  111.  197;  92  Am.  Dec.  206; 
Chicago  etc.  R.  R.  Co.  v.  Shannon,  43 

III.  338;  Columbus  etc.  R.  R.  Co.  v. 
Troesch,  68  111.  545;  18  Am.  Ren.  579; 
Greenleaf  v.  Illinois  etc.  R.  R.  Co.,  29 
Iowa,  14;  4  Am.  Rep.  181;  Schooner 
Norway  r.  Jensen,  52  III.  373;  Colo- 
rado etc.  R.  R.  Co.  V.  Ogden,  3  Col. 
4<)7;  Faulkner  v.  Erie  R.  R.  Co.,  49 
Barb.  324;  Lewis  v.  St.  Louis  etc.  R. 
R.  Co.,  59  Mo.  495;  21  Am.  Rep.  385; 
Gibson  V.  Pacific  R.  R.  Co.,  46  Mo. 


163;  2  Am.  Rep.  497.  "  It  is  tho  mas- 
ter's duty  to  'lo  caioful  that  bin  servant 
is  not  induced  to  work  under  a  notion 
that  tackle  or  machinery  i.ibtam-h  and 
secure,  when  in  fact  the  master  knows, 
or  ou'j/it  to  know,  that  it  in  ntt  no": 
Lord  Cranworth,  in  Pater.sou  v.  Wal- 
lace, 1  Macq.  748;  coiitrd,  and  holding 
actual  notice  to  lie  Docessary,  sec  An- 
derson r.  Steamboat  Co.,  7  RoI)t.  611; 
King  V.  Stewart,  1  Daly,  431;  McMil- 
lan r.  Railroad  Co.,  20  Barb.  4.jO. 

'  Wade  on  Notice,  sec.  672;  Story 
on  Agency,  sees.  140,  451;  Wharton 
on  Agency,  sec.  178. 

*  Pattirson  v.  Pittsburgh  etc.  R.  R. 
Co.,  76  Pa.  St.  389;  18  Am.  Rep.  412; 
Colorado  etc.  R.  R.  Co.  r.  Ogdcn,  3 
Col.  499;  Brabbitts  r.  Chicago  etc.  R. 
R.  Co.,  38  Wis.  28i);  Nashville  etc.  R. 
R.  Co.  r.  Elliott,  1  Cohlw.  611,  618; 
78  Am.  Dec.  506;  Fnizier  v.  Pennsyl- 
vania R.  R.  Co.,  38  Pa.  St.  104;  80 
Am.  Dec.  467. 

"  Patterson  v.  Pittsburgh  etc-.  R.  R. 
Co.,  76  Pa.  St.  389;  13  Am.  Rep.  412. 

"  Colorado  etc.  R.  R.  Co.  v.  Ogden, 
3  Col.  499. 

'  Gage  r.  Delaware  etc.  R.  R.  Co., 
14  Hun,  446. 

»  Nashville  etc.  R.  R.  Co.  v.  Elliott, 
1  Cold.  611;  78  Am.  Dec.  606. 


§306 


PRINCIPAL  AND  AGENT. 


542 


the  company,  if  given  to  the  foreman  of  the  road-house 
and  superintendent  of  machinery,^  or  to  the  foreman''  of 
the  company's  repair  shops."' 

Illustrations.  —  A  switchman  was  coupling  cars,  the  engine 
attached  suddenly  started,  and  the  switchman  was  injured.  It 
appeared  that  the  sudden  starting  of  the  engine  was  caused  by 
a  defect  which  the  engineer  had  before  reported  to  the  company 
as  making  the  engine  dangerous.  Held,  that  these  facts  justi- 
fied a  verdict  against  the  company,  in  an  action  brought  by  the 
switchman:  Chicago  and  Eastern  R.  R.  Co.  v.  Rung,  104  111. 
641.  A  was  employed  by  B  to  run  his  elevator,  which  was  new 
and  made  by  a  first-class  .iiachinist.  The  chain  broke,  and  A 
was  injured.  B's  engineer  had  previously  told  B's  manager 
that  the  chain  was  not  strong  enough.  Held,  that  A  could 
maintain  an  action  against  B:  Delaney  v.  Hilton,  50  N.  Y.  Sup. 
Ct.  341.  Plaintiflf,  a  workman  in  a  coal  mine,  was  injured  by 
the  fall  of  a  rock.  There  had  been  a  crack  for  some  time  where 
the  rock  broke  off,  and  the  superintendent  of  the  mine  knew 
that  it  was  widening  and  was  dangerous.  Held,  that  the  mine- 
owner  was  liable  for  the  injury:  Pantzar  v.  Tilly  Foster  Mining 
Co.,  99  N.  Y.  368.  The  plaintiff,  being  employed  as  a  common 
laborer  by  defendant,  who  was  a  brewer,  was  engaged  in  clean- 
ing hogsheads  by  means  of  a  steam  apparatus,  the  use  of  which 
was  explained  to  him.  After  he  had  been  so  employed  for  a 
number  of  days,  he  was  injured  by  the  explosion  of  a  hogshead, 
caused  by  the  pressure  of  steam.  There  was  evidence  that  the 
apparatus  was  unsafe,  owing  to  the  omission  of  a  certain  gauge 
or  valve,  but  it  did  not  appear  that  the  defendant  knew  or  had 
reason  to  believe  that  it  was  dangerous  in  its  actual  condition. 
Held,  that  the  defendant  was  not  liable:  Loonam  v.  Brochoay,  3 
Robt.  74;  28  How.  Pr.  472.  A  owned  a  building  on  which  B 
agreed,  for  a  lump  sum,  to  trim  certain  stone-work;  B  should 
have  furnished  his  own  scaffold,  but  as  he  did  not,  A  allowed 
him  to  use  one  which  had  been  hung  by  painters  over  a  rotten 
cornice,  which  gave  way  and  injured  B.  Held,  that  A  was  not 
liable:  Matthes  v.  Kerrigan,  53  N.  Y.  Sup.  Ct.  431. 

§  306.  Direct  Negligence  of  Master. — If  an  injury  to 
the  servant  is  owing  to  the  direct  negligence  of  the  mas- 
ter, as  where  he  is  personally  present,  superintending  the 
work  and  giving  orders,  the  master  is  answerable  for  the 

>  Chicago  etc.  1\.  R.  Co.  v.  Shannon,  43  111.  338. 
«  Brabbitt8  v.  Chicago  etc.  R.  R.  Co.,  33  Wis,  289. 
*  2  Tbompsoa  on  Negligence,  994. 


542 


543 


LIABILITIES   OF   MASTER   AND   SERVANT. 


§307 


poad-house 
)reman''  of 


,  the  engine 
njured.     It 
}  caused  by 
le  company 
facts  justi- 
jght  by  the 
ig,  104  111. 
)h  was  new 
oke,  and  A 
8  manager 
it  A  could 
N.  Y.  Sup. 
injured  by 
time  where 
Kline  knew 
t  the  mine- 
iter  Mining 
a  common 
i  in  clean- 
>e  of  which 
oyed  for  a 

hogshead, 
36  that  the 
tain  gauge 
lew  or  had 
condition. 
hockway,  3 
1  which  B 

B  should 
A  allowed 
3r  a  rotten 
A  was  not 


injury  to 
the  mas- 
iding  the 
e  for  the 


damages  to  the  same  extent  as  though  the  relation  of 
master  and  servant  did  not  exist.  The  master,  althousrh 
engaged  at  a  common  labor  with  the  servant,  docs  not  be- 
come a  fellow-servant.*  Where  a  servant  is  assured  by 
his  employer  that  the  spot  where  he  is  ordered  to  work  is 
safe  from  the  fall  of  bricks,  and  he  relies  upon  the  assur- 
ance and  is  injured  by  falling  bricks,  through  no  negli- 
gence of  his  own,  he  may  maintain  an  action  against  his 
master.'* 

§  307.  Concurrent  Negligence  of  Master  and  Fellow- 
servant. —  If  the  negligence  of  the  master,  as  by  provid- 
ing defective  apparatus,  etc.,  combines  with  the  negligence 
of  a  servant,  and  the  two  together  contribute  to  the  injury 
of  a  fellow-servant,  the  master  is  responsible.'^     That  the 


1  Asliworth  V.  Stanwix,  3  El.  &  E. 
701;  Roberts  v.  Smith,  2  Hurl.  &  N. 
213;  Ryan  v.  Fowler,  24  N.  Y.  410; 
82  Am.  Dec.  31;!;  MuMahon  v.  Walsh, 
11  Jones  &  S.  30;  Berea  Stone  Co.  v. 
Kraft,  31  Ohio  St.  287;  27  Am.  Rep. 
510;  Keegan  v.  Kavanaugh,  C2  Mo. 
230;  Johnson  v.  Bruuer,  Gl  Pa.  St.  58; 
lOJ  Am.  Dee.  013;  Lorentz  v.  Robin- 
son, Gl  Md.  G4.  "The  doctrine  that 
a  servant,  on  entering  the  service  of 
an  emjiloyer,  takes  on  himself,  as  a 
risk  incidental  to  the  service,  the 
chance  of  injury  arising  from  the 
noglifjence  of  fellow-servants  engaged 
in  the  common  employment,  has  no 
application  in  the  case  of  the  negli- 
gence of  an  employer.  Though  the 
cliange  of  injury  from  the  negligence 
of  fellow-servant  5  may  be  supposed  to 
enter  into  the  calculation  of  a  servant 
in  undertaking  the  service,  it  would  be 
too  much  to  say  that  the  risk  of  dan- 
ger from  the  negligence  of  a  master, 
when  engaged  with  him  in  their  com- 
mon work,  enters  in  like  manner  into 
his  speculation.  From  a  master  he  is 
entitled  to  expect  the  care  and  atten- 
tion 'Thich  the  superior  position  and 
presumable  sense  of  duty  of  the  latter 
ought  to  command.  The  relation  of 
master  and  servant  does  not  the  less 
subsist  because  by  some  arrangement 
between  the  joint  masters  one  of  them 


takes  on  nimself  the  functions  of  a 
workman.  It  is  a  fallacy  to  buppose 
that  ou  that  account  the  character  of 
master  is  converted  into  that  of  a  fel- 
low laborer":  Asliworth  I'.  Stanwis,  3 
El.  &  E.  701. 

^  Daley  r.  Schaaf,  28  Hun,  314. 

'  Cayzer  r.  Taylor,  '0  Gray,  274;  69 
Am.  Dec.  317;  Crutchfield  v.  Railroad 
Co.,  7G  N.  C.  .320;  Booth  v.  Railroad 
Co.,  73  N.  Y.  38;  29  Am.  Rep.  97; 
Cone  V.  Riilroad  Co.,  81  N.  Y.  206; 
37  Am.  Rep.  491;  McMahon  v.  Ken- 
ning, 1  McCrary  C  C.  olG;  Boyc3  v. 
Fitzpatrick,  80Ind.  52G;  Grand  Trunk 
R.  R.  Co.  V.  Cuminings,  lOG  U.  S.  700; 
Daley  v.  Schaaf,  28  Hun,  314;  Frank- 
lin V.  Railroad  Co.,  37  Uv-a  409.  In 
Paulmier  v.  Railroad  Co.,  34  N.  J.  L. 
151,  the  track  over  a  trestle- work  was 
unsafe,  and  the  engineer  in  charge  had 
orders  not  to  put  tiie  engine  thereon, 
but  disobeyed  orders,  and  a  fireman 
who  was  on  the  engine,  and  who  was 
unaware  of  the  orders  or  of  the  dan- 
ger, was  killed  in  consequence  of  the 
trestle-work  giving  way.  It  was  held 
that  the  master  was  responsible,  the 
court  saying:  "The  servant  does  not 
agree  to  take  the  chances  of  any  negli- 
gence on  the  part  of  his  employer;  and 
no  case  has  gone  so  far  as  to  hold  that 
where  such  negligence  contributes  to 
the  injury,  the  servant  may  not  re- 


308 


PRINCIPAL  AND   AGENT. 


544 


servant  disobeys  the  order  of  the  master  does  not  excuse 
the  liability  of  the  latter  for  his  negligence.*  A  railroad 
company  neglecting  to  see  that  there  are  a  sufficient  num- 
ber of  brakemen  on  a  train  when  it  starts  on  its  trip  is 
liable  to  a  servant  consequently  injured  without  contribu- 
tory negligence  on  his  part,  although  the  immediate  neg- 
ligence in  so  starting  was  that  of  a  '3o-servant.^ 

Illustrations. — The  fireman  of  an  engine  of  a  "wildcat" 
train  was  injured  by  a  collision  caused  by  the  neglect  of  an 
agent  and  telegraph-operator,  in  the  employ  of  the  company,  to 
strictly  observe  the  rules  laid  down  by  the  company  for  govern- 
ing the  movements  of  trains.  Held,  that  the  company  was  lia- 
ble, every  reasonable  precaution  to  avoid  the  collision  not  having 
been  taken:  Sheehan  v.  Railroad  Co.,  91  N.  Y.  332. 

§  308.    Unsuitable  or  Incompetent  Fellow-servants.  — 

Again,  if  the  master  has  failed  to  exercise  ordinary  or 
reasonable  care  in  the  selection  of  his  servants,  in  conse- 
quence of  which  he  has  in  his  employ  a  servant  who,  by 
reason  of  habitual  drunkenness,  negligence,  or  other 
vicious  habits,  or  by  reason  of  want  of  the  requisite  skill 
to  discharge  the  duties  which  he  is  employed  to  perform, 
or  for  any  other  cause  is  unfit  for  the  service  in  which  he 
is  engaged,  and  if  in  consequence  of  such  unfitness  an 
injury  happens  to  another  servant,  the  master  must  an- 
swer for  the  damages  suffered  by  such  servant.^    As  to  the 


cover.  It  would  be  both  unjust  and 
impolitic  to  suffer  the  master  to  evade 
the  penalty  of  his  misconduct  in  ne- 
glecting to  provide  properly  for  the 
security  of  hia  servant.  Contributory 
negligence,  to  defeat  a  right  of  action, 
must  be  negligence  of  the  party  in- 
jured." 

'  Mound  City  Paint  Co.  v.  Conlon, 
92  Mo.  221. 

*  Booth  V.  Railroad  Co.,  73  N.  Y. 
38;  29  Am,  Rep.  97. 

*  2  Thompson  on  Negligence,  p.  974, 
and  cases  cited;  Senior  v.  Ward,  1  El. 
&  E.  .S85;  5  Jur.,  N.  S.,  172;  28  L.  J. 
Q.  B.  139;  7  Week.  Rep.  21)1;  Tarrant 
V.  Webb,  18  Com.  B.  796;  25  L.  J. 
Com.  P.  261;   Walker  v.  Boiling,  22 


Ala.  294;  Taylor  r.  Western  Pacific 
R.  R.  Co.,  45  Cal.  323;  Illinois  etc. 
R.  R.  Co.  V.  Jewell,  40  111.  99;  92  Am. 
Dec.  240;  Chicago  etc.  R.  R.  Co.  v. 
Sullivan,  63  111.  293;  Thayer  v.  St. 
Louis  etc.  R.  R.  Co.,  22  Iisd.  26;  8.5 
Am.  Dec.  409;  Chicago  etc.  R.  R.  Co. 
V.  Harney,  28  Ind.  28;  92  Am.  Dec. 
282;  Couch  v.  Watson  Coal  Co.,  46 
Iowa,  17;  Kansas  etc.  R.  R.  Co.  i'. 
Salmon,  14  Kan.  512;  11  Kan.  8!^;  Chi- 
cago etc.  R.  R.  Co.  V.  Doyle,  18  Kan. 
58;  Union  Pacific  R.  R.  Co.  v.  Young, 
19  Kan.  488;  Cayzer  v.  Taylor,  10 
Gray,  274;  69  Am.  Dec.  317;  Gilmaii 
V.  Eastern  R.  R.  Co.,  10  Allen,  233; 
87  Am.  Dec.  635;  13  Allen,  433;  90 
Am.  Dec.  210;  Cumberland  etc.  K.  R. 


644 


545 


LIABILITIES   OF   MASTER  AND   SERVANT. 


§308 


lot  excuse 
\.  railroad 
lent  num- 
it3  trip  is 
contribu- 
diate  neg- 


"  wildcat" 
;lect  of  an 
jmpany,  to 
for  govern- 
ny  was  lia- 
iiot  having 


irvants.  — 

dinary  or 

,  in  conse- 

it  who,  by 

or   other 

lisite  skill 

)  perform, 

which  he 

itness  an 

must  an- 

As  to  the 

sstern  Pacific 
Illinois  etc. 

1.  99;  92  Am. 

R.  R.  Co.  V. 

hayer  r.  .St. 

!  liid.  2(5;  8.") 

to.  R.  R.  Co. 

[)2  Am.  Dec. 

Coal  Co.,  40 

I.  R.  Co.   c. 

Kan.  8;^;  Chi- 

_)yle,  18  Kan. 
'o.  V.  Young, 

.  Taylor,  10 
317;  Oilman 

>  Allen,  233; 
len,  433;  90 
id  etc.  R.  R. 


selection  and  retention  of  servants,  the  master  docs  not 
warrant  anything.  His  duty  is  to  use  reasonable  care  in 
selecting  them,  and  not  to  retain  them  after  he  has  dis- 
covered their  incompetency.'  "  The  same  care  requisite 
in  hiring  a  servant  in  the  first  instance  must  still  be 
exercised  in  continuing  him  in  the  service;  otherwise 
the  employer  will  become  responsible  for  his  want  of  care 
or  skill.  The  employer  will  be  equally  liable  for  the  acts 
of  an  incompetent  or  careless  servant  w'hom  lie  continues 
in  his  employment  after  a  knowledge  of  such  incom- 
petency or  carelessness,  or  when,  in  the  exercise  of  due 
care,  he  should  have  known  it,  as  if  he  had  been  wanting 
in  the  same  care  in  hiring.'"'    When  the  unfitness  is 


Co.  V.  state,  44  Md.  283;  Harper  v. 
Indianapolia  etc.  R.  R.  Co.,  47  Mo. 
5o7;  4  Am.  Rep.  353;  Moss  v.  Pacific 
R.  R.,  49  Mo.  167;  8  Am.  Rep.  12C; 
Connor  i<.  Chicago  etc.  R.  R.  Co.,  CS) 
Mo.  285;  Laning  v.  New  York  etc.  R. 
R.  Co.,  49  N.  Y.  521;  10  Am.  Rep. 
417;  Sizer  v.  Syracuse  etc.  R.  R.  Co., 
7  Lans.  67;  Chapman  v.  Erie  R.  R. 
Co.,  1  Thomp.  &  C.  526;  Hardy  v. 
Carolina  etc.  R.  R.  Co.,  76  N.  C.  5; 
Frazier  t'.  Pennsylvania  R.  R.  Co.,  38 
Pa.  St.  104;  Ardesco  Oil  Co.  v.  Gilson, 
63  Pa.  St.  146.  And  see  Baulec  v. 
Railroad  Co.,  59  N.  Y.  356;  17  Am. 
Rtp.  325;  Nordyke  Co.  v.  Van  Sant, 
99  Ind.  188. 

'  Columbus  etc.  R.  R.  Co.  ?•.  Troesch, 
6S  111.  545,  550;  18  Am.  Rep.  573;  Tar- 
runt  r.  Webl),  18  Com.  B.  797;  Michi- 
gan Central  R.  R.  Co.  v.  Dolan,  32 
Mich.  510;  Union  Pacific  R.  R.  Co.  v. 
Mdlikcn,  8  Kan.  647;  Lawler  v.  Rail- 
road Co.,  02  Me.  463;  l(i  Am.  Rep. 
492;  Jordan  v.  Wells,  3  Wood.s,  527; 
Bl;iko  r.  Railroad  Co.,  70  Me.  GO;  35 
Am.  Rep.  297;  Buckley  v.  Railroad 
Co.,  14  Fed.  Rep.  8.33;  O'Connell  ,;. 
Railroad  Co.,  20  Md.  212;  83  Am.  Dec. 
549.  I:i  Michigan  etc.  R.  R.  Co.  r. 
Dolan,  32  Mich.  510,  the  court  eaid: 
"A  corporation  stands  on  the  same 
footing  with  an  individual  in  this  re- 
spect, and  both  are  bound  to  use  such 
care  as  the  nature  and  dangers  of  their 
business  require,  and  no  more.  In 
such  a  business  as  that  of  conducting 
Vol.  I. -35 


a  railroad,  personal  presence  of  direc- 
tors and  otiicers  all  along  the  line 
would  be  inipos.sil)le.  The  ch.iri»e  of 
looking  after  various  divisions  of  Ijusi- 
ness  and  local  management  must  of 
necessity  be  given  to  many  suliordi- 
natcs,  of  greater  or  less  authority,  and 
each  of  these  must  be  intrusted  with 
considerable  discretion,  not  only  in 
managing  business,  but  also  in  choos- 
ing their  inferiors  in  position.  It  is 
incumbent  on  the  principal,  whether 
individual  or  company,  to  have  safe 
rules  of  business,  and  to  use  care  iii 
selecting  sucli  agents  as  are  imme- 
diately appointed.  It  is  also  a  duty 
to  remove  such  persons  or  to  chiin;u'o 
such  regulations  as  they  have  reason 
to  believe  unfit.  But,  until  informed 
to  the  contrary,  they  have  a  ri,!.!ht  to 
trust  that  an  agent  or  otlicer  carefully 
chosen  will  use  good  judgment  in  mak- 
ing hi-i  own  appointments  and  doing 
his  own  duties;  and  they  have  a  ri^h;, 
to  rest  upon  that  bi.liof  until,  in  the 
exercise  of  that  general  .igilauce  which 
dev(jlve^J  up  ,n  themselves,  they  find 
they  have  been  mistaken.  And  as  all 
men  are  liable  to  errors,  no  one  can  be 
bound  to  treat  an  agent  as  incompe- 
tent, unless  for  some  <;rror  or  miscon- 
duct going  to  his  general  unfitness  for 
his  place. 

■^  Shanny  i\  Androscoggin  Mills,  66 
Me.  420.  But  it  has  been  ruled  in 
New  York  that  the  same  care  is  not 
required  in  the  keeping  of  servants  as 


308 


PRINCIPAL  AND  AGENT. 


546 


shown  to  have  existed  at  the  time  of  employment,  a 
prima  facie  ease  of  negligence  is  made  out  against  the 
master,  and  the  hurden  is  upon  him  to  disprove  negli- 
gence.' The  mere  fact  that  a  raihoad  engineer  is  near- 
siglitcd  does  not  prove  him  to  be  an  improper  person  for 
the  duty,^  or  that  a  brakeman  was  slow  and  lazy.*  The 
fact  that  a  servant  was  intoxicated  at  the  time  of  the  hap- 
pening of  on  accident,  whereby  a  fellow-servant  was  in- 
jured, is  a  circumstance  to  be  considered  on  the  question 
of  whether  the  master  was  in  fault  for  employing  an  in- 
competent servant.^  A  master  is  liable  for  injury  to  a 
servant  by  the  negligence  of  a  fellow-servant  hired  by 
him  in  entire  ignorance  of  his  qualifications,  and  without 
inquiry  in  reference  thereto.^  A  corporation  is  liable  to 
a  servant  for  personal  injuries  residting  from  the  negli- 
gence of  an  employee  in  selecting  fellow-servants,  however 
competent  such  employee  may  be  in  the  business  of  select- 
ing them.*  Failure  to  employ  a  sufficient  number  of  men 
to  properly  perform  a  work  in  a  safe  manner  is  negli- 
gence/ 

Illustrations.  —  The  fireman  of  a  locomotive  on  defendant's 
railroad  was  killed  through  the  alleged  negligence  of  a  switch- 
njan  of  the  road.  A  prior  act  of  neglect  had  been  charged  upon 
the  switchman,  but  upon  investigation,  by  the  defendant's  gen- 
eral agent,  he  was  retained  in  his  position.  He  had  at  all  times 
appeared  competent  and  faithful.  Held^  that  no  negligence 
could  be  imputed  to  defendants  in  retaining  the  switchman  in 
their  employ,  and  that,  therefore,  they  were  not  liable  for  the 
death  of  the  fireman:  Baulec  v.  Railroad  Co.,  59  N.  Y.  356;  17 
Am.  Rep.  325.  An  employee  of  a  railroad  company  was  in- 
jured by  one  of  its  locomotive  engines,  owing  to  the  negligence 


in  their  selection,  because  it  is  said 
their  fitness  is  presumed  to  continue: 
Chapman  V.  Erie  R.  R.  Co.,  55  N.  Y. 
579.  And  see  Davis  v.  Railroad  Co., 
20  Mich.  105;  4  Am.  Rep.  364;  Blake 
V.  Railroad  Co.,  70  Me.  GO;  35  Am. 
Rep.  297. 

1  Crandallv.  Mcllrath,  24  Minn.  127. 

"  Texas  etc.  R.  R.  Co.  v.  Harring- 
ton, 62  Tex.  597. 


^  Corson  v.  Railroad  Co.,  76  Me. 
244. 

♦  Probst  V.  Delamater,  100  N.  Y. 
266. 

*  Indiana  Mfg.  Co.  v.  Millican,  87 
Ind.  87. 

6  Tyson  v.  Railroad  Co.,  61  Ala. 
654. 

'  Johnson  v.  Ashland  Water  Co.,  71 
Wis.  553. 


546 


547 


LIABILITIES  OP   MASTER  AND   SERVANT. 


§309 


yment,  a 
aiiist  tho 
»vo  negli- 
r  is  near- 
)erson  for 
zy.^    The 
r  the  hap- 
it  was  in- 
)  question 
ng  an  in- 
ijury  to  a 
hired  by 
id  without 
3  liable  to 
the  iiegli- 
3,  however 
s  of  select- 
jer  of  men 
r  is  negli- 

efendant's 

a  Bwitch- 

arged  upon 

dant's  gen- 

it  all  times 

negligence 

tchman  in 

jle  for  the 

Y.  356;  17 

ly  was  in- 

negligence 

Co.,  76  Me. 
,  100  N.  Y. 
Millican,  87 
::o.,  61  Ala. 
Vater  Co.,  71 


or  incompetence  of  the  fireman,  who,  against  the  rules  of  the 
company,  had  been  temporarily  left  in  charge  of  the  engine  by 
the  engineer.  The  master  mechanic  of  the  company,  whoso 
duty  it  was  to  employ  and  discharge  the  engineers  and  firemen, 
knew  that  the  engineers  generally  were  in  the  habit  of  so  leav- 
ing their  engines.  Held,  that  the  company  was  liable  for  tho 
injury:  Ohio  etc.  R.  R.  Co.  v.  Collarn,  73  Ind.  261;  38  Am.  Rep. 
134.  A  foreman  of  work  of  a  railroad  company  was,  when 
hired,  a  fit  person  to  discharge  tho  duties  for  which  he  was  em- 
ployed, but  afterwards  became  addicted  to  habits  of  intemper- 
ance, and  while  intoxicated  caused  a  defective  scaffolding  to 
be  erected,  which  fell,  injuring  the  plaintiff,  a  workman  under 
him.  Held,  that  the  master  was  liable:  Laning  v.  Railroad 
Co.,  49  N.  Y.  521;  10  Am.  Rep.  417.  A,  who  had  never  learned 
the  carpenter's  trade,  and  had  only  worked  as  a  carpenter  for 
twelve  weeks,  was  employed  as  foreman  of  a  gang  of  carpenters 
engaged  in  erecting  a  building.  Plaintiff",  one  of  the  gang,  was 
injured  by  a  staging  on  which  he  was  working  giving  way. 
Held,  evidence  to  sustain  an  action  against  the  employer:  Bun- 
nell v.  Railroad  Co.,  29  Minn.  305.  A  railroad  engineer  is  wild, 
reckless,  and  careless,  and  is  going  down  grade  at  such  an  im- 
proper and  excessive  rate  of  speed  as  to  necessitate  the  setting 
of  the  brakes,  and  the  setting  of  the  b'-akes  caused  the  train  to 
oscillate,  violently  throwing  the  brakeman  from  the  train  and 
killing  him.  Held,  that  the  railroad  company  is  liable  for 
damage  for  such  killing  if  the  incompetence  of  the  engineer  was 
60  generally  known  that  they  would  be  held  to  a  knowledge  of 
it:  Illinois  Cent.  R.  R.  Co.  v.  Jewell,  46  111.  99;  92  Am.  Dec.  240. 

§  309.    Where   Servant  is  an  Infant  or   Minor. — A 

minor  under  twenty-one,  even  a  child  of  tender  years,  in 
entering  a  service,  assumes,  like  the  adult  servant,  the 
risks  of  that  service.*  But  it  seems  essential  that  the  con- 
tract with  the  infant  should  be  a  valid  one.''    The  mere 


'  Brown  v.  Maxwell,  6  Hill,  592;  41 
Am.  Dec.  771;  Haylen  v.  Manufac- 
turing Co.,  29  Conn.  548;  Nashville 
etc.  R.  R.  Co.  V.  Elliott,  1  Cold.  611; 
78  Am.  Dec.  506;  Gartland  v.  Railroad 
Co.,  67  111.  498;  King  v.  Boston  R.  R. 
Co.,  9  Cash.  112;  Chicago  etc.  R.  R. 
Co.  V.  Harney,  28  Ind.  28;  92  Am. 
Dec.  282;  Ohio  etc.  R.  R.  Co.  v.  Ham- 
mersley,  28  Ind.  371;  Curran  v.  Mer- 
chants'^ Mfg.  Co.,  130  Mass.  374;  39 
Am.  Rep.  457;  Fisk  v.  Cent.  Pac.  R. 
II.  Co.,  72  Cal.  38;  1  Am.  St.  Rep.  22. 


>  In  Railroad  Co.  v.  Miller,  49  Tex. 
322,  a  father  recovered  two  thousand 
dollars  damages  for  an  injury  which 
happened  to  his  minor  son  while  em- 
ployed, without  his  permission,  on  the 
defendant's  railroad  as  a  brakeman. 
The  following  instruction  to  the  jury 
was  held  correct:  "  When  a  person  or 
corporation  employs  a  minor,  it  de- 
volves on  such  employer  to  obtain 
the  consent  of  the  father,  when  such 
minor  is  under  the  control  of  the 
father,  and  whilst  said  minor  forms  a 


309 


PRINCIPAL   AND   AGENT. 


548 


employment,  or  the  employment  about  dangerous  work, 
of  a  minor  by  a  railroad  company,  without  the  consent  of 
Lis  father,  is  not  in  itself  negligence.'  But  it  has  been  held 
an  act  of  negligence  on  the  part  of  a  railroad  company  to 
take  into  its  employment  as  a  brakeman  a  minor  of  such 
tender  j'ears  as  not  to  know  the  risks  of  the  service.'' 

The  law  makes  it  the  duty  of  the  master  to  explain  the 
hazards  of  the  service  to  the  minor,  and  to  make  him 
fully  alive  to  the  dangers  of  the  situation.'"'  But  he  is  not 
bound  to  point  out  patent  dangers;'*  for  example,  as  to 
the  use,  by  a  servant  fourteen  years  old,  of  a  freight  ele- 
vator into  the  well  of  which  opened  a  series  of  doors,  one 
on  each  story .^  And  if  the  master,  or  his  foreman  or 
vice-principal,  sends  a  minor  to  perform  a  dangerous  ser- 
vice outside  his  regular  duties,  the  master  will  be  liable 
if  he  is  injured  in  performing  it."     In  tho  absence  of  clear 

part  of  the  fatlier'a  fairiily.  Whilst  a 
minor,  the  father  is  liable  for  the  sup- 
port of  his  child,  and  ii  entitled  to  the 
earnings  of  his  son;  and  where  tho 
son,  through  the  negligence  of  the  em- 
ployer or  its  servants,  receives  an 
injury  incapacitating  him  for  a  while 
from  labor,  and  rendering  him  less 
serviceable  up  to  his  arriving  at  the 
age  of  twenty-one  years,  the  employer 
thus  engaging  a  minor,  without  the 
knowledge  or  consent  of  the  father,  is 
liable  to  the  father  in  damages."  And 
see  Hamilton  v.  Railroad  Co.,  54  Tex. 
550.  But  a  contract  with  au  infant, 
for  his  benefit,  is  valid  until  avoided 
by  the  parent  or  guardian,  and  con- 
tracts of  service  are  frequently  so 
made:  Nashville  etc.  11.  R.  Co.  v.  El- 
liott, 1  Cold.  Gil;  78  Am.  Dec.  50G; 
CJartland  r.  R.  R.  Co.,  67  111.  498. 

^  Texas  and  Pacific  R.  R.  Co.  i\ 
Carlton,  CO  Tex.  397;  Pennsylvania 
R.  R.  Co.  r.  Long,  94  Ind.  250. 

•^  Goffr.  Railroad  Co.,  36  Fed.  Rep. 
299. 

^  Coombs  V.  New  Bedford  Cordage 
Co.,  102  Mass.  572;  3  Am.  Rep.  507; 
Sullivan  v.  India  Mfg.  Co.,  113  Mass. 
390;  Grizzle  r.  Frost,  3  Fost.  &  F.  022; 
Hdl  V.  Gust,  55  Ind.  45;  St.  Louis  etc. 
R.  R.  Co.  V.  Valirius,  50  Ind.  511; 
Dowlmg  V.  Allen,  74  Mo.  13;  41  Am. 


Rep.  298;  F  k  v.  Cent.  Pac.  R.  R.  Co., 
72Cal.  38;  1  Am.  St.  Rep.  22.  A  boy  of 
nineteen,  employed  in  tlio  upper  story 
of  a  factory,  from  which  the  moan j  of 
escape  are  insufficient  in  case  of  lire, 
is  not  presumed,  as  matter  of  law,  to 
have  assumed  the  risk.  Whetlier  he 
has  done  so  is  a  question  of  fact: 
Schwandner  v.  Birge,  33  Hun,  180. 
The  master  is  bound  to  use  more  care 
in  the  case  of  au  infant  siuvaat: 
Robertson  v.  Cornelson,  34  Fed.  Hep. 
710. 

*  Fones  v.  Phillips,  39  Ark.  17;  43 
Am.  Rep.  205;  Rock  v.  Indian  Or- 
chard Mills,  142  Mass.  522;  Gilliurt 
V.  Guild,  144  Mass.  001;  Ciria-U  v. 
Merchants'  Woolen  Co.,  140  I\las3. 
182;  4  Am.  St.  Rep.  307. 

^  Costello  ?'.  .Jud^->n.  -2".  Hun,  390. 

"Railroad  Co 
Sierjel  t\  Si.'liau'.  .. 


Grizzle  v.  Trcv  ., 
Jones  I'.  Old  Demi 
Va.   140;  3  Au.. 


-n,  17  Wall.  ;^o;]; 

■  :'  :.ii).  &  c.  :<;;;!; 

•M)str  &  F.  (y2\.:; 
-.1  Cotton  Mills  S2 
Rep.  92;  co,  l,a, 
Ander.^ou  r.  Morrison,  22  Minn.  'J74. 
In  an  Indiana  case,  the  court  v.eut  fur- 
ther, and  held  that  where  an  infant 
servant  is  ordered  by  a  feUow-servaut 
to  perform  a  work  outside  of  his  du- 
ties, and  is  injured,  the  master  is 
liable:  Chicago  etc.  R.  R.  Co.  v.  Har- 
ney, 28  Ind.  28;  92  Am.  Dec.  282. 


548 


549 


LIABILITIES   OP    MASTER   AND   SERVANT. 


§310 


rous  work, 
consent  of 
1  been  held 
)mpany  to 
or  of  sucli 
vice.^ 
xplain  the 
make  him 
t  ho  is  not 
iplc,  as  to 
reight  ele- 
doors,  one 
)reman  or 
;erous  ser- 
be  liable 
ce  of  clear 

*ac.  R.  R.  Co., 

1.22.  A  boy  of 

e  upper  story 

tho  in(3an  J  of 

1  case  of  lire, 
tcr  of  law,  to 

Whetliei-  lie 
tiou  of  fact: 
3  Hiin,  lS(j. 
use  nioro  cure 
'ant  Si:rvaiit: 
34  Fed.  liep. 

Ark.  17;  4;i 
'.   Indian  Or- 

522;  CHlhurt 
I;  Ciriu'Ii  v. 
,    14(5    ilass. 

Hun,  390. 
17  W' all.  no;]; 

II).  &  L'.  ;i"i;;; 

t.    &     F.    (il'-j; 

Lton  Mills,  82 
1.   1)2;  cni/ra, 

2  Minn.  274. 
art  v.ent  ftir- 
n-e  an  infant 
jllow-survuut 
le  of  liis  da- 
le master  is 
..  Co.  V.  liar- 
Dec.  26-2. 


proof  to  the  contrary,  an  infant  of  the  age  of  fourteen 
years  will  be  presumed  to  have  sufficient  capacity  to 
recognize  and  avoid  danger.* 

Illustrations.  —  A  boy  of  fifteen,  employed  to  feed  a  defect- 
ive press,  was  injured  by  placing  his  fingers  under  the  punch, 
as  was  habitually  done,  notwithstanding  a  rule  forbidding  it, 
nor  could  the  work  well  be  done  without  disregarding  the  rule. 
Held,  that  the  employer  was  liable:  Hayes  v.  Bush  and  Denslow 
MJ(j.  Co.,  41  Hun,  407.  A  boy  of  thirteen,  employed  by  a  cot- 
ton manufacturing  company,  caught  his  hand  in  a  winder. 
Held,  that  a  mere  neglect  to  fence  the  winder  was  not  negli- 
gence, a  winder  not  being  a  peculiarly  dangerous  machine; 
that  if  the  boy  had  been  sufficiently  instructed  concerning  the 
danger,  the  company's  duty  towards  him  had  been  performed: 
Rock  V.  Indian  Orchard  Mills,  142  Mass.  522.  The  plaintiff,  a 
girl  fifteen  years  old,  was  employed  in  the  defendant's  factory, 
and  was  kept  at  work  until  three  o'clock  Sunday  mornings, 
and  was  then,  by  order  of  the  superintendent,  allowed  to  re- 
main in  the  factory  till  daylight,  but  only  in  a  basement  room. 
On  the  occasion  in  question  the  night-overseer  of  the  factory, 
finding  the  basement  room  damp,  put  the  plaintiff,  with  other 
children  operatives,  in  a  .'-(/cond-story  lighted  room,  which  had 
an  unguarded  elevator  hole  in  an  adjoining  unlighted  passage- 
way. The  children  played  at  hide-and-seek,  and  the  plaintiff, 
running  into  the  passage-way,  fell  through  the  hole  and  was 
injured.  Held,  that  the  defendant  was  liable:  Atlanta  Cotton 
Factory  Co.  v.  Speer,  G9  Ga.  137;  47  Am.  Rep.  750.  A  girl  of 
eleven,  under  an  agreement  between  her  father  and  A,  worked 
for  A  at  his  house.  He  permitted  her  to  go  across  a  prairie  so 
ingufficiently  clad  that  she  froze.  Held,  that  she  could  main- 
tain an  action  against  A:  Nelson  v.  Johansen,  18  Neb.  180;  53 
Am.  Rep.  806.  A  girl  of  fourteen,  employed  to  feed  collars  in 
an  ironing  machine,  was  not  instructed  as  to  the  obvious  dan- 
ger. After  six  weeks,  she  caught  her  finger  in  a  button-hole, 
and  her  hand  was  drawn  between  the  rollers.  Held,  that  her 
employer  was  not  liable:  Hickey  v.  Taaffe,  105  N.  Y.  26. 

§  310.  Statutory  Provisions  as  to  Liability  of  Master 
to  Servant.  By  statute  in  some  of  the  states  as  well  as  in 
England,  the  liability  at  common  law  of  a  master  for  in- 
juries to  his  servants  has  been  somewhat  altered.  By  the 
California  Code,^  "an  employer  is  not  bound  to  indemnify 

'  Nagle  V.  Railroad  Co.,  88  Pa.  St.        =»  Civ.  Code,  sec.  1970. 
35;  32  Am.  Rep.  413. 


§310 


PRINCIPAL  AND  AGENT. 


550 


his  employee  for  losses  suffered  by  the  latter  in  conse- 
quence of  the  ordinary  risks  of  the  business  in  which  he 
is  employed,  nor  in  consequence  of  the  negligence  of 
another  person  employed  by  the  same  employer,  in  the 
same  general  business,  unless  he  has  neglected  to  use  or- 
dinary care  in  the  selection  of  the  culpable  employee." 
This  statute  has  been  construed  so  as  to  make  no  differ- 
ence whether  the  culpable  employee  was  in  a  superior 
grade  of  service  to  the  injured  employee,  or  not/  By 
the  Georgia  code  it  is  provided:  "Ilailroad  companies  are 
common  carriers, and  liable  as  such.  As  such  companies 
necessarily  have  many  employees  who  cannot  possibly 
control  those  who  should  exercise  care  and  diligence  in 
the  running  of  trains,  such  companies  shall  be  liable  to 
such  employees,  as  to  passengers,  for  injuries  arising  from 
the  want  of  such  care  and  diligence."^  "The  principal  is 
not  liable  to  one  agent  for  injuries  arising  from  the  neg- 
ligence or  misconduct  of  other  agents  about  the  same 
business.  The  exception  in  the  case  of  railroads  has  been 
prsviously  stated."'  "A  railroad  company  shall  be  liable 
for  any  damages  done  to  persons,  stock,  or  other  property, 
by  the  running  of  the  locomotives  or  cars,  or  other  machin- 
ery of  such  company,  or  for  damage  done  by  any  person 
in  the  employment  and  service  of  such  company,  unless 
the  company  shall  make  it  appear  that  their  agents  have 
exercised  all  ordinary  and  reasonable  care  and  diligence, 
the  presumption  m  all  cases  being  ugainst  the  company."^ 
*'  If  the  person  injured  is  himself  an  employee  of  the  com- 
pany, and  the  damage  was  caused  by  another  employee, 
and  without  fault  or  negligence  on  the  part  of  the  person 
injured,  his  employment  by  the  company  shall  be  no  bar 
to  the  recovery."  ^  These  provisions  change  the  common- 
law  rule,  and  permit  any  employee  who  is  free  from  fault 


1  Collier  v.  Steinhart,  51  Cal.  116; 
McLean  v.  Blue  Point  Gravel  Co.,  51 
Cal.  255. 

^Ga.  Code  1873,  sec.  2083. 


»  Ga.  Code  1873,  sec.  2202. 
*Id.,  sec.  3033. 
6  Id.,  sec.  303(i. 


650 


551 


LIABILITIES   OF   MASTER   AND   SERVANT. 


§310 


in  conse- 
which  he 
igence  of 
r,  ill  the 
to  use  or- 
nployee." 
no  (liffer- 
superior 
lot/     By 
anics  are 
)mpanios 
possibly 
gence  in 
liable  to 
ing  from 
ncipal  is 
the  neg- 
ho  same 
has  been 
be  liable 
property, 
machin- 
y  person 
Y,  unless 
its  have 
iligence, 
ipany."^ 
the  com- 
nployee, 
3  person 
B  no  bar 
ammon- 
)m  fault 

2. 


to   recover  for  the  negligence  of  any   other  employee, 
without  respect  to  whether  the  two  were  engaged  about 
the  same  business,  or  not.'     By  statute  in   Illinois,  the 
owners  of  coal  mines  are  required  to  take  certain  pre- 
cautions  for   the   safety    of    their   workmen,   and    their 
neglect  to   do  so  renders  them  liable  to  a  servant  in- 
jured.''     By  the  code  of  Io>va  it  is   provided-    'Every 
corporation   operating   a  railway  shall    be  liable  for  all 
damages  sustained  by  any  person,  including  employees 
of  such  corporation,  in    consequence  of  the  neglect  of 
agents,  or  by  any  mismanagement  of  the  engineers  or 
other  employees  of  the  corporation,  and  in  consequence 
of  the  willful  wrongs,  Avhether  of  commission  or  omis- 
sion   of    such    agents,    engineers,    or    other    employees, 
when   such  wrongs  are  in  any  manner  connected  with 
the  use  and  operation  of  any  railway  on  or  about  which 
they  shall  be  employed;  and  no  contract  which  restricts 
such  liability  shall  be  legal  or  binding."^     To  make  the 
master   liable  under  this   statute,  the   culpable    servant 
must  have  failed  to  use  ordinary,  not  extraordinary,  care.* 
Under  this  statute,  an  employee  riding  on  a  hand-car,  but 
injured  by  another  hand-car  running  into  his,  has  been 
held  entitled  to  recover,^  and  so  has  a  servant  who  stepped 
on  the  track  to  avoid  a  runaway  team,  and  was  injured 
by  a  hand-car  negligently  run  by  fellow-servants  of  his." 
Where,  in  an  action  for  negligence,  it  appeared  that  plain- 
tiff was  a  section-hand,  and  at  the  time  of  the  injury  was 
loading  a  car,  it  was  held  that  his  service  did  not  pertain 
to  the  operation  of  the  road  under  section  1307  of  that 
code,  permitting  recovery  for  negligence  of  a  co-employee 
only  in  such  a  case.''    An  employee  of  a  railway  company, 

'  Georgia  R.  R.  Co.  v.  Goodwire,        *  Hunt  r.  Chicago  etc.  R.  R.  Co.,  26 
56  Ga.  lyO;  Marsh  v.  South  Carolina    Iowa,  3G3. 


R.  R.  Co.,  50  Ga.  274;  Georgia  R.  R. 
Co.  r.  Rhodes,  50  Ga.  645. 

^Underwood's  111.  Stats.  1878,  pp. 
8C7,  871,  sees.  8,  14;  Kurd's  111.  Stats. 
1877,  pp.  609,  671,  sees.  8.  14. 

« Iowa  Code  1873,  sec.  1307. 


Lombard  v.  Railroad  Co.,  47  Iowa, 
494;  lioben  v.  Railroad  Co.,  20  Iowa, 
562. 

*•  Moore  v.  Railroad  Co.,  47  Iowa, 
688. 

'  Smith  V.  Railroad  Co.,  59  Iowa,  73. 


§310 


PRINCIPAL   AND   AGENT. 


552 


onjraged  in  the  work  of  repairing  tho  track,  is  within  the 
statute  as  thus  limited,  and  entitled  to  recover  damages 
of  the  company  for  the  negligence  of  a  co-employee.'  A 
running  of  special  trains  over  a  railway  by  a  construction 
company,  while  engaged  in  building  it,  is  "operating  a 
railway,"  within  the  statute;  and  a  person  engaged  in 
shoveling  gravel  from  tho  cars  of  such  a  train  is  within 
the  constitutional  scope  of  the  statute.^  A  person  em- 
ployed by  a  railway  company  at  the  work  of  taking  down 
and  removing  a  bridge,  who  was  compelled  by  orders  of 
his  superior  to  go  upon  one  of  the  company's  trains,  and 
while  so  riding  was  injured,  was  engaged  in  operating 
the  road,  within  the  statute,  and  was  entitled  to  damages;^ 
But  a  person  engaged  at  work  in  the  repair-shop  of  a 
railway  company  is  not  within  the  statute,  and  if  ho  can 
maintain  an  action  at  all  for  an  injury  received  while 
thus  engaged,  it  must  be  under  the  principles  of  the 
common  law.*  Whether  the  nature  of  the  service  in 
which  the  injured  servant  was  engaged  brought  him 
within  the  statute  has  been  held  a  question  of  fact  for 
the  jury,  and  not  of  law  for  the  court.^  Contributory 
negligence  of  the  injured  employee  is  a  bar  to  his  ac- 
tion, as  at  common  law.®  In  Kentucky,  by  statute,  "if 
the  life  of  any  person  is  lost  or  destroyed  by  the  willful 
neglect  of  another  person  or  persons,  company  or  com- 
panies, corporation  or  corporations,  their  agents  or  ser- 
vants, then  the  personal  representative  of  the  deceased 
shall  have  the  right  to  sue  such  person  or  persons,  com- 
pany or  companies,  corporation  or  corporations,  and  re- 


*  Frandsen  v.  KailroadCo.,  36  Iowa, 
372. 

*  McKniglit  V.  Construction  Co.,  43 
Iowa,  400. 

*  Schneder  v.   Chicago  etc.    R.  R. 
Co.,  47  Iowa,  375,  383;  41  Iowa,  .344. 

*  Potter  V.  Chicago  etc.  R.  R.  Co., 
40  Iowa,  399. 

*  Schroeder  v.    Chicago  etc.   R.  R. 
Co.,  41  Iowa,  344. 


*  McAunich  v.  Mississippi  etc.  R.  R. 
Co. ,  20  Iowa,  338;  Hoben  v.  Burling- 
ton etc.  R.  R.  Co.,  20  Iowa,  502; 
Hamilton  v.  Des  Moines  etc.  R.  R.  Co., 
30  Iowa,  31;  Carlin  v.  Chicago  etc.  R. 
R.  C^.,  37  Iowa,  310;  Lang  v.  Holi- 
day Creek  R.  R.  Co.,  42  Iowa,  077; 
Steele  v.  Iowa  Central  R.  R.  Co.,  43 
Iowa,  109;  Lombard  v.  Chicago  etc, 
R.  R.  Co.,  47  Iowa,  494. 


652 


553 


LIABILITIES   OF  MASTER  AND  SERVANT. 


§310 


t'ithin  tlie 
(lainagos 
oveo.^     A 
istruction 
crating  a 
gagoJ   ill 
is  within 
rson  em- 
ing  down 
orders  of 
ains,  and 
)perating 
lamages;^ 
liop  of  a 
f  he  can 
cd  while 
s  of  the 
rvice  in 
?ht   him 
fact  for 
ributory 
•  his  ac- 
tute,  "if 
e  willful 
or  cora- 
5  or  scr- 
ileceased 
lis,  com- 
and  re- 

i  etc.  R.  R, 
r.  Burling- 
towa,  5G'2; 
R.  R.  Co., 
igo  etc.  R. 
g  V.  Holi- 
lowa,  G77; 
R.  Co.,  43 
jicago  etc. 


cover  punitive  damages  for  the  loss  or  destruction  of  the 
life  aforesaid."  *  Under  this  statute,  it  is  held  that  if  the 
person  killed  was  an  employee  of  a  railroad  company,  and 
not  a  stranger  to  it,  in  order  to  a  recovery  the  miscon- 
duct of  the  company  or  its  agents  or  servants  must  have 
been  so  gross  as  to  imply  actual  malice,  or  recklessness.'' 
But  if  the  person  killed  was  a  stranger  to  the  railroad 
company,  then,  under  another  section  of  the  same  stat- 
ute,' whilst  immiite  damages  cannot  be  recovered  unless 
the  jury  should  find  that  Uie  company,  its  agents  or  ser- 
vants, had  been  guilty  of  willful  neglect,  yet  there  can  be 
a  recovery  of  compensatory  damages  if  the  killing  was  the 
result  of  want  of  ordinary  care  on  the  part  of  the  defend- 
ant.* When  the  grade  of  negligence  denominated  "  willful 
neglect"  is  established,  the  master  must  pay  damages,  no 
matter  how  negligently  the  person  killed  may  have  acted.'' 
A  Maine  statute  enacting  that  every  railroad  corporation 
shall  be  liable  for  injuries  sustained  by  "any  person" 
under  certain  circumstances  has  been  construed  to  mean 
persons  not  servants  of  the  corporation,  and  hence  not  to 
change  the  common-law  rule  as  to  injuries  by  a  fellow- 
servant.**  And  a  similar  statute  in  Missouri  ^  has  received 
a  similar  construction.*  The  New  York  Laws,  187G, 
chapter  122,  make  it  a  misdemeanor  to  use  a  child  in  a 
dangerous  employment.  An  action  against  the  employer 
may  be  maintained  by  a  child  thus  injured,  and  ordi- 
narily it  is  for  the  jury  to  say  whether  the  employment 


*  Stanton's  Rov.  Stat.  Ky.  510,  sec.  3. 
■^  Claxton  V.  Railroad  Co.,  13  Bush, 

636;  Jacobs  v.  Railroad  Co.,  10  Busli. 
263. 
"  Stanton's  Rev.  Stat.  Ky.  510,  sec.  1. 

*  Jacobs  V.  Louisville  etc.  R.  R.  Co., 
10  Bush,  263;  Claxton  v.  Lexington 
etc.  R.  R.  Co.,  13  Bush,  636. 

"  Claxton  V.  Lexington  etc.  R.  R. 
Co.,  13  Bush,  636;  Louisville  etc.  R. 
R.  Co.  V.  Mahony,  7  Bush,  235,  239; 
Di.^by  V.  Kenton  Iron  Co.,  8  Bush, 
10/;  Jacobs  v.  Louisville  etc.  R.  B. 


Co.,  10  Bush,  263.  But  sec  Sullivan 
V.  Railroad  Co.,  9  Bush,  81. 

"Rev.  Stats.  Me.  1S40,  c.  81,  sec. 
21;  Carle  v.  Bangor  etc.  R.  R.  Co.,  43 
Me.  269. 

'  Rev.  Stats.  1855,  p.  C47;  Gen. 
Stats.  1865,  p.  601;  Wagner's  Stats. 
519;  Rov.  Stats.  1879,  sees.  2121, 
2122. 

*  Proctor  V.  Hannibal  etc.  R.  R. 
Co.,  64  Mo.  112;  overruling  Schultz  v. 
Railroad  Co.,  .%  Mo.  13,  and  Connor 
V.  Railroad  Co.,  59  Mo.  285. 


§311 


PRINCIPAL   AND  AGENT. 


554 


was  dangerous.*  In  Wisconsin,  a  statute  making  a  rail- 
road company  failing  to  fence  liable  to  "pcrsonsj"  injured 
may  bo  availed  of  by  an  employee  of  the  company."  A 
hammer  used  for  driving  spikes  into  cross-tics  on  a 
railroad  is  not  machinery  within  the  Alabama  code  pro- 
viding that  an  employer  is  liable  for  injuries  to  an  em- 
ployee as  if  ho  were  a  stranger,  when  the  injury  is  caused 
by  any  defect  in  the  machinery  used  in  the  business  of 
the  master  or  employer.' 

§  311.  Servant  Waives  Defect  by  Entering  or  Remain- 
ing  in  Service  Knowing  of  It.— If  the  servant  before  ho 
enters  the  service  knows,  or  if  ho  afterwards  disco\'ers,  or 
if  by  the  exercise  of  ordinary  observation  or  reasonable 
skill  and  diligence  in  his  department  of  service  ho  may 
discover,  that  the  building,  premises,  machine,  appliance, 
or  fellow-servant  in  connection  with  which  or  with  whom 
ho  is  to  labor  is  unsafe  or  unfit  in  any  particular,  or  that 
the  occupation  he  is  entering  is  a  dangerous  one,  and  if, 
notwithstanding  such  knowledge,  or  means  of  knowledge, 
he  voluntarily  enters  into  or  continues  in  the  employ- 
ment without  objection  or  complaint,  ho  is  deemed  to  as- 
sume the  risk  of  the  danger  thus  known  or  discoverable, 
and  to  waive  any  claim  for  damages  against  the  master 
in  case  it  shall  result  in  injury  to  him.*     Where  an  cm- 

»  riickey  v.  Taaflfe,  32  lliiu,  7.  v.  Holmes,  7  Hurl.  &  N.  937.     Unitud 

-  Qiiackenbush  v.  Railroad  Co.,  62  States:  Kicllcy  r.  Bulchcr  etc.  Mining 

Wis.  411.  Co.,  3 Saw.  500;  Dillon  ?<.  Union  Pacilic 

'■>  Georgia  Pac.  R'y  Co.  v.  Brooks,  84  R.  R.  Co.,  .3  Dill.  319;  Jones  v.  Ycugur, 

Ala.  138.  2  Dill.  C4.     (,'onnectieut:    Hayden  r. 

*2TlionipsononNegligence,  p.  1008,  Smithvillo  Mfg.  Co.,  29  Conn.  54S. 
citing  and  groupi-.ig  the  following  Georgia:  Western  etc.  R.  R.  Co,  v. 
decisions:  British:  Aissop  v.  Yates,  2  Bishop,  50  Ga.  465;  Johnson  r  Wost- 
Hurl.  &  N.  767;  Griffiths  v.  Gidlow,  ern  etc.  R.  R.  Co.,  55  Ga.  1.33;  Georgia 
3  Hurl.  &  N.  648;  Skipp  r.  Eastern  R.  R.  Co. «;.  Kcnney,  58  Ga.  4S5.  Corn- 
Counties  R.  K.  Co.,  9  Ex.  223;  3  L.  pare  Central  R.  R.  Co.  j\  Kelluy,  58  Ga. 
J.  Ex.  23;  Woouley  »'.  Metropolitan  107.  Iowa:  Lumlcyr. Caswell,  47  Iowa, 
R.  R.  Co.,  2  Ex.  Div.  384;  Ogden  v.  159;  7  Rep.  559.  Illinois:  Chica<,'o 
Runimens,  3  Fost.  &  F.  751.  Com-  etc.  R.  R.  Co.  v.  Jackson,  55  111.  4'J-'; 
pare  Seymour  v.  Maddox,  16  Q.  B.  Camp  Point  Mfg.  Co.  r.  Ballon,  71 
326;  Dynen  v.  Leach,  26  L.  J.  Ex.  111.  417;  St.  Louis  etc.  R.  R.  Co.  r. 
221;  co)itra,  Britton  v.  Great  West-  Britz,  72  111.  256;  Chicago  etc.  K.  11. 
ernCottonCc.L.  R.  7Ex.  130;  Clarke  Co.  v.  Munroe,  85  111.  25j  Morris  v. 


mk 


554 

g  a  rnil- 
"  injured 
any."  A 
ics  on  a 
codo  pro- 
,o  uu  cm- 
is  caused 
isincss  of 


r  Remain- 
before  ho 
centers,  or 
casonablo 
0  ho  may 
ippliancc, 
ith  whom 
IT,  or  that 
ic,  and  if, 
iiowlcdgc, 
)  employ- 
ed to  as- 
overablc, 
master 
0  an  em- 


555 


LIABILITIES   OP   MASTER   AND   SERVANT. 


§311 


10 


United 
etc.  Milling 
nioii  l\icilic 
es  r.  Yoigur, 
lluyden  r. 
Conn.  D4S. 
:.  K.  Co,  r. 
r  ^Vost- 
;{3;  Georgia 
4S5.  t'oiii- 
elley,  ')S  ( t;i. 
ell,  47  Iowa, 
Cliicatro 
55  111.  4'.l-.'; 
Ballon,  71 
11.  Co.  V. 
etc.  K.  R. 
Morris  r. 


j)loyec,  after  having  the  opportunity  of  becoming  ac- 
(piaintod  with  the  risks  of  his  situation,  r''eoi)ts  them,  ho 
cannot  complain  if  ho  is  subseipicntly  injured  by  such 
exi)osure.'  One  whoso  employment  in  a  raih'oad  yard 
reiiuires  him  to  move  damaged  cars  takes  the  risks  inci- 
dent to  mistaking  a  damaged  car  for  a  sound  one,*  like- 
wise the  risk  arising  from  the  use  of  worn  rails  for 
side-tracks  in  a  railroad  yard.'*  A  brakeman  cannot  re- 
cover for  being  struck  by  a  snow-bank  left  along  tiio  sides 
of  tho  track  by  tho  snow-plow,  as  ho  assumes  such  risks.* 
Ono  who  works  on  a  raised  platform  without  u  railing 


Mil.  242;  S'J  Am. 
r.  Northern   etc. 
280.     Minnesota: 


Oloason,  1  Bradw.  610;  Toledo  etc. 
U.  U.  Co.  V  Anbury,  84  111.  42U;  Chi- 
cago etc.  R.  K.  Co.  V.  Ward,  01  111. 
llil);  Indianaixdis  etc.  R.  R.  Co.  v. 
Flanigan,  77  111.  305;  Mosa  v.  John- 
Bon,  22  111.  0;i.3.  Kentucky:  .Sullivan v. 
Louisville  B.  Co.,  0  BuJi,  81.  Ma.s- 
sauhusett.-i:  Liidd  v.  New  Bedford  U. 
l\.  Co.,  119  Mass.  412.  Maine:  Buz- 
zoU  r.  Laconia  Mfg.  Co.,  48  Me.  113; 
77  Am.  Dec.  212.  Maryland:  Balti- 
more etc.  R.  R.  Co.  V.  Woodrutf,  4 
Dec.  72;  Hanrathy 
R.  R.  Co.,  40  Md. 
Le  Claire  v.  First 
Division  etc.  R.  R.  Co.,  20  Minn.  9. 
Michigan:  Davis  r.  Detroit  etc.  R.  II. 
Co.,  20  Mich.  105;  4  Am.  Dec.  304; 
Fort  Wayne  etc.  R.  R.  Co.  v.  Gilder- 
sleuve,  33  Mich.  l.'JS.  Missouri:  Dale 
V.  .St.  Louis  etc.  R.  R.  Co.,  03  Mo. 
4G5;  Devitt  v.  Pacitic  R.  R.,  50  Mo. 
302.  North  Carolina:  CrutchfieM  v. 
Richmond  etc.  R.  R.  Co.,  78  N.  C. 
300;  70  N.  C.  320.  New  York:  DeCJraff 
r.  New  Yor4«etc.  R.  R.  Co.,  3  Thomp. 
&  C.  255;  rcver.sed.  19  Alb.  L.  J.  134; 
Lauing  r.  New  York  etc.  R.  R.  Co.,  49 
N.  Y.  521;  10  Am.  Rep.  417:  Gibson  r. 
Eiio  R.  R.  Co.,  03  N.  Y.  449;  20  Am. 
Rep.  552;  reversing  5  Hun,  39;  Haskin 
V.  New  Y'ork  etc.  R.  R.  Co.,  05  Barb. 
129;  affirmed  50  N.  Y.  008;  Wright  v. 
Now  York  etc.  R.  R.  Co.,  25  N.  Y. 
5(5?;  Jones  v.  Roach,  9  Jones  &  S.  248. 
Pennsylvania:  Frazier  v.  Pennsylva- 
nia R.  R.  Co.,  38  Pa.  St.  104;  80  Am. 
Dec.  467;  and  see  O'Donnell  v.  Rail- 
road Co.,  59  Pa.  St.  239;  98  Am.  Dec. 
33G,    Rhode  Island:  Kelley  v.  Silver 


Springs  etc.  Co.,  12  R.  I.  112;  34  Am. 
Rep.  015.  Texas:  Robinson  i:  Hous- 
ton etc.  R.  R.  Co.,  40  Tex.  540;  In- 
ternational R.  R.  Co.  r.  Doyle,  49 
Tex.  190.  Wisco'.sin:  Dorsey  c.  Phil- 
lips etc.  Co.,  42  Wis.  583;  (Juk  Bridge 
Coal  Co.  r.  Rued,  0  Cent.  L.  J.  2;  5; 
Wormell  r.  Maine  Cent.  R.  11.  Co.,  79 
Me.  397;  1  Am.  St.  Rep.  321;  Smiih 
V.  Car  Works,  00  Mich.  5Jl;  1  Am. 
.St.  Rep.  542;  and  see  Grceuleaf  r. 
R.  R.  Co.,  29  Iowa,  14;  4  Am.  Rep. 
181;  Money  v.  Coal  Co.,  55  Iowa,  071; 
Naylor  i\  Chicago  etc.  R.  R.  Co.,  53 
Wis.  001;  Clark  v.  Railroad  Co.,  28 
Minn.  128;  Chicago  etc.  R.  R.  Co.  v. 
Clark,  11  111.  App.  104;  Chicago  etc.  R. 
R.  Co.  r.  Simmons,  11  111.  App.  147; 
Louisville  etc.  R.  R.  Co.  v.  Gower,  85 
Tonn.  405;  Spiva  v.  0.sago  Coal  Co.,  88 
Mo.  08;  Brown  v.  Railroad  Co.  ,09  Iowa, 
iei;Herrimam'.  R.  R.  Co.,27  Mo.  App. 
435;  Kiioxvillo  Iron  Co.  r.  .Smith,  bO 
Tenn.  45;  Norfolk  etc.  R.  R.  Co.  v. 
Emmert,  83  V^a.  040;  Bolicr  r.  llavoy- 
nieyer,  40  Hun,  557;  Norfolk  etc. 
R.  R.  Co.  V.  Cottrell,  83  Va.  512; 
Woodward  v.  Shruinpf,  120  I'a.  St. 
458;  Wilson  v.  R.  R.  Co.,  37  Minn. 
320;  Anderson?'.  Sowlo  Eh.'vator  Co., 
37  Minn.  539;  Hudson  r.  Octan  S.  S. 
Co.,  110  N.  Y.  025;  New  York  etc. 
R.  R.  Co.  V.  Lyons,  119  Pa.  St.  324. 

'  Umback  v.   R,   R.   Co.,   83  Ind. 
191. 

•^  Fraker  v.  R.  R.  Co.,  32  Minn.  54. 

*  Michigan    Central   R.    R.    Co.   v. 
Austin,  40  Mich.  247. 

*  Do  well  V.  Railway  Co.,  62  Iowa, 
G29. 


§311 


PRINCIPAL  AND    AGENT. 


556 


takes  the  risk  of  falling  off.'  A  servant  does  not  necessa- 
rily assume  the  risks  incident  to  the  use  of  unsafe  ma- 
chinery furnished  by  his  master,  because  he  knows  its 
character  and  condition;  it  is  also  necessary  that  he 
should  know,  or  by  the  exercise  of  common  observation 
might  have  known,  the  risks  attending  its  use.^  A  work- 
man in  a  mine  does  not  assume  risks  incident  to  defects 
in  the  hoisting  apparatus  used  for  lowering  him  to  the 
place  where  he  works.  This  is  not  machinery  about 
which  he  is  employed.' 

Illustrations. — The  plaintiflF  was  employed  to  work  on  a 
machine  of  an  old  pattern,  which  had  not  all  the  safeguards  of 
newer  machines.  He  worked  on  it  for  several  years,  and  then 
told  the  owner's  superintendent  that  it  ought  to  have  an  ad- 
ditional safeguard.  Tlie  superintendent  promised  to  attend  to 
it,  but  it  was  not  furnisliud,  and  the  plaintiff  was  required  to 
continue  to  work  with  it,  under  threat  of  being  disch.irged  if  ho 
refused.  He  complied,  and  was  injured.  Held,  that  the  mas- 
ter was  not  liable:  Sweeney  v.  Berlin  and  Jones  Envelope  Co.,  101 
N.  Y.  520;  54  Am.  Rep.  722.  A  railroad  switchman  hid  been 
sent  by  the  defendants  to  switch  a  car  owned  by  another  rail- 
road company,  to  be  loaded  with  nitro-glycerine  by  the  con- 
signor of  that  company.  Owing  to  the  negligence  of  the 
servants  of  that  consignor  there  was  an  explosion,  by  which 
the  switchman  was  killed.  The  switchman  knew  the  danger- 
ous character  of  the  work.  Held,  that  defendant  was  not  lia- 
ble: Foley  V.  Railroad  Co.,  48  Mich.  622;  42  Am.  Rep.  481.  A 
brakeman  in  the  service  of  a  railroad  company  was  injured  by 
catching  his  foot  in  the  guard  of  a  switch.  The  guard  was 
made  of  T  rail,  the  kind  in  general  use,  and  it  appeared  that 
U  rail  would  have  been  safer,  although  not  in  general  use. 
The  brakeman  knew  the  character  of  the  rail,  and  continued  in 
the  service  without  objection.  Held,  that  the  railroad  company 
was  not  responsible  in  damages:  Smith  v.  Railroad  Co.,  CD  Mo. 
32;  33  Am.  Rep.  484.  A  conductor  on  defendant's  railroad 
was  knocked  from  a  freight  train  and  killed  by  a  projecting 
roof  of  defendant's  depot.  He  was  familar  with  the  road,  had 
passed  over  it  daily  for  a  long  time,  and  the  roof  had  not  been 
altered  after  he  entered  the  defendant's  employ.  Held,  that  the 
company  was  not  liable:  Gibson  v.  Railroad  Co.,  63  M.  Y.  449; 


'  Moulton 
390. 


Gage,     138     Mass. 


»  Russell  V.  R.  R.  Co.,  32  Minn.  230. 
'  Moran  v.  Harris,  C3  Iowa,  3)0. 


556 


557 


LIABILITIES    OF    MASTER    AND    SERVANT. 


311 


;  necessa- 
isafe  ma- 
:nows  its 

that  he 
servation 

A  work- 
to  defects 
im  to  the 
ry  about 


7ork  on  a 
^guards  of 
and  then 
ive  an  ad- 
attend  to 
3quircd  to 
irged  if  ho 
,  the  mas- 
pe  Co.,  101 
bnd  boon 
other  rail- 

the  cou- 
:e  of  the 
by  which 
le  danger- 
s  not  lia- 

481.  A 
njured  by 
;uard  was 
sared  tlnit 
leral  use. 
itinuod  in 
company 
0.,  m  Mo. 
3  railroad 
projecting 
road,  had 

not  been 
I  that  tl)0 
Y.  449; 

!  Minn.  230. 
wa,  SI'). 


20  Am.  Rep.  552.  A  locomotive  engineer,  in  the  employ  of  a 
railroad  company,  while  leaning  outside  an  engine  in  motion, 
and  looking  back  for  a  signal  from  the  conductor,  was  injured 
by  his  head  coming  in  cor  tact  with  a  (signal  post  three  feet 
eight  inches  distant  from  the  track,  and  visible  half  a  mile 
away.  There  were  many  other  signal  posts  arid  other  erections 
along  the  track  at  the  same  distance  from  it.  He  knew  of  those 
facts,  but  had  not  noticed  this  particular  post.  Held,  that  he 
was  not  entitled  to  recover  against  the  railroad  company  for 
the  injury,  as  he  knew  the  danger  and  assumed  the  risk:  Love- 
joy  v.  Railroad  Co.,  125  Mass.  79;  28  Am.  Rep.  206.  A  car- 
coupler  or  switchman  was  constantly  employed  in  running 
damaged  cars  to  the  shop  for  repairs.  While  attempting  to 
couple  two  of  these  cars  he  was  killed.  Held,  that  he  had  ac- 
cepted the  service  and  its  risks,  and  could  not  recover.  Chicago 
etc.  R.  R.  Co.  V.  Ward,  Gl  111.  130.  A  fireman  was  killed  by 
the  overturning  of  an  engine  engaged  in  "bucking"  snow. 
Held,  in  the  suit  of  his  representatives  against  the  company, 
that  a  verdict  for  defendant  was  properly  directed:  Bryant  v. 
Railroad  Co.,  65  Iowa,  305;  55  Am.  Rep.  275.  A  workman  in 
a  railroad  yard  caught  his  foot  between  the  main  rail  and  the 
guard  rail  at  a  crossing.  lie  knew  that  there  were  no  blocks. 
Held,  that  the  risk  was  one  which  he  assumed,  and  that  for  his 
injury  the  company  was  not  liable:  Hass  v.  Railroad  Co.,  40 
Hun,  145.  An  employee  of  a  railroad,  while  on  top  of  a  freight- 
train,  was  caught  by  a  telegraph  wire  about  four  feet  above  the 
top  of  the  train,  and  was  killed.  The  wire  had  been  there  for 
five  weeks.  The  employee  was  well  aware  of  its  pooiiion,  had 
frequently  passed  under  it,  and  was  an  experienced  hand. 
Held,  that  there  was  no  evidence  of  negligence  on  the  part  of 
the  management  of  the  railroad  which  should  be  submitted  to 
a  jury:  DaUo)>  "■  Atlantic,  Mississippi,  etc.  R.  R.  Co.,  4  Hughes, 
180.  A  railroad  corporation  was  in  the  habit  of  running  special 
trains  without  notice.  An  employee  knowing  this,  while  on  a 
hand-car,  was  run  into  and  injured  by  a  special  train  going  at 
a  high  rate  of  speed  without  notice.  Held,  that  he  had  no 
right  of  action  against  the  corporation:  Pennsylvania  R.  R.  Co. 
V.  Wachtcr,  60  Md.  395.  A  workman  was  employed  by  a  rail- 
road company  to  stand  in  a  dangerous  place  to  signal  trains. 
Held,  that  he  assumed  the  obvious  risks  of  the  position:  Ken- 
nedy V.  Railroad  Co.,  33  Hun,  457.  A  railroad  track  in  a  yard 
curved  so  sharply  as  to  be  dangerous  to  one  attem])ting  to 
make  a  coupling  from  the  inner  side.  Held,  that  the  risk  was 
incident  to  the  employment,  and  that  a  brakeman  killed  there 
must  be  deemed  to  have  assumed  the  risk:  Tuttle  v.  Detroit, 
Grand  Haven,  etc.  K'y  Co.,  122  U.  S.  189.     A  workman  engaged 


§312 


PRINCIIAL  AND   AGENT. 


558 


in  excavating  a  tnnnel  was  injured  by  a  land  slide,  the  danger 
from  which  was  apparent  to  him.  Held,  that  he  could  not  re- 
cover of  his  employer,  although  he  was  ordered  to  work  there 
by  a  foreman,  who  also  knew  of  the  danger:  Anderson  v.  Win- 
ston, 31  Fed.  Rep.  528.  A  fireman  knowing  the  danger  lets  on 
steam  when  there  is  water  in  the  pipes,  and  is  injured  by  the 
bursting  of  a  valve  in  which  there  is  no  defect.  Held,  an  injury 
arising  from  the  risks  of  his  employment:  lAnch  v.  Sagamore 
Mfg.  Co,  143  Mass,  206.  The  engineer  of  a  train  was  killed  in 
an  accident  caused  by  a  misplaced  switch.  It  appeared  that 
the  switch-target  was  painted  green,  and  the  plaintiff  contended 
that  if  it  had  been  red  it  could  have  been  more  readily  seen  al 
a  distance,  and  enabled  intestate  to  stop  his  train  in  time. 
Held,  that  as  all  the  switch-targets  on  the  road  were  green,  and 
had  been  for  two  years,  during  which  time  intestate  had  been  in 
the  employ  of  the  company,  he  was  presumed  to  have  accepted 
it  as  one  of  the  risks  of  the  employment:  Naylor  v.  N.  Y.  Cent. 
R.  R.  Co.,  33  Fed.  Rep.  801.  One  employed  as  switchman  in  a 
freight-yard,  while  coupling  cars,  stepped  into  one  of  several 
drainage  sluices  which  were  in  existence  when  he  entered  the 
employment,  and  which  he  knew  remained  without  alteration, 
and  was  killed.  Held,  that  the  company's  receiver  was  not 
liable:  De  Forest  v.  Jewett,  88  N.  Y.  264. 

§  312.  Aliter  where  He  Complains  and  Master  Prom- 
ises to  Remedy  Defect. — As  stated  in  the  last  section,  the 
servant,  by  continuing  in  the  service  after  knowledge  of 
defects,  is  deemed  to  assume  the  risk  himself.*  But  if  the 
servant  complain  of  the  defect  to  the  master,  and  the  lat- 
ter promises  to  remedy  or  repair  it,  the  servant,  by  remain- 
ing on  this  assurance  for  a  reasonable  time  in  the  service, 
will  not  be  considered  to  have  waived  it,  and  the  question  of 
a  reasonable  time  will  be  for  the  jury.^     But  if  the  defect 


1  Kroy  V.  Chicago  etc.  R.  R.  Co.,  32 
Iowa,  357;  Greenleaf  v.  Dubuque  etc. 
R.  R.  Co.,  33  Iowa,  52;  Muldowney  v. 
Illinois  etc.  R.  R.  Co.,  39  Iowa,  U15; 
Way  V.  Illinois  etc.  R.  R.  Co.,  40 
Iowa,  341;  Lumley  v.  Caswell,  47 
Iowa,  159;  7  Rep.  559;  Crutchtield 
V.  Richmond  etc.  R.  R.  Co.,  78  N.  C. 
300;  Jones  v.  Roach,  9  Jones  &  S. 
248;  Morris  v.  Gleason,  4  111.  App. 
395. 

*  Belair  v.  Railroad  Co.,  43  Iowa, 
662;  Crutchfield  v.  Railroad  Co.,  78 


N.  C.  300;  Shanny  v.  Androscoggin 
Mills,  66  Me.  420;  Laaing  v.  New  York 
etc.  R.  R.  Co.,  49  N.  Y.  521;  10  Am. 
Rep.  417;  Holmes  v.  Worthington,  '?. 
Fost.  &  F.  533;  Holmes  v.  Clarke,  (5 
Hurl.  &  N.  349;  30  L.  J.  Ex.  135; 
affirmed  in  Exchequer  Chamber,  8itb 
nom.  Clarke  v.  Holmes,  7  Huil.  &  N. 
937;  Conroy  v.  Vulcan  Iron  Works, 
62  Mo.  35,  39;  Paterson  v.  Wallace, 
1  Macq.  748;  1  Pat.  App.  389;  26 
Scot.  Jur.  550;  Kelley  r.  Silver  Spring 
etc.  Co.,  12  R.  I.  112;  34  Am.  Kep. 


558 


559 


LIABILITIES   OP   MASTER   AND   SERVANT. 


§312 


he  danger 
Id  not  re- 
ork  there 
in  V.  Win- 
;er  lets  on 
ed  by  the 
an  injury 
Sagamore 
!  killed  in 
ared  that 
contended 

ly  Sfccli  a'b 

in  time, 
^reen,  and 
id  been  in 
)  accepted 
L  Y.  Cent 
iman  in  a 
of  several 
itered  the 
alteration, 
r  was  not 


er  From- 

ition,  the 
vledge  of 
Jut  if  the 
i  the  lat- 
remain- 
3  service, 
lestion  of 
le  defect 

ndro8Coggin 
New  York 
'21;  10  Am. 
thington,  ?. 
Clarke,  6 
Ex.  135; 
laniber,  nub 
Hull.  &  N. 
on  Works, 
n.  Wallace, 
p.  389;  26 
ilver  Spring 
Am.  Rep. 


is  not  remedied  within  the  promised  time,  his  remaining 
in  the  service  is  at  his  own  risk.^  And  when  a  master 
has  furnished  implements  perfect  of  their  kind,  but  not 
designed  for  or  adapted  to  the  performance  of  his  work, 
and  a  servant  objects  to  using  them  on  this  account,  but 
continues  to  use  them,  he  will  be  held  to  have  assumed 
the  risk.''  And  the  mere  complaint  of  the  servant  will 
not  be  sufficient,  unless  the  master  expressly  or  impliedly 
promises  to  repair  the  defect.^  In  some  jurisdictions  it 
is  even  held  that  although  the  servant  may  have  been 
aware  of  the  defect,  yet  if  it  was  of  such  a  nature  that  a 
man  of  ordinary  prudence  would  not  on  account  of  it 
have  abandoned  the  service,  and  the  servant  continued 
therein,  and  was  in  consequence  of  the  defect  injured,  he 
may  recover  damages.* 

Illustrations. — A  railroad  employee  in  passing  over  the 
track  had  observed  that  it  was  rough  and  uneven.  Held,  not 
an  assumption  of  the  risk:  Dale  v.  St.  Louis  etc.  R.  R.  Co.,  Go 
Mo.  455;  Dorsey  v.  Railroad  Co.,  42  Wis.  583.  The  deceased,  a 
miner,  complained  to  the  manager  of  a  mine  of  a  dangerous 


615;  Patterson  v.  Railroad  Co.,  76  Pa. 
St.  389;  18  Am.  Rep.  412;  Missouri 
Furnace  Co.  v.  Abend,  107  111.  44;  47 
An.  Rep.  425;  Greene  v.  Railroad  Co., 
31  Minn.  248;  47  Am.  Rep.  785;  Manu- 
facturing Co.  V.  Morris&ey,  40  Ohio  St. 
148;  48  Am.  Rep.  669;  Conroy  v.  Vul- 
can Iron  Works,  6  Mo.  App.  102; 
Parody  v.  Railroad  Co.,  15  Fed. 
Rep.  205;  Connsell  v.  Hall,  145  Mass. 
468.  In  Holmes  v.  Worthiugton,  2 
Fost.  &  F.  533,  Mr.  Justice  Willes 
said:  "There  is  no  case  deciding  that 
where  the  employer  and  the  servant 
are  both  aware  that  the  machinery  is 
in  an  nnsafe  state^  and  the  servant 
goes  on  using  it  under  a  reasonable 
belief  that  it  will  be  set  right  by  the 
employer,  and  it  is  not  set  right,  and 
he  suffers  an  injury,  he  cannot  sustain 
an  action.  The  master  may  choose  to 
be  too  chary  of  repairs  for  the  sake 
of  economy.  No  doubt  if,  knowing 
this,  the  servant  chooses  to  use  the  ma- 
chine, he  may  lose  his  remedy,  just  as 
in  the  case  of  the  man  taking  employ- 


ment at  a  gunpowder  factory 

If  the  defendants  knew  of  the  defect, 
and  undertook  to  repair  it,  and  the 
plaintiff  went  on  working,  relying  on 
their  repairing  it,  then  thoy  may  bo 
liable.  If  the  plaintiff  complained  of 
the  defect,  and  the  defendants  prom- 
ised that  it  should  be  remedied,  he  is 
not  to  be  deprived  of  his  remedy 
merely  because,  relying  on  their 
promise,  he  remained  in  their  em- 
ployment." 

»  Eureka  Co.  v.  Bass,  81  Ala.  200; 
60  Am.  Rep.  152. 

'■*  Texas  etc.  R.  R.  Co.  v.  Bradford, 
66  Tex.  732;  59  Am.  Rep.  639. 

3  Railroad  v.  Drew,  59  Tex.  10;  46 
Am.  Rep.  201. 

♦  Snow  V.  Railroad  Co.,  8  Allen,  441; 
85  Am.  Doc.  720;  Pattersons.  Railroad 
Co.,  76  Pa.  St.  389;  18  Am.  Rep.  413; 
Colorado  R.  R.  Co.  v.  Ogden,  3  Col. 
499;  Buzzell  v.  Mfg.  Co.,  48  Me.  113; 
77  Am.  Dec.  212;  Britton  v.  Cotton 
Co.,  L.  R.  7  Ex.  130;  Clarke u.  Holmes, 
7  Hurl.  &  N.  937. 


§313 


PRINCIPAL  AND  AGENT. 


660 


stone  in  the  roof  of  the  mine,  and  he  promif=ed  to  remove  it. 
The  foreman  Bcnt  men  to  remove  it,  and  the  deceased  went  to 
work  below,  instead  of  waiting  till  it  was  removed.  The  work- 
men accidentally  detached  the  stone,  and  it  fell  on  the  deceased, 
killing  him.  Ilchl,  that  the  deceased  had  not  waived  the  de- 
fect: Patterson  v.  Wallace,  1  Macq.  648.  An  employee  of 
a  railroad  company  complained  to  the  yard-master  that  the 
work  on  which  he  was  engaged  was  unsafe,  because  enough 
hands  were  not  furnished  to  perfonu  it.  No  promise  to  furnish 
more  was  given.  The  employee  continued  in  the  service  and 
was  injured.  Held,  that  he  was  not  negligent  as  matter  of  law: 
Thorpe  v.  Railroad  Co.,  89  Mo.  650;  58  Am.  Rep.  120. 


§  313.  Contributory  Negligence  of  Servant — Failing 
to  Notify  Master  of  Defect.  —  If  the  servant  continues  in 
the  use  of  the  particular  machine,  tool,  or  appliance,  or 
to  work  in  the  particular  building,  on  the  particular 
premises,  or  in  connection  with  the  particular  fellow- 
servant,  after  he  has  discovered  that  it  is  dangerous  for 
him  to  do  so,  without  informing  his  master  of  the  danger, 
he  is  guilty  of  contributory  negligence,  such  as  will  pre- 
clude him  from  recovering  damages  of  the  master  in  case 
he  is  afterwards  injured  thereby.^     He  must  either  make 


'  2  Thompson  on  Negligence,  sec. 
)9,  p.  1014;  Gieenleaf  i\  Dubuque  etc. 
R.  R.  Co.,  33  Iowa,  62,  57;  Cratch- 
field  V.  Richmond  etc.  R.  R.  Co.,  78 
N.  C.  300;  70  N.  C.  320;  Timmons  v. 
Central  Ohio  R.  R.  Co.,  GOhio  8t.  105; 
Buzzell  V.  Laconia  Mfg.  Co.,  48  Me. 
113;  77  Am.  Dec.  212;  Catawissa  R. 
R.  Co.  V.  Armstrong,  49  Fa.  St.  18G; 
Mansfield  Coal  Co.  v.  McEnery,  91  Pa. 
St.  185;  30  Am.  Rep.  002;  Pennsyl- 
vania Co.  V.  Lynch,  90  111.  3.33.  In 
Mad  liivcr  R.  R.  Co.  v.  Barber,  5 
Ohio  St.  541,  07  Am.  Dec.  312,  the 
court  say:  "The  duty  imposed  on  the 
company  by  the  relation  occupied  by 
the  conductor  was  to  use  reasonable 
and  ordinary  care  and  diligence  in 
furnishing  him  with  sufficient  sound 
and  safe  cars  and  machinery  for  the 
train.  This  duty  required  not  only 
that  the  company  should  use  proper 
skill  and  diligence  in  procuring  and 
furnishing  sufficient  and  safe  cars  and 
machinery,   but    also,   when  notified 


that  they  had  become  insufficient  and 
unsafe,  or  when  they  had  been  in  use 
as  long  as  they  could  with  safety  be 
used,  to  take  them  oflf  the  road  untd 
repaired  and  made  sufficient  and  safe. 
And  for  any  injury  sustained  by  au 
agent  or  employee  of  the  company 
from  any  neglect  of  this  duty,  the  com- 
pany would  be  liable.  But  the  rela- 
tion occupied  by  the  agent  or  employee 
imposes  a  reciprocal  duty  upon  him. 
It  was  the  duty  of  Barber,  as  the  con- 
ductor of  this  train,  to  use  ordinary 
and  reasonable  skill  and  diligence  on 
his  part,  not  simply  in  the  manage- 
ment of  the  train,  but  also  in  suiier- 
vising  the  due  inspection  of  tiic  cars^ 
machinery,  and  apparatus,  as  to  t'.ieir 
sufficiency  and  safety  while  under  his 
charge;  and  on  the  discovery  of  .my 
defect  or  insufficiency,  to  notify  the 
company,  and  to  take  the  proper  pre- 
cautions to  guard  against  danger  there- 
from. And  if  he  was  injured  by  tbu 
negligence  of  the  company  in  fuiuish- 


561 


LIABILITIES   OF   MASTER   AND    SERVANT. 


314 


the  necessary  repairs  himself,  or  report  the  fact  to  the 
employer  or  person  having  charge  of  the  repairs,  and  if 
he  omits  to  do  so,  and  is  injured  in  consequence,  he  can- 
not recover  from  the  employer,*  It  is  contributory  neg- 
ligence in  the  servant,  if  after  discovering  defects  in  the 
machinery,  or  incompetence  in  his  fellow-servants,  not 
to  notify  the  master  of  the  fact;'^  unless,  it  seems,  where 
the  master  has  equal  knowledge  of  the  defect  with  the 
servant,'  But  the  servant  is  not  negligent  ^)er  se  for  us- 
ing defective  machinery,  even  with  knowledge  of  defects, 
if  the  danger  is  not  immediate.'* 

§  314.    Going  into  Dangerous  Situation  by  Command  of 
Master. —  Where   the  master'  orders  tiie  servant  into  a 


ing  or  continuing  to  use  defective  cars 
and  machinery,  yet  '*  '-is  own  neglect 
of  duty  in  the  management  of  the 
train,  or  duo  inspection  of  tlie  cars 
and  machinery  in  his  charge,  con- 
tributed as  a  proximate  cause  of  the 
injury,  he  couM  liave  no  right  of  ac- 
tiou  against  the  company  for  damages; 
or  if  lie  knew  of  the  defects  and  iii- 
sufKciency  ot  tlie  cars  or  machinery, 
and  without  tuking  the  necessary  and 
proper  precaution  to  guard  agaitist 
danger,  continued  to  use  them,  lie  took 
upon  himself  the  risk,  and  waived  his 
right  as  against  the  company.  If 
there  was  no  neglect  of  due  and  or- 
dinary care  and  diligence  on  the  part 
of  the  company  furnishing  or  continu- 
ing the  use  of  the  cars  and  machinery, 
and  the  injury  was  caused  hy  latent 
defects,  unknown  alike  to  the  com- 
pany and  to  the  conductor,  and  not 
discoverable  by  due  and  ordinary  skill 
and  diligence  in  the  inspection  of  the 
cars  and  machinery,  it  would  be  a  mis- 
adventure, falling  among  the  casualties 
inciilentto  the  business,  and  for  whicli 
no  one  could  be  blamed.  But  if  the 
defects  which  caused  the  injury  were 
actually  unknown,  either  to  the  com- 
pany or  the  conductor,  and  not  dis- 
coverable by  due  and  ordinary  in- 
spection, and  yet  were  such  as  resulted 
from  a  neglect  of  reasonable  and  or- 
dinary care  and  diligence  on  the  part 
of  the  company,  either  in  procuring 
Vol.  I.  -30 


the  cars  or  machinery  to  be  made,  or 
in  continuing  their  use  on  the  road 
beyond  the  time  when  they  coidd  bo 
safely  used,  the  company  would  be 
liable  in  damages  for  the  injury.  And 
whether  such  was  the  case  or  not  was 
a  matter  of  fact  for  submisijion,  under 
proper  instructions,  to  tiie  jury  in  tiie 
court  below." 

-  Stroble  V.  Railroad  Co.,  70  Iowa, 
555;  59  Am.  Rep.  4oG. 

'  Illinois  etc.  R.  R.  Co.  v.  Jewell, 
4G  111.  99;  92  Am.  Dec.  240;  Toledo 
etc.  R.  R.  Co.  V.  Eddy,  72  111.  j:}8; 
Crutchfield  r.  Richmond  etc.  R.  R. 
Co.,  7GN.  C.  .320;  78  N.  C.  300;  Pat- 
tersoii  ?'.  Railroad  Co.,  7t>  Pa.  St.  389; 
18  Am.  Rep.  412;  McMillan  r.  Rad- 
road  Co.,  20  Barb.  449;  Davis  r.  Rail- 
road Co.,  20  Mich.  105;  4  Am.  Rep. 
.304;  Allerton  Packinjf  Co.  v.  Kgan, 
80  III.  253;  Porter  v.  Railroad  Co.,  07 
N.  C.  GO;  2  Am.  St.  Rcj).  1172.  If  a 
servant  knows  that  the  tools  given 
him  by  his  master  to  Wfirk  with  are 
defective,  he  cannot  recover  for  an  in- 
jury caused  by  the  defect:  Texas  and 
Pacific  R'y  Co.  v.  Bradford,  OG  Tex. 
732;  59  Am.  Rep.  039;  as  wlieie  a 
section-master  used  a  defective  dump- 
car  after  ho  had  been  oi'dcred  to  get 
another:  Pleasants  v.  Raleigh  and  Au- 
gusta Air-line  R.  R.  Co.,  95  N.  C.  195. 

"  Fairbank  v.  Haentzsche,  73  111, 
236;  Perry  v.  Ricketts,  55  III.  234. 

*  Huhn  V.  Railroad  Co.,  92  Mo.  440.. 


§314 


PRINCIPAL  AND  AGENT. 


562 


"% 


*;■ 


situation  of  danger,  and  he  obeys,  and  is  thereby  injured, 
the  hiw  will  not  deny  him  a  remedy  against  the  master 
on  the  ground  of  contributory  negligence,  unless  the  dan- 
ger was  so  glaring  that  no  prudent  man  would  have  en- 
tered into  it,  even  where,  like  the  servant,  he  was  not 
entirely  free  to  choose.*  Although  a  master  may  have 
directed  a  servant,  through  his  superintendent,  to  wipe 
off  a  machine  while  in  motion,  without  caution  as  to  the 
danger  of  so  doing,  yet  if  the  danger  is  apparent,  and  the 
servant  in  doing  so  allows  the  waste  which  he  is  using  to 
hang  down  and  be  caught  in  the  cog-wheels  below,  this 
is  contributory  negligence.^  The  fact  that  an  employee 
has  performed  work,  knowifig  it  to  bo  dangerous,  does  not 
of  itself  make  him  guilty  of  contributory  negligence,  but 
it  must  appear  that  he  performed  that  which  was  danger- 
ous in  a  negligent  manner.*  So  where  the  person  injured 
was  ordered  into  a  service  of  peculiar  danger,  such  as  he 
did  not  undertake  to  perform,  by  another  servant,  stand- 
ing toward  him  in  the  relation  of  superior  or  vice-principal, 
if  ho  obeys  such  an  order,  and  is  injured,  he  may  recover 
damages.  The  law  will  not  declare  his  act  of  obedience 
negligence  per  se,  but  will  leave  it  to  the  jury  to  say 
whether  he  ought  to  have  obeyed  or  not.* 

Illustrations. — The  plaintiff  was  a  laborer  in  the  employ 
of  a  railroad  company,  under  the  control  of  a  section  foreman, 
engaged  in  spiking  down  rails.  He  was  furnished  with  a  liain- 
mcr  obviously  and  dangerously  defective.  He  protested  to  tlie 
foreman  against  working  with  it,  but  was  ordered  to  use  it  on 
pain  of  losing  his  place.  The  work  in  hand  required  speedy 
performance.     He  used  the  hammer,  and  was  injured  by  reason 

'  Keegan  v.  Kavanaugh,  62  Mo.  230;     Co.  v.  Kraft,  31  Ohio  St.  287;  27  Am. 


Leary  v.  Railroad  Co.,  139  Mass.  580; 
62  Am.  Rep.  733;  Jones  v.  Railroad 


Rep.  510;  Bradley  v.  New  York  etc. 
R.    R.    Co.,   62  N.   Y.   99;   Mann  v. 


Co.,  49   Mich.  573;   Colo  v.  Railroad    Oriental  Print  Works,  11  R.  I.  loH; 
Co.,  71  Wis.  114.  -    -  -      - 

^  Atlas   Engine  Works  v.  Randall, 
100  Ind.  293;  50  Am.  Rup.  798. 

*  Mobile  etc.  R'y  Co.  v.  Holborn, 
84  Ala.  133. 


Chicago  etc.  R.  R.  Co.  v.  Bayfield,  37 
Mich.  205;  Patterson  v.  Pittsburg  K. 
R.  Co.,  76  Pa.  St.  389,  394;  IS  Am. 
Rep.  412;  Fort  v.  Whipple,  11  Huii, 
586;  Chicago  etc.  R.  R.  Co.  v.  Harney, 
♦  Lalor  V.  Chicago  etc.  R.  R.  Co.,  52  28  Ind.  28;  92  Am.  Dec.  282. 
III.  401;  4  Am.  Rep.  616;  Berea  Stone 


562 


563 


LIABILITIES   OF    MASTER   AND   SERVANT. 


§3 


14 


injured, 
)  master 
the  dan- 
have  en- 
was  not 
lay  have 
,  to  wipe 
as  to  the 
,,  and  the 
i  using  to 
elow,  this 
employee 
1,  does  not 
;ence,  hut 
iS  dangcr- 
)n  injured 
uch  as  he 
int,  stand- 
-principal, 
ay  recover 
obedience 
iry  to  say 

the  employ 
3n  foreman, 
?ith  a  liaiu- 
3Sted  to  the 

o  use  it  on 
ired  epcody 

d  by  reason 

287;  27  Am. 
lew  York  ntc. 
99;  Mann  r. 
11  R.  I.  m-, 
V.  Bayfield,  37 
Pittsburg  K. 
394;  18  Am. 
pple,  11  Hun, 
Co.  V.  Harney, 
282. 


of  its  defective  condition.    HcUl,  that  the  railroad  company  was 
liable:  East  Tennessee  etc.  R.  7?.  Co.  v.  Dvffidd,  12  Lea,  G3;  47  Am. 
Rep.  319.     The  defendant,  owner  and  master  of  a  steam-tug, 
ordered  the  cook  to  go  forward  and  handle  the  bow-line,  and  ho 
got  entangled  in  it  and  was  hurt.     He  was  usually  employed  at 
the  stern,  and  the  employment  in  question  was  more  dangerous, 
and  the  defendant  did  not  warn  him,  but  urged  him  to  the  duty 
with  an  oath.     But  the  plaintiff'  was  nineteen  years  old,  had 
lived  at  the  seashore  all  his  life,  and  had  been  to  sea  three  sum- 
mers, and  on  the  tug  four  months.     Held,  that  a  verdict  for  tho 
defendant  must  stand:   Willinms  v.  Churchill,  137  Mass.  243;  50 
Am.  Rep.  304.     The  plaintiff,  in  the  employ  of  a  railroad  com- 
pany, went  under  a  car  standing  alone  on  a  repair  track,  by 
order  of  his  foreman,  to  repair  it,  and  was  there  injured  by  tho 
starting  of  the  car  by  an  advancing  train.     The  track  was  usu- 
ally protected.     There  was  no  proof  of  any  precautions  to  pro- 
tect it  on  this  occasion.     Held,  that  a  nonsuit  was  improper: 
LuebJce  v.  Railroad  Co.,  59  Wis.  127;  48  Am.  Rep.  483.     A  ser- 
vant is  directed  by  his  master  to  drive  a  van  under  a  gateway, 
over  which  there  is  a  sign,  the  master  having  better  means  of 
observation,  and  in  following  directions  is  injured  by  coming  in 
contact  with  the  sign.     Held,  that  he  may  maintain  an  action 
against  the  master  for  such  injury:  Haley  v.  Case,  142  Mass. 
316.     A  hod-carrier,  engaged  at  work  about  an  excavation,  per- 
ceiving that  it  was  dangerous,  manifested  some  reluctance  to 
descend  into  it,  but  was  ordered  by  his  employer  to  do  so,  and 
obeyed,  and  the  earth  caved  in  upon  him  and  killed  him.    Held, 
that  his  widow  might  recover  damages  of  his  employer:  Kcegan 
V.  Kavanaugh,  62  Mo.  230.     Plaintiff's  intestate  was  employed 
by  defendant,  a  railroad  company,  as  a  common  laborer,  for 
the  purpose  of  loading  and    unloading  freight-cars.      While 
thus  engaged  he  was  ordered  by  the  depot  superintendent  to 
couple  a  freight  car  with  other  cars  attached  to  a  locomotive; 
and   having    to  go   between   the   cars   for   this    purpose,   tho 
engine  was   so   carelessly  managed   that   he  was  crushed   to 
death.     The  duty  of  coupling  the  cars  was  entirely  different 
from  that  for  which  deceased  was  hired.     Held,  that  plaintiff 
could  recover:  Lalorx.  Railroad  Co.,  52  111.  401;  4  Am.  Rep.  61G. 
A  took  service  with  a  railroad  company  as  a  brakeman  on  a 
passenger  train.     After  a  while  he  was  ordered  to  do  yard-work. 
He  objected   and   protested,  hut,  rather  than  lose   his   place, 
complied  Avith  the  order.     While  in  the  performance  of  the 
yard-work,  which  was  of  a  dangerous  character,  he  received 
injuries.     Held,  that  the  company's  liability  to  him  was  greater 
than  it  would  have  been  had  he  been  an  ordinary  yard-hand, 
and  that  it  was  competent  for  him  to  show  that  he  protested 


§315 


PRINCIPAL  AND  AGENT. 


564 


against  doing  the  work  when  ordered  to:  Jonea  v.  liailrond  Co., 
41)  Mich.  573.  A  railroad  engineer  was  ordered  to  use  two 
engines  coupled  together  for  bucking  snow  off  the  track.  The 
practice  is  general  and  well  known,  but  dangerous.  The  en- 
gineer, while  thus  engaged,  was  killed.  Held,  the  occupation 
was  included  in  the  ordinary  risks  of  his  employment:  Morse 
V.  Railroad  Co.,  30  Minn.  4G5.  A  master  ordered  his  servant 
to  go  on  a  platform,  which  was  dangerous  because  eloping 
outwards,  slippery,  and  unprotected,  to  do  a  piece  of  work. 
Tlie  servant  knew  the  danger  as  well  as  the  master,  and  might 
have  taken  some  precautions  against  it.  lie  took  none,  how- 
ever, fell,  and  was  injured.  Held,  that  the  master  incurred  no 
liability:  English  v.  Railroad  Co.,  24  Fed.  Rep.  906. 

§  315.    Other  Cases  of  Contributory  Negligence. — It  is 

negligence  in  the  servant  to  disobey  the  regulations  of 
the  master  whereby  ho  is  injured/  provided  the  violation 
is  the  proximate  cause  of  the  injury;*^  as  where  a  brake- 
man  was  injured  by  coupling  cars  by  hand,  when  the 
rules  of  the  company  declared  that  "a  short  stick  must 
always  be  used  to  guide  tho  link."^  If  a  servant  is  di- 
rected  to  do  a  certain  thing,  and  he  voluntarily  and 
negligently  chooses  a  dangerous  method  of  doing  it,  there 
being  a  safer  method,  his  master  is  not  liable  for  injuries 
resulting  from  such  negligence.^  An  engineer  cannot 
recover  against  the  company  for  injuries  received  in  a 
collision  with  another  train,  where  bis  own  train,  as  well 
as  the  other,  was  out  of  time.'^ 

Illustrations.  —  An  engine  was  old  and  rickety,  and  liable, 
when  fired  up,  to  start  off  of  its  own  accord;  but  by  the  observ- 
ance of  certain  simple  rules  this  could  be  prevented.  A  fireman, 
well  knowing  these  rules,  neglected  them  when  ho  fired  up  the 
engine  for  the  day's  work,  and  while  he  was  standing  on  tho 
track,  adjusting  the  key  to  the  cellar-box,  the  engine  started, 


*  Lyon  V.  Railroad  Co.,  31  Mich. 
429;  Shaniiy  v.  Androscoggin  Mills, 
6U  M(j.  4-20;  Memphis  11.  R.  Oo.  v. 
Thomas,  51  Miss.  0^7. 

^  Ford  V.  Railroad  Co.,  110  Mass. 
240;  14  Am.  Rep.  oi)8;  Locke  v.  Sioux 
City  R.  R.  Co.,  4G  Iowa,  109. 


"Wolsey  V.  Railroad  Co.,  33  Oliio 
St-  2'.>7. 

*  St.  Louis  Bolt  and  Iron  Co.r.  Burko, 
12  111.  App.  309. 

'•'  C-eorgia  R.  II.  etc.  Co.  v.  MoDade, 
69  Ga.  73. 


564 


665 


LIABILITIES   OP  MASTER  AND  SERVANT. 


§315 


ilroad  Co., 
to  use  two 
rack.  The 
i.  The  on- 
occui)ation 
lent:  Morsr. 
his  servant 
ise  sloping 
;e  of  work. 
,  and  might 
none,  how- 
ncurred  no 


QCe. — It  is 
Illations  of 
e  viohition 
re  a  brukc- 
,  when  the 
stick  must 
vaiit  is  di- 
itarilv  and 
ng  it,  there 
'or  injuries 
er  cannot 
eived  in  a 
\in,  as  well 

and  liable, 
the  ohsorv- 

A  fireinun, 
fired  up  the 
ling  on  (ho 
ine  started, 

Co.,  33  Ohio 
m  Co. ?•.  Burke, 
:o.  V.  McDade, 


injuring  him.     Held,  that  ho  was  guilty  of  contributory  neptli- 
gence:     Vickshurg   R.  R.  Co.   v.    Wilkins,  47  Miss.  404.     The 
boiler  of  a  locomotive  contained  defects  which  were  plainly 
visible   on   the   outside.     Notwithstanding   this,  the   engineer 
continued  to  run  the  engine,  keeping  the  steam  much  higher 
than  he  was  instructed  to  do,  and  higher  than  would  have 
been  safe  with  a  sound  boiler.     It  exploded,  and  he  was  killed. 
Ilrhl,  contributory  negligence:  Huhgh  v.  Railroad  Co.,  0  La. 
Ann.  495;  54  Am.  Dec.  5G5.     A  servant  gropes  along  a  dark 
passage-way  on  his  master's  premises  where  he  has  no  busi- 
ness, and  opens  a  door  and  falls  down  an  elevator,  which  has 
a  bar  in  front  of  it.     Held,  that  he  has  no  cause  of  action 
against  his  master:  PJciffcr  v.  Ringlcr,  12  Daly,  437.     A  brake- 
man,  endeavoring  to  couple  cars  under  circumstances  of  pecu- 
liar danger,  disregarded  the  warning  of  by-standers,  and  was 
injured.     Held,  contributory  negligence,  preventing  him  from 
recovering  damages:  Middonncy  v.  Railroad  Co.,  39  Iowa,  G15. 
An  experienced  brakeman  undertook  to  couple  cars  which  he 
knew  to  be  of  unequal   height,  without   using  the  ordinary 
crooked  link  which  is  used  for  the  purpose  of  preventing  acci- 
dents in  such  case.     Held,  contributory  negligence,  barring  a 
recovery:  Ihdctt  v.  Railroad  Co.,  G7  Mo.  239.     On  the  defend- 
ant's railroad  was  a  bridge  with  sides  five  feet  high,  coming  up 
one  foot  above  the  floor  of  the  engine-cab,  and  thirteen  and  a 
half  inches  from  the  sides  of  passing  engines.     The  plaintiff's 
intestate,  a  fireman,  well  knowing  the  character  and  situation 
of  the  bridge,  without  orders  and  in  violation  of  the  rules,  opened 
the  ash-pan,  whereby  fire  was  communicated  to  woolen  waste 
in  a  journal  box.     Then  without  orders  or  neceseity  he  stood 
outside  of  the  engine  on  the  steps  of  the  engine  and  tender  and 
endeavored  to  extinguish  the  fire  with  a  hose,  and  while  so 
enjployed  he  was  struck  by  the  side  of  the  bridge  and  killed. 
IIcJil,  that  the  company  was  not  liable:  Shecler  v.  Railroad  Co., 
81  Va.  188;  59  Am.  Rep.  G54.     An  engineer  carried  more  steam 
tlian  the  rules  of  the  company  allowed,  and  suflered  the  water 
to  get  too  low  in  the  boiler.     An  explosion  took  place  and  ho 
was  killed:   Held,  contributory  negligence:  Illinois  etc.  R.  R. 
Co.  V.  IIuuclc,  72  ill.  285.     An  engineer  was  running  his  train 
at  a  high,  reckless  rate  of  speed,  in  order  to  make  up  for  lost 
time.     The  engine  ran  off  the  track  while  passing  a  battered 
rail  on  a  curve,  and  he  was  injured.     Held,  contributory  negli- 
gence: Illinois  etc.  R.  R.  Co.  v.  Paterson,  G9  111.  G50.     A  railroad 
company  used  on  some  of  its  cars  an  apparatus  for  coupling 
known  as  the  "Miller"  draw-bar,  and  on  others  an  ordinary 
draw-bar.     When  it  is  attempted  to  couple  a  car  provided  with 
the  ''Miller"  draw-bar  with  one  provided  with  the  ordinary 


§315 


PRINCIPAL  AND  AGENT. 


5G0 


draw-bar,  the  ends  arc  liable  to  Blip  past  each  other,  thus 
bringing  the  platforms  of  the  two  cars  near  together.  This,  on 
one  occasion,  happened  with  two  of  the  company's  cars,  in  tlio 
presence  of  an  experienced  brakcman.  Hoon  after,  the  same 
cars  got  detached  from  each  other,  and  this  brakcman  went 
between  them  to  couple  them,  and  was  crushed  and  killed  by 
reason  of  the  ends  slipping  past  each  other  and  the  platforms 
coming  together.  Ilcldy  that  there  could  be  no  recovery:  Toledo 
etc.  R.  R.  Co.  V.  Ashbury,  84  III.  4?9.  A  brakcman  failed  in 
his  first  attempt  to  make  the  coupLng,  and  instead  of  stepping 
out  from  between  the  cars,  as  ho  might  have  done,  continued 
the  attempt  as  the  cars  were  moving  on,  and  while  so  doing, 
got  his  foot  in  the  frog  of  the  rails,  whereby  ho  was  injured. 
JTcld,  that  although  the  company  had  failed  to  furnish  cars  which 
coupled  readily,  yet  the  negligence  of  the  brakcman  was  the 
proximate  cause  of  the  injury:  Williavis  v.  Railroad  Co.,  43  Iowa, 
o9G.  A  brakeman  whoso  duty  it  was  to  uncouple  cars  saw  that 
the  train  did  not  stop  to  enabl  ,  him  to  perform  this  duty.  lie 
nevertheless  ran  in  between  the  cars  while  they  were  moving, 
endeavoring  to  uncouple  them,  and  was  killed.  Held,  con- 
tributory negligence:  Marsh  v.  Railroad  Co.,  5G  Ga.  274.  The 
proprietors  of  a  factory  failed  to  fence  a  shaft,  which  they 
were  required  to  do  by  statute.  One  of  their  servants,  contrary 
to  their  express  commands,  and  knowing  that  it  was  dangerous 
to  meddle  with  the  shaft,  took  hold  of  it  and  set  it  in  motion, 
whereby  ho  was  injured.  Held,  contributory  negligence:  Cafuvell 
V.  Worth,  5  El.  &  B.  849.  A  servant  of  a  ship-builder,  knowing 
a  bridge  to  be  weak  and  defective,  and  that  blocks  had  previ- 
ously been  placed  under  it  to  strengthen  it,  and  that  when  po 
strengthened  it  had  borne  the  weight  of  eighteen  hundred 
pounds,  attempted  to  uso  it  without  the  aid  of  such  strcjigtli- 
ening-blocks.  It  broke  down  and  he  was  drowned.  Held, 
contributory  negligence:  Jones  v.  Roach,  9  Jones  &  S.  248.  A 
brakeman  of  a  gravel  train,  having  lost  his  coat  from  the  train 
while  in  motion,  got  off  to  pick  it  up,  and  attempted  to  board 
it  while  in  motion,  and  in  doing  so  caught  hold  of  the  rim  of 
a  box-car,  which  broke,  and  he  fell.  Held,  contributory  negli- 
gence: Timmons  v.  Railroad  Co.,  6  Ohio  St.  105.  A  railroad 
llagman  stood  on  the  track  in  front  of  an  approaching  train, 
and  was  run  over.  Held,  contributory  negligence:  Milh  v. 
Railroad  Co.,  2  McAr.  314.  An  experienced  seaman  was 
placed  to  await  orders  in  the  wheel-house  of  a  steam-barge 
which  was  being  towed.  He  unlashed  the  wheel  without 
orders,  and  as  the  rudder  came  into  contact  with  an  obstruc- 
tion on  the  bottom,  the  wheel  revolved  and  injured  him  while 
trying  to  hold  it.    Held,  that  he  was  guilty  of  contributory 


666 


667 


LIABILITIES  OP   MASTER  AND   SERVANT. 


§315 


)thcr,  thus 
Tliis,  on 
arp,  in  tho 
,  Iho  sanio 
mian  went 

killed  1)}' 
!  platforms 
ry:  Toledo 
\  failed  in 
)f  stepping 
continued 

BO  doinp, 
IS  injured, 
cars  whieh 
in  was  the 
9.,  4.J  Iowa, 
•s  saw  that 
duty.  He 
•e  moving, 
Held,  con- 
274.  Tho 
diich  they 
s,  contrary 
dangerous 
in  motion, 
30 :  Cafiu'dl 
r,  knowing 
lad  previ- 
it  when  m 
hundred 

strcTigtli- 
bd.     Held, 
248.    A 
1  the  train 

to  board 
the  rim  of 
tory  ncgli- 
\.  railroad 
ling  train, 
Mills  v. 
iman  was 
eam-barge 
1  without 
n  obstruc- 
him  while 
Qtributory 


negUgonco:  Tlie  John  B.  Lyon,  33  Fed.  Rep.  184.  A  brakeman, 
while  descending  the  ladder  on  the  ^ide  of  the  eahoose,  not  in 
tho  discharge  of  his  duty,  but  for  sonK;  purpose  of  his  own,  was 
struck  and  injured  by  the  supply-pipe  of  u  water-tank.  lie  had 
been  on  the  road  for  three  months,  knew  of  the  proximity  of  tho 
tank,  and  that  there  was  not  sullieient  space  for  a  person  to 
pass  between  the  pipe  and  tho  train.  Held,  that  he  was  guilty 
of  contributory  negligence:  Wilson  v.  LoiuhvUIc  <C'  A'.  li.  Co., 
Ala.,  1888.  A  brakeman,  having  been  warned  of  the  danger, 
attempted  to  couple  cars  with  double  dead-woods,  and  was 
injured.  Held,  that  ho  was  guilty  of  contributory  negligence. 
Hathaway  v.  Michigan  Cent.  li.  Jl.  Co.,  51  Mich.  25;>;  47  Am. 
Rep.  509;  and  see  Kelly  \\  Abbott,  03  Wis.  307;  53  Am.  Rep. 
292.  A  brakeman  attempted  to  change  an  cngitie-link  without 
having  the  engine  stop  before  going  on  an  unballasted  side- 
track, and  was  injured.  Held,  contributory  negligence:  Penn- 
sylvania Co.  V.  Hankey,  93  111.  580.  A  foreman  of  a  gang  of 
stone-cutters  directed  a  particular  stone  to  be  taken  from  a 
large  pile.  This  was  done  in  such  a  manner  as  to  cause  the 
fall  of  another  stone,  by  which  tho  plaintiff,  one  of  tho  gang,  a 
person  under  age,  had  his  leg  broken.  There  was  evidence 
tending  to  show  negligence  both  on  the  part  of  the  foreman 
and  of  the  workmen.  Held,  contributory  negligence:  Brown  v. 
Maxwell,  G  Hill,  592;  41  Am.  Dec.  771.  A  laborer  attempted 
to  raise  a  weight  by  fastening  an  engine  to  it  by  means  of  a  clip. 
The  clip  slipped  off,  the  weight  fell,  and  he  was  killed.  Held, 
contributory  negligence:  Dynen  v.  Leach,  20  L.  J.  Ex.  221.  An 
employee  rode  on  the  top  of  a  car  and  was  struck  by  a  bridge, 
whoso  situation  he  well  knew.  Held,  contributory  negligence: 
Pittaburg  etc.  R.  R.  Co.  v.  Scntmeyer,  92  Pa.  St.  270;  37  Am.  Rep. 
684;  Clark  v.  Railroad  Co.,  78  Va.  709;  49  Am.  Rep.  394; 
Hooper  V.  Railroad  Co.,  21  S.  C.  541;  53  Am.  Rep.  091;  Owen 
V.  Railroad  Co.,  1  Lans.  108.  A  brakeman  was  thrown  from  a 
railroad  car  and  killed,  by  reason  of  the  brake-head  coming  off 
tho  upright  shaft,  through  the  nut  at  the  top  being  loose  and 
coming  off.  Held,  that  the  company  was  not  liable,  as  it  was 
tho  brakeman's  duty  to  see  that  the  brake  was  in  good  repair 
and  in  fit  condition  for  use,  and  to  report  its  defects  to  the  com- 
pany: lilinois  Cent.  R.  R.  Co.  v.  Jewell,  ^10  111.  99;  92  Am.  Dec. 
240.  An  engineer,  Avhile  leaning  out  of  the  locomotive,  and 
looking  back  to  get  a  signal  from  the  conductor,  was  injured  by 
his  head  coming  against  a  signal-post,  three  feet  and  eight 
inches  distant  from  the  track.  Before  looking  back  he  had 
looked  ahead  and  seen  no  obstruction.  He  knew  of  the  signal- 
posts,  but  had  never  noticed  this  one.  There  were  other  struc- 
tures on  the  line  of  the  road  at  the  same  distance  from  the 


§§310,017 


PRINCIPAL   AND   AGENT. 


5GS 


trnrk.  Held,  that  he  could  not  recover  of  the  company  for  the 
injury:  l.oirjoy  v.  Bontnn  etc.  R.  11.  Co.,  125  Mnpp.  70;  28  Am. 
Ut'p.  20().  A  workman  in  a  mining  tunnel,  fully  aware  of  the 
danger  of  an  unsupported  ceiling  which  he  was  fixing  in  his 
own  way  (confesPodly  a  dangerous  way),  eat  down  while  rest- 
ing directly  under  the  dangerous  spot.  The  ceiling  fell,  and  \w 
was  injured.  7/r/f/,  in  an  action  against  the  employer,  that  the 
jury  should  be  directed  to  find  for  defendant:  Ihiut  v.  Sierra 
liutteH  (iohl  Mhiiiifj  Co.,  24  Fed.  Rep.  847.  An  employee  in  a 
etove  factory,  in  the  abseneo  and  in  violation  of  the  directions 
of  his  employers,  exchanged  his  usual  and  proper  place  of 
work,  for  which  lie  was  employed  as  a  catcher,  —  a  place  of 
little  or  no  danger, ^ — for  that  of  sawyer,  a  much  more  dangerous 
position;  and  while  he  was  so  acting  as  sawyer,  a  band-wheel 
broke,  and  one  of  the  pieces  struck  and  injured  the  employee. 
Held,  that  the  employee,  by  going  from  his  proper  place  into 
one  of  greater  danger,  contributed  to  his  injury:  Brown  v.  liij- 
ronds,  47  Ind.  435.  An  engineer  in  the  employ  of  a  railroad 
company  was  injured  by  the  falling  of  an  embankment.  Held, 
that  the  fact  that  he  had  with  him  in  the  locomotive,  at  the 
time  of  the  accident,  another  engineer,  contrary  to  a  rule  of  the 
company,  would  not  prevent  his  recovering  damages  against 
the  conipany,  provided  that  the  presence  of  the  other  engineer 
did  not  contribute  to  the  disaster:  Central  R.  R.  Co.  v.  Mitchell, 
63  Ga.  173. 

§  316.    What  not  Contributory  Negligence  in  Servant. 

— It  has  been  held  not  contributory  negligoneo  for  a 
brakeman  to  attempt  to  pick  up  a  coupling-pin  from  the 
track  in  front  of  a  slowly  moving  train;*  for  section-hands 
to  run  a  hand-car  over  a  track  ahead  of  a  train  past  due;" 
for  a  baggage-master  to  jump  from  a  moving  train  which 
is  in  danger  of  collision;''  for  a  locomotive  engineer  to 
stick  to  his  post  in  tl  ?  face  of  danger;*  for  a  locomotive 
engineer  to  run  tlie  engine,  knowing  the  air-brake  to  bo 
out  of  order.^ 

§  317.     Doctrine  of  "Comparative  Negligence."— The 

doctrine   of  "comparative   negligence"   exists  in  a   few 

'Steele  v.  Railroad  Co.,  43  Iowa,  *  Cottrell  v.  Railroad  Co.,  47  Wis. 

109.  634;  .S2  Am.  Rep.  7%;  Pennsylvania 

^  Campbell  r.  Railroad  Co.,  45  Iowa,  Co.  v.   Roney,  89  Ind.  453;  4(5  Am. 

78.  Rep.  173. 

»  Georgia  R.  R.  Co.  v.  Rhodes,  66  "  Flynn  v.  Railroad  Co.,  78  Mo.  195; 

Ga.  645.  47  Am.  Rep.  99. 


609 


LIABILITIES   OP   MASTER  AND   SERVANT. 


§318 


states.  The  rulo  of  "comparative  noj::;lip;piiro"  is,  that  a 
compnrisou  may  bo  made  by  tbo  jury  bclwoon  tho  iic<:;li- 
pcnco  of  tbo  pbiintiir,  or  tbo  doccascd,  and  tbat  of  tbo 
defendant;  and  if,  in  comparison  witb  eaeli  otber,  tbo 
negligence  of  tbo  former  is  sliglit,  wbile  tbat  of  tbo  bitter 
is  gross,  tbo  |iliiintilF  will  bo  entitled  to  recover.'  Under 
tbis  rule,  recoveries  luivo  been  sustained  in  tbo  following 
instances:  Wiiero  a  fireman  on  a  railroad  locomotivo  in 
motion,  loaning  out  from  tbo  gangway  or  side  window,  on 
tbo  look-out  for  signals,  was  killed  by  a  "  mail-eatcbor";" 
where  a  railroad  company  retained  in  its  employ,  as  con- 
ductor of  a  gravel  train,  a  person  notoriously  given  to 
habits  of  intemperance,  and  by  his  negligence,  when  partly 
into.xicatod,  another  employee  was  killed,  bimseif  negligent 
in  sitting  on  the  end  of  a  flat-car  with  his  legs  hanging 
down;''  where  tho  proprietors  of  a  factory,  in  uujving  an 
engine,  left  a  revolving  shaft  extending  several  foot  into  a 
room  where  twenty  girls  were  at  work,  and  one  of  them, 
while  going  about  her  work,  vas  caught  by  it  and  killed;' 
where  several  railroad  section-hands,  returning  from  their 
Avork  on  a  band-car,  were  ran  upon  by  an  engine  which 
came  suddenly  round  a  curve  at  an  unlawful  rate  of  speed, 
although  tho  deceased  might  have  saved  himself  by  jump- 
ing off  the  hand-car  as  the  rest  did.^ 

§  318.  Contracts  between  Master  and  Servant  as  to  In- 
juries.—  It  has  been  held  in  Georgia  tbat  contracts  be- 
tween railroad  companies  and  their  employees,  by  which 
tho  latter  assume  all  risks  incident  to  tbo  omi)loyniont, 
are  valid  if  they  do  not  include  criminal  acts."     But  in 


'  Cliicago  etc.  R.  R.  Co.  v.  Sullivan, 
0.1  111.  '2m;  8t.  Lonis  etc.  R.  R.  Co.  v. 
Britz,  72  111.  250;  Fairbank  v.  Haen- 
tzicho,  73  III.  230;  Chicago  etc.  R.  R. 
Co  r.  Gregory,  58  111.  272;  Toledo  etc. 
R.  R.  Co.  V.  OConuor,  77  111.  391; 
Fostur  V.  Chicago  etc.  R.  R.  Co.,  84 
111.  1G5;  Haruis  v.  Sullivan,  1  Bradw. 
251. 


*  Chicago  etc.  R.  R.  Co.  r.  Gregory, 
58  111.  272. 

^  Chicago  etc.  R.  11.  Co.  r.  Sullivan, 
63  111.  293. 

*  Fairbank  v.  Ilaentzscho,  73 II).  230. 

*  Toledo  etc.  II.  U.  Cu.  v.  OCouuor, 
77  111.  391. 

"Galloway  ?'.  Railroad  Co.,  57  Ga. 
612;  Western  etc.  R.  R.  Co.  v.  Bishop, 


§319 


PRINCIPAL  AND  AGENT. 


570 


other  states  it  is  held  that  such  a  contract,  made  to  in- 
clude negligence,  is  void  as  against  public  policy.*  Con- 
tracts between  the  master  and  servant,  entered  into  after 
the  servant  received  the  injury,  by  which  a  servant  re- 
leases the  master  from  the  damages,  are  upheld  as  valid 
if  founded  upon  a  valuable  consideration,  and  not  ob- 
tained from  the  servant  by  means  of  misrepresentations  or 
fraud.^  The  fact  that  an  employee  has  been  disabled 
while  in  the  employ  of  a  railroad  company,  and  in  the 
discharge  of  liis  hazardous  duties,  is  a  sufficient  consider- 
ation to  support  a  promise  to  pay  for  the  nursing  and 
medical  attendance  necessary  to  his  cure.' 

§  319.  Who  are  Fellow-servants  — Common  Employment 
the  Test. — "The  decided  weight  of  authority  is  to  the  ef- 
fect that  all  who  serve  the  same  master,  work  under  the 
same  control,  derive  authority  and  compensation  from  the 
same  common  source,  and  are  engaged  in  the  same  gen- 
eral business,  though  it  may  be  in  different  grades  or  de- 
partments of  it,  are  fellow-servants  who  take  the  risk  of 
each  other's  negligence."*  Though  servants  work  under 
different  overseers,  if  engaged  in  the  same  one  of  employ- 
ment, such  as  necessarily  brings  them  into  frequent  con- 
tact with  each  other  in  the  prosecution  of  their  work,  they 
are  co-servants."  The  fact  that  the  negligent  servant,  in 
his  grade  of  employment,  is  superior  to  the  servant  in- 
jured does  not,  in  the  opinion  of  most  of  the  courts,  take 


60  Ga.  46o;  Western  etc.  R.  R.  Co.  v. 
Strong,  52  Ga.  4G1;  Heiulricks  v. 
Western  R.  R.  Co.,  52  Ga.  467;  and 
Bee  Mitchell  v.  Railroad,  '  Am.  Law 
Reg.  717. 

^  Roesner  v.  Hermann,  10  Biss.  486; 
RailroJid  Co.  v.  Spangle,  44  Ohio  St. 
471;  58  Am.  Rep.  S'.ili;  Kansas  Pac.  R. 
R.  Co.  V.  Peavey,  29  Kan.  169;  44  Am. 
Rep.  630;  Little  Rock  etc.  R.  R.  Co. 
V.  Eubanks,  48  Ark.  460;  3  Am.  St. 
Rep.  245;  Memphis  etc.  R.  R.  Co.  v. 
Jones,  2  Uead,  517. 

2  Illinois  etc.  R.  R.  Co.  v.  Welch, 


52  111.  183;  4  Am.  Rep.  593;  Schultz 
V.  Railroad  Co.,  44  Wis.  638;  Chicago 
etc.  R.  R.  Co.  V.  Doyle,  18  Kan. 
58. 

"  Toledo  etc.  R.  R.  Co.  v.  Rodri{^  .les, 
47  111.  188;  95  Am.  Dec.  484. 

*  2  Thompson  on  Hi  gligence,  sec. 
31.  p.  1026;  Wonder  v.  Railroad  Co., 
32  Md.  411;  3  Am.  Rep.  143;  Foster 
V.  Railroad  Co.,  14Minu.  360,  Chicago 
etc.  R.  R.  Co.  V.  Murphy,  53  111.  336; 
5  Am.  Rep.  48. 

*  Chicago  and  Alton  R.  R.  Co.  v, 
O'Bryan,  16  111.  App.  134. 


570 


571 


LIABILITIES    OP    MASTER   AND    SERVANT. 


§319 


de  to  in- 
^*  Con- 
nto  after 
rvant  re- 
[  as  valid 

not  ob- 
ations  or 

disabled 
d  ill  the 
consider- 
sing  and 


ployment 

to  the  ef- 
mder  the 
from  the 
ime  gen- 
les  or  de- 
3  risk  of 
rk  under 
employ- 
lent  cou- 
)rk,  thoy 
rvant,  in 
vaut  in- 
irts,  take 

93;  Schultz 
{8;  Chicago 
18    Kan. 

Rodri^  aes, 

s^eiice,  sec. 
ilroii'l  Co., 
143;  Foster 
10,  (,'liicago 
53  111.  336; 

R.  Co.  V. 


the  case  out  of  the  rule;  they  are  equally  fellow-servants, 
and  the  master  is  not  liable.*  Where  two  servants  are  at 
work  in  the  same  employment,  neither  having  authority 
over  the  other,  the  mere  fact  that  one  of  them  has  au- 
thority to  employ  and  discharge  other  servants  does  not 
change  his  character  of  fellow-servant  to  that  of  a  rep- 
resentative of  their  employer.'^  The  following  have  in 
different  cases  been  held  to  be  in  the  same  common  em- 
ployment, and  therefore  "fellow-servants"  with  each  other, 
viz.:  A  locomotive  cngimer  and  a  switch-tender;"  a  lire- 
man  on  one  engine  and  a  substitute  for  a  switch-tender;'* 
a  brake  man  and  the  men  engaged  in  making  up  a  train  ;^ 
a  mill  superintendent  and  a  common  spinner;''  a  track- 
repairer  and  those  in  charge  of  a  train  upon  which  he 
rode;'  a   brakeman  of  one  train   and   the   engineer   of 


1  O'Connell  v.  Baltimore  R.  R.  Co., 
20  Md.  212;  83  Am.  Dec.  549;  Mc- 
Gowaa  r.  St.  Louis  etc.  R.  R.  Co.,  Gl 
Mo  528;  Columbua  etc.  R.  R.  Co.  r. 
ArnoLl,  31  Iiul.  174;  99  Am.  Dec.  CIS; 
Thayer  v.  St.  Louis  etc.  R.  R.  Co.,  22 
lud.  28;  85  Am.  Dec.  409;  Daubcrt  v. 
Pickcl,  4  Mo.  App.  590;  Cumberland 
Coal  and  Iron  Co.  v.  Scally,  27  Md. 
5S9;  Shauck  v.  Northern  etc.  R.  R. 
Co.,  25  Md.  402;  O'Connors.  Roberts, 
120  Mass.  227;  Albro  v.  Agawam 
Canal  Co.,  0  Cush.  75;  McLean  v. 
Blue  Point  M.  Co.,  51  CaX.  255; 
Faulkner  v.  Erie  R.  R.  Co.,  49  Barb. 
324;  Conway  v.  Belfast  etc.  R.  R.  Co., 
L  R.  9  C.  L.  498;  Murphy  v.  Smith, 
lOCom.  B.,  N.  S.,  301;  12  L.  T.,  N.  S., 
005;  Allen  v.  New  Oas  Co.,  1  Ex.  Div. 
25;  IiowcUd  V.  Laudoro  Siemens  Steel 
Co.,  10  Q.  B.  02;  Gallasher  v.  Piper, 
10  Com.  B.,  N.  S.,  009;  Lehigh  Valley 
Coal  Co.  V.  Jones,  80  Pa.  St.  4.32; 
Lawler  v.  Androscoggin  R.  R.  Co.,  02 
Me.  403;  10  Am.  Rep.  492;  i-'cltham 
V.  England,  L.  R.  2  Q.  B.  33;  revers- 
ing 4  Fost.  &  F.  400;  Wilson  v.  Merry, 
L.  R.  1  H.  L.  S.  320;  Brown  v.  Max- 
./ell,  0  Hill,  592;  41  Am.  Dec.  771; 
Peterson  v.  Coal  Co.,  50  Iowa,  073;  32 
Au  Hep.  143;  Blake  v.  Railroad  Co., 
70  Me.  60;  35  Am.  Rep.  297;  Brown 


V.  Railroad  Co.,  27  Minn.  102;  38  Am. 
Rep.  285;  Eagan  v.  Tucker,  18  Ilun, 
347;  Delaware  etc.  R.  R.  Co.  v.  Car- 
roll, 89  Pa.  St.  374;  Peterson  r.  White- 
breast  Coal  Co.,  50  Iowa,  073;  32 
Am.  Rep.  143;  Quincy  Mining  Co.  v. 
Kitta,  42  Mich.  34;  McDermott  v. 
Boston,  133  Mass.  349;  Flyuii  v.  Salem, 
134  Mass.  351;  Hart  r.  Dry  Dock  Co., 
48  N.  Y.  Sup.  Ct.  400;  HoLh  r.  Peters, 
55  Wis.  405;  Dwyer  v.  Am.  Ex.  Co.. 
55  Wis.  453;  Willis  v.  Railroad  Co.,  11 
Or.  257. 

*  Lincoln  Coal  Mining  Co.  v.  Mc- 
Nally,  15  111.  App.  181. 

»  FarwoU  v.  Railroad  Co.,  4  Met. 
49;  38  Am.  Dec.  339. 

*  Tinnoy  v.  Boston  etc.  R.  R.  Co., 
52  N.  Y.  632. 

^Hodgkins  v.  Railroad  Co.,  119 
Mass.  419. 

*•  Albro  V.  Agawam  Canal  Co.,  6 
Cush.  75. 

'  Gillshannon  v.  Stony  Brook  R.  R. 
Co.,  10  Cush.  228;  Seavcr  v.  Boston 
etc.  R.  R.  Co.,  14  Gray,  400;  Gilman 
r.  Eastern  R.  R.  Co.,  10  Allen,  233; 
87  Am.  Dec.  635;  13  Allen,  433;  90 
Am.  Dec.  210;  Russell  i'.  Hudson 
River  R.  R.  Co.,  17  N.  Y.  134;  Ohio 
etc.  R.  R.  Co.  r.  Tindall,  13  Ind.  306; 
74  Am.  Dec.  259. 


§319 


PRINCIPAL   AND   AGENT. 


572 


another  colliding  with  the  first;*  a  locomotive  engineer 
and  a  master  mechanic  of  the  railroad;^  several  persons 
engaged  in  a  mine,  some  breaking  down  the  ore  with 
picks  and  by  blasting,  others  loading  and  wheeling  it 
out;''  the  persons  in  charge  of  a  railroad  locomotive  and 
a  section-man  engaged  in  repairing  defendant's  track  ;**  a 
laborer  engaged  in  hoisting  coal  by  machinery  and  the 
engineer  in  charge  of  the  engino;^  an  underground  work- 
man in  a  coal-pit  and  the  engineer  at  the  top  of  the  pit;® 
a  licensed  water-man  employed  by  a  warehouseman  by 
the  week,  but  whose  duties  only  required  him  to  attend 
three  hours  at  every  high  tide,  and  the  other  servants  of 
the  warehouseman  engaged  in  hoisting  goods;^  the  fore- 
man of  a  shop,  having  charge  of  the  machinery  therein 
and  a  woikman  in  the  shop  injured  by  a  defect  in  the 
machinery;*  the  heads  of  different  departments  in  the 
same  coal-mine  working  together  under  a  common  su- 
perintendent;® a  master  of  a  vessel  and  the  mate;*"  an 
"under-lookcr  "  in  a  coal  mine,  whose  duty  it  is  to  exam- 
ine the  .oof  and  prop  it  up  if  dangerous,  and  a  common 
laborer  in  a  mine;"  servants  engaged  in  operating  differ- 
ent trains  on  the  same  line  or  road;*^  a  conductor  of  a 
"dump,"  or  gravel  train,  and  a  common  laborer  thereon;'* 
a  brakeman  on  a  train  and  the  mechanics  in  the  repair- 


'  Wright  V.  New  York  etc.  R.  R. 
Co.,  25  N.  Y.  5G2;  Randall  o.  Rail- 
road Co.,  101)  U.  S.  478. 

^  Hard  v.  Vermout  etc.  R.  R.  Co., 
32  Vt.  473. 

^  Kiolley  v.  Belcher  Silver  Mining 
Co.,  3  Saw.  500. 

*  Foster  v.  Minnesota  etc.  R.  R. 
Co.,  14  Minn.  300;  Coon  v.  Syracuse 
etc.  R.  R.  Co.,  5  N.  Y.  492;  Whaalan 
V.  Mad  River  etc.  R.  R.  Co.,  8  Oliio 
St.  249. 

*  Wood  V.  New  Bedford  Coal  Co., 
121  Mass.  252. 

*  Bartonshill  Coal  Co.  v.  Reid  and 
oMcGuire,  3  Macq.  260,  300;  4  Jur., 
N.  S..  707;  1  Tat.  App.  785. 

'  LovoU  V.  Howell.  L.  R.  1  Com.  P. 
Div.  101;  45  L.  J.  387. 


^  Hanrathy  i\  Northern  etc.  R.  R. 
Co.,  40  Md.  280;  5  Rep.  008. 

'  Lohigh  Vallev  Coal  Co.  v.  Jones, 
80  Pa.  St.  432;  0  Rep.  125;  17  Alb. 
L.  J.  513. 

**  Halverson  i\  Nisen,  3  Saw.  502. 

"  Hall  V.  Johnson,  3  Hurl.  &  C.  580; 
11  Jur..  N.  S.,  180;  34  L.  J.  Ex.  2-J2; 
13  Week.  Rep.  411;  11  L.  T.,  N.  S., 
779. 

•'^  Hutchinson  v.  York  etc.  R.  R. 
Co.,  5  Ex.  343;  6  Eng.  R.  R.  Cas. 
680;  Louisville  etc.  R.  R.  Co.  v.  Rob- 
inson, 4  Bush,  507;  Pittsburgli  etc. 
R.  R.  Co.  V.  Devinney,  17  Ohio  St. 
197. 

"  O'Connell  v.  Baltimore  etc.  R. 
R.  Co.,  20  Md.  212;  83  Am.  Dec. 
549. 


573 


LIABILITIES   OF   MASTER   AND   SERVANT. 


§319 


shops;  a  brakeraan,  and  the  inspector  of  machinery  and 
rolling  stock;'  a  conductor  of  a  construction  train  and 
one  of  the  laborers  employed  on  it,  in  the  absence  of  proof 
that  the  conductor  was  in  fact  a  vice-principal;'*  a  carpen- 
ter or  other  employee  of  a  railroad  company  and  the  men 
in  charge  of  the  train  by  which  he  is  carried  to  or  from 
his  work,  in  pursuance  of  his  contract  of  service;^  an  em- 
ployee on  a  train  going  to  his  work  and  a  signal-man  of 
the  company;^  a  conductor  traveling  on  another  train  to 
his  place  of  service;'  a  fireman  and  a  master  machinist 
of  the  company;**  an  engineer,  brakeman,  and  shoveler;^ 
a  coal-miner  employed  by  a  mining  company,  who  has 
been  detailed,  with  many  other  miners,  to  work  repairing 
a  break  in  a  railroad  belonging  to  the  company,  and  the 
conductor  of  a  construction  train  on  such  railroad,  on 
which  train  the  person  injured  was  working;*  a  switch- 
tender  and  a  locomotive  engineer;"  a  brakeman  and 
another  brakeman,  together  with  a  conductor  of  a  freight 
train;'"  the  general  traffic  manager  and  a  "milesman" 
employed  under  the  orders  of  the  "ganger";"  a  carpenter 
at  work  for  the  railroad  company  and  the  servants  of  the 
company  in  charge  of  a  turn-table;'^  a  conductor  and  a 
brakeman  employed  on  the  same  train ;'^  a  brakeman  on 
a  freight  train  and  an  engineer  on  a  passenger  train  of 


'  Wonder  v.  Baltimore  etc.  R.  R. 
Co.,  32  Mil.  411;  3  Am.  Rep.  143. 

■^  McGowan  v.  St  Louis  etc.  R.  R. 
Co.,  CI  Mo.  528. 

^Seaver  t'.  Boston  etc.  R.  R.  Co., 
14  Gray,  466;  Gillshannon  v.  Stony 
Brook  R.  R.  Co.,  10  Cush.  228;  Mor- 
gan V.  Vale  of  Neath  R.  R.  Co.,  5 
Best  &  S.  736;  5  Best  &  S.  570;  Tun- 
ney  V.  Midland  R.  R.  Co.,  L.  R.  1  Com. 
P.  291;  contra,  O'Donnell  v.  Allegheny 
Valley  R.  R.  Co.,  59  Pa.  St.  239;  98 
Am.  Dec.  336. 

*  Moran  v.  New  York  etc.  R.  R. 
Co.,  3  Thomp.  &  C.  770;  67  Barb.  96. 

"  Manville  v.  Cleveland  etc.  R.  R. 
Co.,  11  Ohio  St.  417. 

*  Columbua  etc.  R.  R.  Co.  v.  Arnold, 


31  Ind.  174;  99  Am.  Dec.  015;  over- 
ruling Fitzpatrick  v.  New  Albany  etc. 
R.  R.  Co.,  7  lud.  436. 

'  St  Louis  etc.  R.  R.  Co.  r.  Britz, 
72  111.  256. 

*  Cumberland  Coal  and  Iron  Co.  v, 
Scally,  27  Md.  589. 

'  Farwell  v.  Boston  etc.  R.  R.  Co., 

4  Met.  49;  38  Am.  Dec.  339. 

'<'  Hayes  v.  Western  R.  R.  Corp.,  3 
Cush.  270. 

"  Conway  i\  Belfast  etc.  R.  R.  Co., 
I.  R.  9  C.  L.  498. 

'^  Morgan  v.  Vale  of  Neath  R.  R. 
Co.,  L.  R.  1  Q.  B.  149;  5  Best  &  S.  736; 

5  Best  &  S.  570. 

'*  Dow  V.  Kansas  Pacific  R.  R.  Co., 
8  Kan.  C42. 


§319 


PRINCIPAL   AND  AGENT. 


574 


the  same  company;*  a  repairer  of  cars  at  a  particular 
station,  and  an  engineer  in  charge  of  a  switch-engine  at 
the  same  station,  although  each  received  his  orders  from 
a  different  foreman;''  the  servants  of  a  person  who  had 
contracted  to  deliver  wood  to  a  railroad  company,  and  the 
engineer,  fireman,  and  conductor  furnished  by  the  rail- 
road company,  in  pursuance  of  the  terms  of  the  contract, 
who  were  associated  together  on  the  same  train;'  the 
engineer  and  shovelers  on  a  gravel  train ;^  a  servant  em- 
ployed at  a  particular  station,  whose  duties  consisted  in 
coupling  and  uncoupling  trains,  and  the  engineer  and 
conductor  of  any  train  that  might  come  along  and  need 
his  services  in  switching  cars;®  a  brakeman  and  a  section- 
boss  whose  duty  it  was  to  tend  the  switch  at  a  particular 
station;"  a  brakeman  and  the  engineer  on  the  same 
train; '  a  guard  on  a  train  on  an  English  railwa}'^  and  the 
"ganger,"  whose  duty  it  is  to  inspect  the  track  and  see 
that  such  tree-nails  are  renewed  as  are  decayed;®  a  station- 
master  having  charge  of  the  freight  trains  of  a  certain 
division  of  the  road  and  the  engineer  of  such  a  train;®  a 
car  repairer  and  the  head  brakeman  and  yard-master  at 
a  particular  yard;*"  the  general  superintendant  of  a  rail- 
road, the  supervisor  of  the  road  and  engineer,  a  section- 
master,  and  a  common  laborer; "  the  laborers  on  a  gravel 
or  construction  train  ai^d  the  conductor  or  engineer  of 
the  sarae;'^  a  railroad  conductor  and  engineer  on  the  same 


*  Louisville  etc.  R.  R.  Co.  v.  Robin- 
son, 4  Bush,  507. 

^  Chicago  etc.  R.  R.  Co.  v.  Murphy, 
53  111.  330;  5  Am.  Rep.  48;  Valtez  v. 
Ohio  etc.  R.  R.  Co.,  85  111.  500. 

» Illinois  etc.  R.  R.  Co.  v.  Cox,  21 
111.  20;  71  Am.  Dec.  298. 

*  Ohio  etc.  R.  R.  Co.  v.  Tindall,  ' 
Ind.  3GG;  74  Am.  Dec.  259. 

*  Wilson  V.  Madison  etc.  R.  R.  Co., 
18  Ind.  22G. 

8  Slattery  v.  Toledo  etc.  R.  R.  Co., 
23  Ind.  81. 

'  Summerhays  v.  Kansas  Pacific  R. 
R.  Co.,  2  Col.  484;  St.  Louis  etc.  R. 


R.  Co.  V.  Britz,  72  111.  250;  Nash- 
ville etc.  R.  R.  Co.  V.  Whelcss,  10  Lea, 
741;  43  Am.  Rep.  317;  Pittsburg  etc. 
R.  R.  Co.  V.  Ranney,  37  Ohio  St.  GG5. 

8  Waller  v.  South  Eastern  R.  R. 
Co.,  2  Hurl.  &  C.  102. 

^.ans  V.  Atlantic  etc.  R.  R.  Co., 
on  Mo.  49. 

I''  Besel  V.  Railroad  Co.,  70  N.  Y. 
171. 

"  Mobile  etc.  R.  R.  Co.  v.  Smith,  G 
Rep.  264. 

•^  Ryan  v.  Cumberland  Valley  etc. 
R.  R.  Co.,  23  Pa.  St.  384;  Chicago  etc. 
R.  R.  Co.  V.  Keefe,  47  111.  108. 


■ 


575 


LIABILITIES   OF   MASTER   AND   SERVANT. 


319 


train;*  one  of  a  gang  of  track  repairers  and  the  foreman 
of  the  gang;'^  a  brakeman  on  one  train  and  the  conductor 
or  engineer  on  another  train  belonging  to  the  same  com- 
pany;' a  track  repairer  and  the  fireman  or  engineer  of  a 
passing  train  ;^  an  inspector  of  the  track  and  the  servants 
of  the  company  in  charge  of  passing  trains;*  a  laborer 
employed  in  getting  out  ballast  and  a  track-layer  who 
had  laid  a  temporary  track  on  which  such  laborer  was  at 
work;  ®  a  brakeman  and  the  conductor  and  engineer  of  tho 
same  train;^  a  train  dispatcher  and  a  brakeman;^  an  em- 
ployee in  a  railroad  repair-shop  and  another  employee 
in  a  different  department  of  the  shop;''  a  "gang-boss" 
and  a  workman  on  a  railroad;'"  the  master  of  a  vessel  and 
the  mate;"  the  road-master  of  a  railroad  and  an  engineer 
or  fireman ;*''  a  telegraph  operator  at  a  railroad  station 
and  a  locomotive  engineer;"  a  switchman  and  a  car  in- 
spector;'* a  track  repairer  and  an  employee  on  a  train;'^ 
an  engineer  running  a  switch-engine  and  a  switch-tender;*^ 
one  running  a  steam-engine  for  hoisting  in  a  mine  and 
workmen  in  the  mine;"  an  engineer  of  one  train  and  an 
engineer  of  another  train  on  the  same  road;'^  an  engineer 
in  charge  of  a  steam-shovel  and  a  workman  engaged  with 
ihe  machine;'"  a  road-man  in  a  mine  and  a  miner;^"  the 


^  Ragsdale  v.  Memphis  etc.  R.  R. 
Co.,  59  Tenn.  426. 

^  Wcger  V.  Pennsylvania  R .  R.  Co. , 
55  Pa.  St.  460. 

*  Pittsburgh  etc.  R.  R.  Co.  v. 
Dcvinney,  17  Ohio  St.  197. 

*  Whaalan  v.  Mad  River  etc.  R.  R. 
Co.,  8  Ohio  St.  249;  Boldt  v.  New 
York  etc.  R.  R.  Co.,  18  N.  Y.  432; 
Ohio  etc.  R.  R.  Co.  v.  CoUarn,  8  Cent. 
L.  J.  12;  7  Rep.  143. 

^  Coon  V.  Syracuse  etc.  R.  R.  Co., 
5  N.  Y.  492. 

*  Lovegrove  v.  London  etc.  R.  R. 
Co.,  16  Com.  B.,  N.  S.,  669. 

'  Sherman  v.  Rochester  etc.  R.  R. 
Co.,  17  N.  Y.  153;  Johnston  v.  Pitts- 
burg R.  R.  Co.,  114  Pa.  St.  44.3. 

*  Robertson  v.  Railroad  Co.,  78  Ind. 
77;  41  Am.  Rep.  552. 

»  Murphy  v.  Railroad  Co.,  88  N.  Y. 
146;  42  Am.  Rep.  240. 


^^  Keystone  Bridge  Co.  v.  Newberry, 
96  Pa.  St.  246;  42  Am.  Rep.  54;5; 
Chicago  etc.  R.  R.  Co.  v.  Simmons,  1 1 
111.  App.  147;  Doughty  v.  Log  Driving 
Co.,  76  Me.  143. 

1'  Mathews  V.  Case,  61  Wis.  491;  50 
Am.  Rep.  151. 

'•^  Walker  v.  Boston  etc.  R.  R.  Co., 
128  Mass.  8. 

"  Dana  t-.  Railroad  Co.,  23  Hun,  473. 

"  Gibson  r.  Railroad  Co.  ,22  Hun,2S9. 

»»  Gormley  v.  Railroad  Co. ,  72  Ind .  3 1 . 

'*  Chicago  etc.  R.  R.  v.  Henry,  7  111. 
App.  322. 

"  Buckley  v.  Mining  Co.,  14  Fed. 
Rep.  833. 

'*  Chicago  etc.  R.  R.  Co.  v.  Doyle, 
CO  Miss.  977. 

'»  Thompson  v.  Railroad  Co.,  18  Fed. 
Rep.  2.39. 

■•'*  Troughear  v.  Coal  Co.,  62  Iowa, 
576. 


§319 


PRINCIPAL  AND   AGENT. 


576 


conductor  of  a  gravel  or  construction  train  and  a  laborer 
thereon;^  a  station  agent  and  an  i^nginecr  of  a  locomotive 
running  on  the  tracks  about  the  station;'^  a  foreman  in 
charge  of  a  derrick  and  a  workman  moving  stone  on  a 
truck;^  an  engineer  on  a  train  and  a  workman  in  the 
engine-yard;^  a  fireman  and  brakeman  on  a  train;''  car 
inspectors  and  brakemen  on  the  same  road;"  a  foreman 
of  a  night-crew  and  a  night-watcher;'  a  foreman  of  a  car- 
yard  and  a  car-mover;*  a  master  machinist  of  a  railroad 
and  a  fireman;"  coal-heavers  and  firemen  of  a  railroad 
and  track-walkers;'"  a  stevedore  and  a  boatswain  engaged 
to  perform  a  single  operation;"  a  brakeman  and  the  en- 
jjineer;'^  a  laborer  employed  in  constructing  a  sewer  and 
,  -i  having  the  oversight  and  direction  of  the  work;"  an 
/'  I'loyee  of  the  state,  injured  while  digging  clay,  and  the 
captain  of  a  boat  belonging  to  the  state,  under  whoso  di- 
iv -tioi  ^  ^  was  acting;"  a  servant  employed  to  operate  a 
machine  arid  other  operatives  who  repair  it;^^  a  laborer 
who  shoveled  grain  for  an  elevator  company  and  the 
captain  of  a  tug  owned  by  the  company  engaged  in  bring- 
ing a  vessel  to  the  elevator;^"  a  track  repairer  and  a  train- 
man;" the  engineer  of  a  coal-mine,  whose  duty  it  is  to 
lower  and  raise  the  cages,  and  a  common  laborer,  prepar- 
ing the  bottom  of  the  shaft  to  receive  them;'*  the  conduc- 


1  Heine  v.  Railroad  Co.,  58  Wis.  525; 
Cassidy  v.  Railroad  Co.,  70  Me.  488; 
St.  Louis  etc.  R.  R.  Co.  v.  Shackel- 
ford, 42  Ark.  417. 

'■'  Brown  v.  Railroad  Co.,  31  Minn. 
553.  , 

=»  Scott  V.  Sweeney,  34  Hun,  292, 

*  Texas  etc.  R.  R.  Co.  v.  Harring- 
ton, 02  'i'ex.  597. 

'*  Galveston  etc.  R.  R.  Co.  v.  Faber, 
63  Tex.  344. 

"Little  Miami  R.  R.  Co.  v.  Fitz- 
patrick,  42  Ohio  St.  318. 

'  Chicago  etc.  R.  R.  Co.  v.  Geary, 
110  HI.  383. 

8  Fraker  v.  Railroad  Co. ,  32  Minn.  54. 

•  Columbus  etc.  R.  R.  Co.  v.  Ar- 
nold, 31  Ind.  174;  99  Am.  Dec.  C15. 


w  Schultz  V.  Railroad  Co.,  67  Wis. 
610;  58  Am.  Rep.  881. 

"  Smith  V.  The  Furnessia,  30  Fed. 
Rep.  878. 

*^  Missouri  Pac.  R.  R.  Co.  v.  Texas 
and  Pacific  R.  R.  Co.,  31  Fed.  Rep. 
527. 

"Conley  i;.  Portland.  78  Me.  217. 

"  Loughlin  v.  State,  105  N.  Y.  1,^9. 

'^  Reading  Iron  Works  v.  Uevine, 
100  Pa.  St.  240. 

'"  Baltimore  Elevator  Co.  v.  Neal, 
65  Md.  438. 

"  Corbett  v.  St.  Louis  and  Iron 
Mountain  etc.  R.  R.  Co.,  26  Mo. 
App.  621. 

"*  Starne  v.  Schlothane,  21  111.  App. 
97. 


577 


LIABILITIES   OP   MASTER  AND  SERVANT. 


§320 


tor  and  engiireer  of  a  construction  train  and  a  shovelcr 
thereon,  having  the  same  master;*  a  track-walker  and  a 
locomotive  fireman;^  a  mining  boss  and  a  miner;'  a 
brukeman  and  a  car-inspector;*  an  engineer  and  a  coupler 
of  a  train;'  a  track  repairer  and  an  engineer  of  an  ele- 
vated  railroad;"  a  section-hand  and  an  engineer  of  a 
train;'  a  foreman  of  a  mine  and  a  miner  employed  to 
work  under  him;*  the  brakeman  and  the  conductor  on  a 
train;®  locomotive  engineers;'"  an  engineer  of  a  train  and 
a  switchman;"  the  foreman  at  the  round-house  and  an 
employee  working  under  him;"  the  station  agent  and  a 
brakeman  on  a  train;"  a  second  mate  and  a  seaman;"  a 
"wiper"  of  engines  and  the  employees  in  charge  of  a 
train.'« 

§  320.  Who  are  not  Fellow-servants.  —  And  these 
have  been  held  not  fellow-servants  within  the  rule  as 
to  common  employment,  viz.:  A  carpenter  employed  by 
the  railroad  company  and  train-men  in  charge  of  a  train 
on  which  he  is  riding  to  his  work;*'  a  draughtsman  in  a 
locomotive- works  and  a  carpenter  and  workmen  excavat- 
ing a  cellar  under  the  building;*^  a  pilot  and  one  of  the 
crew  of  the  vessel;**  a  train  dispatcher  and  an  ordinary 
employee;*'  a  locomotive  engineer  and  a  laborer  on   a 


^  Chicago  and  Alton  R.  B.  Co.  v. 
McDonald,  21  111.  App.  409. 

'  Schultz  V.  Chicago  and  Northwest- 
em  R.  R.  Co.,  67  Wis.  616;  58  Am. 
Rep.  881. 

'  Redstone  Coke  Co.  v.  Boby,  116 
Pa.  St.  364. 

*  Philadelphia  etc.  R.  B.  Co.  v. 
Hughes,  119  Pa.  St.  301. 

'  Boat  Wright  w.  Railroad  Co. ,  25  S.  C. 
128. 

«Van  Wickle  v.  Bailroad  Co.,  32 
Fed.  Rep.  278. 

'  Easton  v.  Bailroad  Co.,  32  Fed. 
Rep.  893. 

*  Stephens  v.  Doe,  73  Cal.  26. 

» Brown  v.  Cent.  Pao.  B.  B.  Co.,  72 
Cal.  623. 

Vou  L— 87 


»•  Van  Avery  v.  Union  Pac.  R.  R. 
Co.,  35  Fed.  Rep.  40. 

"  Naylor  v.  N.  Y.  Cent.  R.  R.  Co., 
33  Fed.  Rep.  801. 

"  Gonsior  v.  Railroad  Co.,  36  Minn. 
385. 

"  Toner  r.  Railroad  Co.,  69  Wis.  188. 

**  Roberta  v.  Egyptian  Monarch,  36 
Fed.  Bep.  773. 

»» Ewald  V.  Railroad  Co.,  70  Wis. 
420. 

"  ODonnellr.  Railroad  Co.,  59  Pa. 
St.  239;  98  Am.  Deo.  336. 

"  BairJ  v.  Pcttit,  70  Pa.  St.  477. 

M  Smith  V.  Steele,  L.  R.  10  Q.  B. 
125. 

"Booth  V.  Bailroad  Co.,  67  N.  Y. 
593;  73  N.  Y.  38;  29  Am.  Bep.  97. 


320 


PBINCIPAL  AND  AGENT. 


578 


railroad;*  a  section  foreman  of  a  railroad  and  a  brake- 
man;*  the  fireman  on  a  locomotive  and  a  track  repairer;' 
the  conductor  of  a  railroad  material  train  and  a  train-man 
or  laborer;*  a  section-hand  and  a  train-man;"  the  con- 
ductor of  a  construction  train  and  a  gang  of  day-laborers;' 
a  train  dispatcher  and  a  locomotive  engineer;^  a  car- 
inspoctor  and  a  car-coupler;*  railroad  employees  on  differ- 
ent  trains;®  section-hands  of  a  railroad  and  a  brakeman;'" 
the  master  of  a  steam-tug  and  the  foreman; "  a  switchman 
and  a  section  foreman;"  the  carpenters  who  erect  a  scaf- 
fold and  a  laborer  who  carries  bricks  thereon;"  the  con- 
cl victor  of  a  train  and  the  engineer;"  a  deck-hand  on  a 
boat  and  the  pilot;**  a  contractor  to  break  rock  at  a  certain 
price  per  foot  and  the  superintendent  of  the  mine;"  a 
brakeraan  and  the  conductor  of  another  road;'^  a  brake- 
man  on  a  freight  train  and  a  master  mechanic  of  the  road;" 
a  master  mechanic  and  the  foreman  of  the  railroad  shops;" 
a  car-inspector  in  the  railroad  yards  and  brakemen  on 
the  road;®*  the  employee  of  the  E.  company  engaged  in 
shoveling  ashes  from  a  pit  and  the  engineer  of  a  locomo- 
tive  belonging  to  the  T.  company,  though  the  E.  company 
had  exclusive  control  over  the  servants  of  the  T.  company 
employed  on  its  locomotives  while  in  the  yard;^*  a  servant 


>  Ryan  v.  Railroad  Co.,  60  111,  171; 
14  Am.  Rep.  32. 

'  Lewis  V.  Railroad  Co.,  59  Mo.  495; 
21  Am.  Rep.  385. 

*  Chicago  etc.  R.  B.  Co.  v.  Moranda, 
93  111.  302;  34  Am.  Rep.  168. 

*  Moon  w.  Railroad  Co.,  78  Va.  745; 
49  Am.  Rep.  401 ;  Coleman  v.  Railroad 
Co.,  25  S.  0.  446;  60  Am.  Rep.  516. 

'  Moon  V.  Railroad  Co.,  supra. 

*  Chicago  etc.  R.  R.  Co.  v.  Swanson, 
16  Neb.  254;  49  Am.  Rep.  718. 

'  Dan-igan  v.  Railroad  Co.,  52  Conn. 
285;  52  Am.  Rep.  590. 

*  Tiemey  v.  Riailroad  Co.,  33  Minn. 
311;  53  Am.  Rep.  35. 

*  Cooper  V.  Mullins,  30  Oa.  146;  76 
Am.  Dec.  638. 

>•  Vautrain  v.  Railroad  Co.,  8  Mo. 
App.  538. 


"  The  Clatsop  Chief,  7  Saw.  274. 

"  Hall  V.  Missouri  R.  R.  Co.,  74  Mo. 
298. 

^' Green  v.  Banta,  16  Jonea  &  8. 
156. 

"  Chicago  etc.  R.  R.  Co.  v.  Ross,  112 
U.  S.  377. 

»*  The  Titan,  23  Fed.  Rep.  413. 

16  Maybe w  v.  Mining  Co.,  76  Me. 
100. 

»^  Zeigler  v.  Danbury  R.  R.  Co.,  52 
Conn.  543. 

"  Cooper  V.  Railroad  Co.,  24  W.  Va. 
37. 

**  St.  Lonia  etc.  R.  R.  Co.  v.  Harper, 
44  Ark.  524. 

)•  Little  Miami  R.  R.  Co.  v.  Fitc- 
Patrick,  42  Ohio  St.  318. 

s>  SolUvan  v.  Tioga  B.  R.  Co.,  44 
Hon,  304. 


578 

a  brake- 
3pairer;* 
ain-man 
the  con- 
aborers;' 
^  a  car- 
fn  (liffer- 
keman;'" 
itch  man 
;t  a  scaf- 
the  con- 
nd  on  a 
a  certain 
line;"  a 
a  brake- 
leroad;" 
1  shops;" 
jraen  on 
;aged  in 
locorao- 
ompany 
ompany 
I  servant 

aw.  274. 
Co.,  74  Mo. 

ones  &   S. 

<).  Boss,  112 

p.  413. 
0.,  76  Me. 

R.  Co.,  52 
,24W.Va. 

V.  Harper, 
!o.  V.  Fits* 

L  Co.,  44 


579 


LIABILITIES  OF  MASTER  Ain>  SERVANT. 


320 


ignorant  of  the  use  of  a  machine  and  an  instructor  fur- 
nished him,  from  whose  incompetency  or  negligence  the 
servant  is  injured;*  a  section-hand  and  a  section-boss;*  a 
laborer  employed  by  a  contractor  engaged  in  grading  a 
railroad  and  the  engineer  of  a  train  furnished  by  the 
company  to  move  the  dirt;'  an  engineer  in  charge  of  a 
train  and  a  brakeman  acting  under  his  orders;*  an  assist- 
ant foreman  having  charge  of  the  department  and  a 
workman  engaged  therein  under  his  orders;*  one  em- 
ployed to  superintend  the  construction  of  a  cistern  and 
one  of  the  workmen  whom  he  employs;'  a  servant  to 
whom  a  master  intrusts  the  duty  of  furnishing  machin- 
ery for  other  servants  and  such  other  servants;'  a  brake- 
man  and  a  car-inspector;'  a  car-inspector  and  a  yard- 
master;'  a  subcontractor  for  building  bridges  for  a  rail- 
road and  those  employed  by  it  in  managing  its  trains;"*  a 
switchman  and  a  yard-master  engaged  at  the  time  as 
engineer;"  a  master  mechanic  and  wreck-master  and  a 
bridge  carpenter;**  an  employee  on  a  freight  train  and  an 
employee  on  a  passenger  train;"  a  conductor  of  train  and 
an  employee  on  the  train;"  a  telegraph  operator  and  the 
conductor  of  a  train;*'  a  foreman  of  gang  and  a  laborer;** 
an  engineer  and  a  brakeman.*' 


*  Brennan  v.  Oordon,  13  Daly,  208. 
'  Patton  V.  Western  North  Carolina 

R.  R.  Co.,  96  N.  C.  455. 

*  Louisville,  New  Orleans,  eto.  R.  B. 
Co.  V.  Conroy,  63  Miss.  662. 

*  East  Tennessee  and  Western  North 
Carolina  R.  R.  Co.  v.  Collins,  85  Tenn. 
227;  Louisville  eto.  R.  R.  Co.  v. 
Brooks,  83  Ky.  129;  4  Am.  St.  Rep. 
135. 

<^  Dutzi  V.  Geisel,  23  Mo.  App.  676. 

'Mulcaims  v.  Janesville,  67  Wis. 
24. 

'  Kelly  V.  Erie  Telegraph  and  Tele- 
phone Co.,  34  Minn.  321. 

*  Missouri  Pacific  R'y  Co.  «.  Dwyer, 
36  Kan.  58. 

*  Macy  V.  St.  Paul  andDolnih  R  B. 
Co.,  35  Minn.  SiOO. 


>*  Donaldson  «.  Railroad  Co.,  18 
Iowa,  280;  87  Am.  Dec.  391. 

"  Harvey  v.  Railroad  Co.,  36  Fed. 
Rep.  657 


79. 


Tabler  v.  Railroad  Co.,  93  Ma 


>*  Central  Trust  Co.  v.  Wabash  etc 
R.  R.  Co.,  34  Fed.  Rep.  616. 

^^Boatwright  v.  Railroad  Co.,  25 
S.  C.  128;  Coleman  V.  Railroad  Co.,  26 
S.  C.  446;  60  Am.  Rep.  616. 

»  East  Tenn.  R.  R.  Co.  v.  De  Ar- 
mond,  86  Tenn.  73. 

"  Wabash  etc.  R.  R.  v.  Hawk,  121 
HL  259;  2  Am.  St.  Rep.  83. 

"  Louisville  etc.  R.  R.  Co.  v.  Brooks^ 
83  Ey.  129;  4  Am.  St.  Rep.  135;  Louis- 
ville eto.  B.  B.  Co.  V.  Moore,  83  Ky. 
675. 


§321 


PRINCIPAL  AND  AGENT. 


580 


§  321.  Snperior  Servant  having  Control  of  Inferiors, 
a  "Vice-principal."  —  Where  the  master  delegates  to  a 
servant,  such  as  a  foreman  or  superintendent,  the  man- 
agement of  his  business  or  a  department  of  it,  the  servant 
becomes  a  vice-principal,  and  inferior  servants,  subject 
to  his  orders  and  control,  and  injured  by  his  negligence, 
can  recover  of  the  master.  The  vice-principal  is  not  a 
"  fellow-servant "  as  to  them.*  The  selection  of  an  em- 
ployee by  a  superintendent  who  has  entire  charge  of  the 
work,  with  power  to  hire  and  discharge  servants,  is  the 
act  of  the  master;  not  that  of  a  fellow- servant.*  Under 
this  rule,  it  has  been  held  that  the  following  are  vice-prin- 
cipal and  servant,  and  not  "fellow-servants,"  viz.:  The 
general  manager  of  a  railroad  and  an  engineer  on  one  of 
the  trains  of  the  company;'  a  superintendent  of  a  machine- 


'  Washburn  v.  Railroad  Co.,  3  Head, 
638;  75  Am.  Dec.  784;  Little  Miami 
R.  R.  Co.  V.  Stevens,  20  Ohio,  415; 
Cleveland  etc.  R.  R.  Co.  v.  Keary, 
3  Ohio  St.  201;  Berea  Stone  Co.  v. 
Kraft,  31  Ohio  St.  287,  292;  27  Am. 
Rep.  510;  Railroad  Co.  v.  Collins,  2 
Duvall,  114;  Wha^lan  v.  Mad  River 
R.  R.  Co.,  8  Ohio  St.  249;  Gormly 
V.  Vulcan  Iron  Works,  61  Mo.  492; 
Brothers  v.  Cartter,  52  Mo.  373;  14 
Am.  Rep.  424;  Corcoran  v.  Hoi- 
brook,  59  N.  Y.  517;  17  Am.  Rep. 
369;  MuUan  v.  Railroad  Co.,  78  Pa. 
St.  25;  21  Am.  Rep.  2;  Dobbin  v.  Bail- 
road  Co.,  81  N.  C.  446;  31  Am.  Rep. 
512;  Tyson  v.  Railroad  Co.,  61  Ala. 
554;  32  Am.  Rep.  8;  Cowles  v.  Rail- 
road Co.,  84  N.  C.  309;  37  Am.  Rep. 
621;  Mitchell  V.  Robinson,  80  Ind.  281; 
41  Am.  Rep.  812;  Wilson  v.  Williman- 
tic  Linen  Co.,  50  Coun.  433;  47  Am. 
Rep.  653;  Miller  v.  Railroad  Co.,  17 
Fed.  Rep.  67;  Greville  v.  Railroad  Co., 
3  McCrary,  352;  Gilmore  v.  Railroad 
Co.,  18  Fed.  Rep.  866;  Quinn  v.  New 
Jersey  Lighterage  Co.,  23  Fed.  Rep. 
363;  Louisville  etc.  R.  R.  Co.  v.  Fil- 
bern,  6  Bash,  574;  99  Am.  Dec.  690; 
Jones  V.  Old  Dominion  Cotton  Mills, 
82  Va.  140;  3  Am.  St.  Rep.  92;  Farren 
V.  Sellers,  39  La.  Ann.  1011;  4  Am.  St. 
Rep.  256.    See  Crispin  v.  Babbitt,  SI 


N.  Y.  516;  37  Am.  Rep.  621;  L.  &  N. 
B.  R.  Co.  V.  Lahr,  86  Teun.  335.  In 
Malone  v.  Hathaway,  64  N.  Y,  5,  21 
Am.  Rep.  573,  the  court  say:  "When 
the  servant  by  whose  acts  of  negligence 
or  want  of  skill  other  servants  of  the 
common  employer  have  received  injury 
is  the  aliter  ego  of  the  master,  to  whom 
the  employer  has  left  everything,  then 
the  middle-man's  negligence  is  the  neg- 
ligence of  the  employer,  for  which  the 
latter  is  liable.  The  servant  in  such 
case  represents  the  master  and  is 
charged  with  the  master's  duty:  Cor- 
coran V.  Holbrook,  59  N.  Y.  517;  17 
Am.  Rep.  369;  Murphy  v.  Smith,  19 
Com.  B.,  N.  S.,  361.  When  the  mid- 
dle-man or  superior  servant  employs 
and  discharges  the  subalterns,  and  the 
principal  withdraws  from  the  manage- 
ment of  the  business,  or  the  business  is 
of  such  a  nature  that  it  is  necessarily 
committed  to  agents,  as  in  the  case  of 
corporations,  the  principal  is  liable  for 
the  neglects  and  omissions  of  duty  of 
the  one  charged  with  the  selection  of 
other  servants  in  employing  and  se- 
lecting such  servants,  and  in  the  gen- 
eral conduct  of  the  business  committed 
to  his  care." 

»  Henry  v.  Brady,  9  Daly,  142. 

*  Krogg  V.  Atlanta  etc.  R.  R.  Co., 
77  Ga.  202;  4  Am.  St.  Rep.  79. 


580 

nferiors, 
ttes  to  a 
be  laan- 
I  servant 
I  subject 
jligence, 
is  not  a 
'  an  em- 
;e  of  the 
s,  is  the 
Under 
ice-prin- 
iz.:  The 
n  one  of 
ciachine- 


!1;  L.  &N. 
D.  335.  In 
N.  Y.  5,  21 
y:  "When 
'  negligence 
anta  of  the 
ived  injury 
ir,  to  whom 
thing,  then 
)  is  the  neg- 
r  which  the 
mt  in  Buch 
ter  and  is 
duty:  Cor- 
Y.  517;  17 

Smith,  19 
)n  the  mid- 
it  employs 
ns,  and  the 
be  manage- 

busiuess  is 
necessarily 
the  case  of 
is  liable  for 
of  duty  of 
lelectiou  of 
ag  and  se- 
ll the  gcn- 
committed 

,  142. 
R.  B.  Ca, 
79. 


581 


LIABILITIES  OF  MA8TEB  AND  BEBVANT. 


§321 


shop  and  an  errand-boy  employed  therein;*  a  girl  em- 
ployed in  a  hemp  factory  and  the  foreman;'  the  engineer 
of  a  manufactory  and  the  fireman;'  the  superintendent  of 
work  of  a  railroad  and  a  teamster;*  the  foreman  of  a 
wrecking  gang  and  the  members  of  the  crew;'  the  archi- 
tect and  superintendent  of  a  building  and  the  workmen;' 
the  section-boss  of  a  railroad  and  workmen  working  under 
him;^  the  conductor  of  a  construction  train  and  a  laborer 
employed  thereon;'  the  superintendent  of  a  railroad  com- 
pany and  its  orr^.inary  employees;"  the  captain  of  a  ship 
and  one  of  the  crew;*"  a  captain  of  a  mine  and  a  laborer 
employed  therein;"  the  mate  of  a  vessel  and  a  sailor  or 
deck-hand;*'  the  conductor  of  a  train  and  the  engineer 
and  brakemen;*'  a  stevedore's  foreman,  intrusted  with  the 
supervision  of  unloading  a  vessel,  and  the  laborers  em- 
ployed by  him;"  a  train  dispatcher  and  those  engaged  in 
the  operating  of  the  trains;*'  the  mate  of  a  ship  and  the 
seamen;"  the  foreman  of  a  gang  of  laborers  with  power  to 
discharge  them  and  a  laborer;"  the  engineer  of  a  locomo- 
tive and  the  general  manager  of  a  railroad;"  a  train  dis- 
patcher and  the  conductor  or  engineer;*'  a  section-boss  and 
the  brakeman  on  a  train.®*    Says  a  writer  of  authority:^* 


»  Railroad  Co.  v.  Fort,  17  Wall.  553; 
2  Dill.  259. 

«  Grizzle  v.  Frost,  3  Fost,  &  F.  622; 
and  see  Nashville  etc.  B.  R.  Co.  v. 
Jones,  9  Heisk.  27. 

*  Mann  v.  Oriental  Print  Works, 
11  R.  I.  152;  and  see  Cooper  v.  Rail- 
road Co.,  44  Iowa,  134. 

*  Cook  V.  Railroad  Co.,  63  Mo.  397. 
"•  Wabash  etc.  R.  R.  Co.  v.  Hawk, 

121  111.  259;  2  Am.  St.  Rep.  83. 


« Whalen  v.  Centenary  Church,  62    211 


"  Olson  V.  Clyde,  32  Hun,  425;  Daub 
r.  Railroad  Co.,  18  Fed.  Rep.  625. 

"  Chicago  etc.  R.  R.  Co.  v.  Ross,  112 
U.  S.  377. 

"  Brown  v.  Sennett,  68  Cal.  225;  68 
Am.  Rep.  8. 

>*  Smith  V.  Railroad  Co.,  92  Mo. 
359;  1  Am.  St.  Rep.  729;  Lewis  v.  Sei- 
fert,  116  Pa.  St.  628;  2  Am.  St.  Rep. 
631. 

i«Scharff  ».   Metcalf,    107    N.    Y. 


Mo.  326. 

^  Louisville  etc.  R.  R.  Co.  v.  Bowler, 
9  Heisk.  866. 

*  Chicago  etc.  R.  R.  Co.  v.  Bayfield, 
37  Mich.  205. 

*  Washburn  v.  Railroad  Co.,  3  Head, 
638;  75  Am.  Dec.  784. 

'*  Ramsey  v.  Quiuo,  4  Cent.  L.  J. 
478. 

^'  Ryan  v.  Bagaley,  60  Mich.  179;  45 
Am.  Rep.  35. 


"Criswell  v.  Fi-ir-ad  Co.,  30  W. 
Va.  799. 

"  Krogg».  Railroad  Co.,  77  Ga.  202; 
4  Am.  St.  Rep.  79. 

"  Smith  r.  Railroad  Co.,  92  Mo.  359; 
1  Am.  St.  Rep.  729;  Lewis  v.  Seifert, 
116  Mass.  628;  2  Am.  St.  Rep.  631. 

»  Hulehan  v.  Railroad  Co.,  68  Wis. 
520. 

'^  2  Thompaon  on  Negligence,  p. 
1030. 


§321 


PniNCIPAL  AND  AGENT. 


682 


"  It  is  hold  that  if  a  master  delegates  to  a  superintendent 
the  power  to  employ  and  discharge  servants,  which  be- 
longs to  him  as  master,  ho  thereby  makes  himself  liable 
for  injuries  sustained  by  a  servant,  caused  by  the  negli- 
gonco  of  such  superintendent'  in  selecting  an  insufficient 
number  of  servants  for  the  duty  required  of  th  '  or  in 
selecting  a  servant  unfit  for  the  duties  require^  .^  him,* 
or  for  an  injury  through  tho  negligence  of  the  servants 
employed  by  such  superintendent  while  acting  under  his 
orders."  * 

Illustrations. — Plaintiff,  under  the  direction  of  defend- 
ant's foreman,  put  up  a  staging  about  twenty-eight  feet  high, 
firmly  nailing  the  two  plunks  which  constituted  the  floor. 
During  his  absence,  another  workman,  under  direction  of  the 
foreman,  removed  one  of  the  planks,  placing  another  in  its 
place,  without  fastening  it.  Plaintiff,  not  knowing  that  any 
change  had  been  made,  returned  to  his  work  on  the  staging, 
which  let  him  fall  to  the  ground.  Held,  that  not  the  failure  of 
plaintiff's  fellow-workman  to  nail  the  plank  which  rep^^-ced  the 
nailed  one,  but  the  act  of  the  foreman  in  misleadir  aintiff 
into  danger,  was  the  cause  of  the  injury,  for  which  idant 

was  liable:  Ileckman  v.  Mackey,  35  Fed.  Rep.  353.  'Ine  fore- 
man and  general  superintendent  of  a  machine-shop  hired  a 
boy,  and  told  him  to  do  whatever  K.,  another  employee,  directed 
him.  K.,  being  in  charge  of  dangerous  machinery,  told  the  boy 
to  do  a  certain  act  in  regard  to  it,  whereby  he  was  injured. 
Held,  that  K.  and  the  boy  were  not  fellow-servants  as  to  that 
act,  and  the  boy  could  recover  against  the  principal:  Bowling 
V.  Allen,  74  Mo.  13;  41  Am.  Rep.  298.  Tho  foreman  of  a  gang 
of  men  employed  by  a  railroad  corporation  negligently  gave, 
and  insisted  on,  an  order  in  reference  to  moving  a  car  and  some 


^  Brothers  v.  Cartter,  52  Mo.  373; 
14  Am.  Bep.  424;  Stoddard  v.  St. 
Louia  etc.  B.  B.  Co.,  C5  Mo.  514; 
Kansaa  Pacific  B.  B.  Co.  v.  Little,  19 
Kan.  267;  Walker  v.  Boiling,  22  Ala. 
294;  Chapman  v.  Erie  B.  B.  Co.,  55 
N.  Y.  579,  583.  "When  the  middle- 
man  or  superior  servant  employs  and 
discharges  the  subalterns,  and  the 
princix)al  withdraws  from  the  manage- 
ment of  the  business,  or  tho  business 
is  of  such  a  nature  that  it  is  necessa- 
rily committed  to  agents,  as  in  the  case 
of  corporations,  the  principal  is  liable 


for  the  neglects  and  omissions  of  duty 
of  the  one  charged  with  the  selection 
of  other  servants,  in  employing  and 
selecting  such  servants,  and  in  the 
general  conduct  of  the  business  com- 
mitted to  his  care  ":  Malone  v.  Hatlia- 
way,  64  N.  Y.  5;  21  Am.  Bep.  573, 
per  Allen,  J. 

*  Stoddard  v.  St.  Louis  etc.  B.  R. 
Co.,  63  Mo.  514. 

»  Walker  v.  Boiling,  22  Ala.  294. 

<  Lydon  v.  Manion,  3  Mo.  App.  601, 
602. 


583 


LIADILITIES   OF   MASTER  AND  BERVANT. 


§022 


lumber,  ohcdionco  to  which,  on  tho  part  of  one  of  tho  men, 
caused  the  luiiihcr  to  fall,  injuring  him.  Held,  that  the  fdie- 
man  was  the  representative  of  tho  corporation,  and  that  the 
rule  which  exempts  a  master  from  liability  for  tlie  net.:ligenco 
of  a  servant  towards  a  fellow-servant  was  inapplicable:  ('liicn'jo 
etc.  R.  /'.  Co.  V.  M<iy,  108  111.  288.  A  workman  was  injured  by 
a  defective  rigf;ing  of  a  derrick,  the  ropes  having  become 
Btretched  by  the  rain  of  the  night  before  the  morning  of  the  ac- 
cident. Tho  foreman  who  had  charge  of  the  derrick  superin- 
tended its  starting.  JIcUl,  that  the  owner  was  liable  fur  the 
injury:  Courtney  v.  Cornell,  49  N.  Y.  Sup.  Ct.  28().  An  em- 
ployee, in  assisting  to  ■'■■  i  a  car  on  the  track,  is  injured  by  tho 
breaking  of  an  old  w  irn  r(.pe,  used  by  direction  of  the  road-mas- 
ter superintending  tho  job.  IMd,  that  he  may  recover  damages: 
Gahesion  etc.  R.  R.  Co.  v.  Delahvnty,  53  Tex.  20G.  The  rules 
of  a  railroad  company  reipiired  that  "conductors  must  in  all 
cases,  while  running  by  telegraph  or  special  orders,  show  the 
same  to  the  engineer  of  their  train  before  leaving  stations  where 
orders  are  received,"  and  that  "the  engineer  must  read  and 
understand  tho  order  before  leaving  tho  station."  Hrhl,  that 
the  engineer  was  subordinate  to  the  conductor,  and  they  were 
not  fellow-servants:  Jinas  v.  Rdilnxid  Co.,  2  McCrary,  2;55.  A 
conductor  orders  a  brakeman  to  get  off  a  train  moving  at  tho 
rate  of  four  miles  an  hour  in  the  night-time,  and  the  brakeman 
obeys,  using  such  care  as  he  may,  and  is  injured  by  alighting 
on  a  skid  left  by  train-hands  l^etween  the  tracks.  JlchI,  that 
ho  may  maintain  an  action  against  the  company;  and  it  i.s  no 
defense  that  the  conductor,  under  the  company's  rules,  had  no 
right  to  order  a  man  off  a  moving  train:  Central  R.  R.  Co.  v. 
Dc  Bray,  71  Ga.  406.  A  plumber  employed  in  a  railroad  com- 
pany's repair-shops  was  directed  by  the  master  mechanic,  to 
whose  orders  ho  was  subject,  to  bold  a  ]nece  of  timber  betv.cen 
a  tender  and  an  approaching  locomotive  to  prevent  a  direct 
collision,  and  so  holding  ho  asked  the  mechanic  if  tliai  was 
right,  to  which  tho  latter  replied:  "Yes,  that  will  do."  Tho 
engine  striking  higher  up  than  the  bufier  of  tho  tender  brought 
the  timber  violently  against  tho  plumber,  and  severely  injured 
him.  Held,  that  the  company  was  liable  therefor:  Dourjlas  v. 
Railroad  Co.,  63  Tex.  564. 


§  322.  Servant  having  Charge  of  Construction  cr  Re- 
pair of  Machinery  Used  by  Other  Servants. — On  this 
ground,  it  is  held  in  the  best  considered  of  the  cases  on 
the  subject  that  a  servant  who  has  charge  of  the  construc- 
tion and  repairs  of  the  machinery,  or  the  buildings  or 


323 


PRINCIPAL  AND  AGENT. 


684 


works  used,  is  not,  in  the  master's,  absence,  to  be  deemed 
a  fellow-servant  with  a  servant  who  is  employed  in  con- 
nection with  its  running  operations.  The  former  is  a 
vice-principal.*  Other  courts,  however,  hold  that  the 
master  is  not  liable  where  the  injury  happens  in  con- 
sequence of  the  negligence  of  his  master  mechanic,  in- 
spector of  machinery,  or  other  servant  or  servants  whoso 
duty  it  is  to  see  that  his  machinery  is  kept  in  safe  condi- 
tion for  use,  if  such  servant  was  a  competent  and  fit  person 
to  be  so  employed,  and  if  the  master  has  been  guilty  of  no 
personal  negligence  in  employing  him  or  in  retaining  him 
in  his  service.'' 


§  323.  Servants  of  Different  Masters. — It  is  generally 
requisite  that  the  servants,  to  be  "  fellow-servants,"  should 
bo  servants  of  the  same  master.'  Therefore  the  servants 
of  an  independent  contractor  are  not  "fel'ow-servants"  of 
the  servants  of  the  employer  for  whom  the  contractor  is 
working.*     The  rule  as  to  fellow-servants  is  not  applica- 

Graniteville  Mfg.  Co.,  18  S.  C.  2G2;  44 
Am.  Rep.  573;  Davis  v.  Railroad  Co., 
55  Vt.  84;  45  Am.  Rep.  590;  Kaiu  v. 
Smith,  25  Hun,  14G;  Houston  etc.  R. 
R.  Co.  V.  Marcelles,  59  Tex.  334;  Atchi- 
son etc.  R.  R.  Co.  V.  Moore,  31  Kan. 
197;  Mulvey  v.  Locomotive  Works,  14 
R.  I.  204. 

'^  See  2  Thompson  on  Negligence,  pp. 
1040  ct  seq. ;  McGee  v.  Boston  Cordage 
Co.,  139  Mass.  445. 

*  McAndrews  v.  Burns,  39  N.  J.  L. 
119;  Smith  v.  Railroad  Co.,  19  N.  Y. 
127;  75  Am.  Pec.  305;  Shearman  and 
Redlield  on  Negligence,  sec.  1 10; 
Swainson  v.  Railroad  Co.,  L.  R.  3  Ex. 
Div.  341;  Sawyer  ?;.  Railroad  Co.,  27 
Vt.  370;  Carroll  v.  Railroad  Co.,  13 
Minn.  30;  97  Am.  Dec.  221;  Cooper  v. 
MuUins,  SO  Ga.  146;  76  Am.  Dec. 
638. 

*  Svenson  v.  Pacific  Mail  Co.,  57 
N.  Y.  108;  Young  v.  Railroad  Co.,  30 
Barb.  299;  Abraham  v.  Reynolds,  5 
Hurl.  &  N.  142;  Burke  v.  Railroad 
Co.,  34  Conn.  474;  contra,  Johnson  v, 
Boston,  US  Mass.  114;  Illinoia  Cent. 
R.  R.  Co.  V.  Cox,  21  HI.  20;  71  Am. 


^  Shanny  v.  Androscoggin  Mills,  66 
Me.  420;  charge  of  the  court  below  in 
Seaver  v.  Boston  etc.  R.  R.  Co.,  14 
Cray,  4G0;  Ford  v.  Fitchburg  R.  R. 
Co.,  110  Mass.  240;  14  Am.  Rep.  598; 
Chicac^o  etc.  R.  R.  Co.  v.  Gregory,  58 
111.  272;  Houston  etc.  R.  R.  Co.  v. 
Dunham,  49  Tex.  181;  Cumberland 
etc.  R.  R.  Co.  V.  State  to  Use  of 
Moran,  44  Md.  284;  Cumberland  etc. 
R.  R.  Co.  V.  State  to  Use  of  Hogan, 
45  Md.  229;  Chicago  etc.  R.  R.  Co.  v. 
Jackson,  55  111.  492;  8  Am.  Rep.  GGl; 
Fliko  V.  Boston  etc.  R.  R.  Co.,  53 
N.  Y.  549;  13  Am.  Rep.  545;  Brab- 
bitts  V.  Chicago  etc.  11.  R.  Co.,  38 
Wis.  289;  Mullan  v.  Phdadelphia  etc. 
R.  R.  Co.,  78  Pa.  St.  25;  21  Am.  Rep. 
21;  L'jwis  V.  St.  Louis  etc.  R.  R.  Co., 
59  Mo.  495;  21  Am.  Rep.  381;  Kansas 
Pac.  11.  R.  Co.  V.  Little,  19  Kan.  267; 
Illinois  etc.  R.  R.  Co.  v.  Welch,  52 
Mo.  183;  4  Am.  Rep.  593;  Colorado 
etc.  R.  R.  Co.  V.  Ogden,  3  Col.  499; 
Railroad  Co.  v.  Stont,  17  Wall.  553; 
Spclman  v.  Railroad  Co.,  56  Barb.  151; 
Chicago  etc.  R.  R.  Co.  v.  Swett,  45 
111.  197;  92  Am.  Dec.  206;  Guuter  v. 


584 

)  deemed 
I  in  con- 
mer  is  a 
that  the 
in  con- 
auic,  in- 
ts  whoso 
fo  condi- 
it  person 
Ity  of  no 
ling  him 


;enerally 
"  should 
servants 
ants"  of 
ractor  is 
applica- 

C.  2C2;  44 
ilroail  Co., 
0;  Kaiu  v. 
on  etc.  R. 
i34;  Atchi- 
2,  31  Kan. 
Works,  14 

gencc,  pp. 
in  Conlagc 

)  N.  J.  L. 
19  N.  Y. 
irmau  and 
sec.  ll(j; 
.  R.  3  Ex. 
x\  Co.,  '27 
a  Co.,  13 
Cooper  r. 
^m.  Dec. 

Co.,  57 
.d  Co.,  30 
ynoltls,  5 
Railroad 
)hnson  v, 
ois  Cent. 
71  Am. 


585 


LIABILITIES   OP   MASTER   AND    SERVANtT. 


323 


ble  to  a  case  where  a  servant  of  tenants  has  been  injured 
by  the  negligence  of  a  servant  of  the  owner  employed  in 
the  same  room  to  manage  an  engine  v/orking  an  elevator, 
upon  which  the  injury  occurred.^  An  agreement  between 
connecting  roads,  in  order  to  secure  speed  and  comfort  for 
through-passenger  travel  between  certain  points,  docs  not 
make  an  employee  of  one  of  the  roads  the  fellow-servant 
of  an  employee  of  another  one.^ 

Illustuatioxs. — A  railroad  company,  A,  permitted  another 
company,  B,  to  use  its  station,  subject  to  its  rules  and  to  the  con- 
trol of  its  station-master,  and  one  of  its  servants  was  injured  by 
the  negligence  of  an  engine-driver  of  B  company,  who  shunted  a 
train  upon  the  siding  without  giving  or  receiving  the  signal  re- 


Dec.  298;  Wiggettr.  Fox,  11  Ex.  832. 
lu  Harkius  v.  Standard  Sugar  Refin- 
ery, 122  Mass.  400,  tlie  court  said: 
"The  alleged  injury  was  caused  by 
the  breaking  of  the  rope  furnished  by 
tlie  master  rigger.  The  rope  broke 
while  hoisiting  a  beam,  either  by  rea- 
son of  its  own  imperfection  or  the  un- 
skillfulness  with  which  it  was  used 
by  the  rigger.  The  rigger  was  either 
the  servant  of  the  defendant,  or  a  con- 
tractor having  exclusive  control  of  the 
work  he  had  co.itracted  to  do.  If  he 
was  a  contractor,  the  defendant  would 
not  be  liable  for  any  injury  caused  by 
his  negligence,  whether  arising  from 
the  selection  of  his  tackle  or  the  man- 
ner of  using  it:  Connera  v.  Hennessy, 
112  Mass.  9(3,  and  cases  cited.  If  not 
a  contractor,  but  a  servant,  then  he 
and  those  employed  under  him  to  do 
the  hoisting  were  fellow-servants  with 
the  master  mason  and  the  men  em- 
ployed as  masons  under  him,  of  whom 
the  plaintiff  'a  intestate  was  one.  They, 
together  with  the  carpenters,  were  en- 
gaged in  tlio  common  employment  of 
erecting  and  completing  the  structure, 
under  the  general  dire(;tion  of  the  de- 
fendant's agent:  Johnson  v,  Boston, 
118  Mass.  114.  All  the  master  me- 
chanics thus  employed  were  to  furnish 
the  men,  tools,  and  tackle  necessary 
to  do  the  work  in  their  respective  de- 
partments. A  master  thus  employing 
servants  to  do  a  certain  work,  and  to 
furnish  the  tools  and  other  appliances 
accessary  for  the  prosecutioa  of  the 


work,  is  responsible  to  a  fellow-ser- 
vant only  for  care  in  the  selection  of 
the  men  thus  employed.  Ho  is  not 
responsil)lo  for  a  defective  ax,  rope, 
or  trowel  so  furnished,  which,  in  the 
hands  and  under  the  control  cf  one  of 
his  servants,  injures  a  fellow-servant, 
any  more  than  he  is  responsible  to  his 
servant  for  the  careless  and  negligent 
manner  in  which  such  tool  or  appli- 
ance is  used  by  a  fellow-servant.  Sup- 
pose a  carpenter  and  pluniber  are  en- 
gaged in  the  common  employment  of 
making  repairs,  each  bringing,  as  is 
usual  in  such  cases,  hiy  own  tools: 
the  master  would  not  be  liable  for  an 
injury  to  the  carpenter  caused  by  a 
defect  in  the  furnace  of  the  plumber. 
Two  woodmen  are  Oinploycd  to  cut 
down  trees,  and  they  both  l)ring  their 
own  axes:  it  could  not  be  contended, 
if  one  is  injured  by  a  defect  in  the  ax 
of  the  other,  that  the  master  would  be 
responsible.  The  workman  takes  the 
risks  of  the  employment  he  engages 
in,  which  include  the  n^sult9  of  negli- 
gence on  the  part  of  other.-;  cnga^ctl  in 
tlie  same  service;  and  where  all  fur- 
nish their  own  tools,  and  arc  engaged 
in  a  common  employment,  the  work- 
man takes  the  risk  of  the  ne^li;;er.ce 
of  his  fellow-workman  in  selectiny;  and 
caring  for  his  tools,  as  well  as  iu  the 
use  of  them." 

'  Stewart  v.  Harvard  College,  12 
Allen,  58. 

■■*  Philadelphia,  Wilmington,  etc.  R. 
R.  Co.  V.  State,  58  Md.  372. 


g  324 


PRINCIPAL  AND  AGENT. 


586 


quired  by  the  rules  of  A  company.  Held,  that  such  servant  of 
A  company  was  not  a  fellow-servant  with  the  engine-driver  of 
B  company,  and  that  B  company  must  pay  damages  to  him: 
Warburtoii  v.  Railroad  Co.,  L.  R.  2  Ex.  30.  A  road  of  A  com- 
pany formed  a  junction  with  that  of  B  company,  and  the  cars 
of  B  couipany,  under  an  arrangement  between  the  two  com- 
panies, ran  for  four  miles  over  the  road  of  A  company.  B 
company  intrusted  a  servant  of  A  company  with  the  duty  of 
switching  its  trains,  so  as  to  avoid  collisions  with  the  trains  of 
A  company,  and  gave  him  a  joint  time-table  of  the  two  roads  to 
enable  him  to  do  so.  Owing  to  the  negligence  of  this  servant, 
a  train  of  B  company  collided  with  a  train  of  A  company  nliile 
on  ihc  track  of  A  company,  killing  a  servant  of  A  company. 
He'd,  thf't  B  company  was  liable  for  the  damages:  Taylor  \. 
Railroad  Co.,  45  Cal.  323.  The  plaintiff,  a  deck-hand  on  the 
steamboat  A.,  was  injured  by  the  explosion  of  the  boiler  of  the 
steamboat  R.,  while  the  boats  were  near  each  other.  The  de- 
fendant was  owner  of  the  steamboat  A.,  but  had  an  agreement 
with  the  owner  of  the  steamboat  R.  that  each  should  employ 
the  men  and  manage  his  own  boat,  and  at  the  end  of  the  season 
the  profits  of  the  boats  should  be  divided  between  them.  Held, 
that  the  defendant  and  the  owners  of  the  R.  were  partners,  and 
each  responsible  for  the  negligence  of  the  ofiicers  and  crew  of 
each  boat;  that  the  plaintiff  and  the  crew  of  the  R.  were  not 
fellow-servants:  Connolly  v.  Davidson,  15  Minn.  519;  2  Am. 
Rep.  154.  The  plaintiff,  while  engaged  in  the  employ  of  a  tel- 
egraph company  in  distributing  poles  along  the  line  of  a  rail- 
road, and  while  upon  a  train  on  such  railroad,  was  injured  by 
the  negligence  of  the  railroad  company's  engineer  upon  tlie 
train.  The  train,  in  pursuance  of  a  contract  between  the  com- 
panies, was  transporting  men  and  materials  of  the  telegraph 
company.  The  train  Avas  manned  by  employees  of  the  railroad 
company,  but  was  temporarily  under  the  direction  of  the  fore- 
man of  the  telegraph  company.  Held,  that  the  plaintiff  could 
recover  of  the  railroad  company:  Coggin  v.  Railroad  Co.,  G2  Ga. 
685;  35  Am.  Rep.  132. 

§  324.  When  Relation  of  Master  and  Servant  does  not 
Subsist — Time.  —  If  a  servant  has  quit*,  his  work  for  the 
day  and  started  for  his  home,  he  is  not  to  be  deemed  a 
fellow-servant  with  other  servants  of  his  master  who  are 
still  engaged  in  the  master's  employment;  but  he  stands 
as  a  stranger  towards  the  master,  and  if  ho  is  injured  by 
the  negligence  of  such  servants,  the  master  is  liable  to 


586 


587 


LIABILITIES   OF  MASTER  AND  SERVANT. 


§324 


servant  of 
D-driver  of 
9  to  him: 
of  A  com- 
l  the  cars 
two  com- 
ipany.  B 
le  duty  of 
3  trains  of 

0  roads  to 
is  servant, 
>any  n-lnle 
company. 

Taylor  v. 
id  on  the 
iler  of  tlio 
The  de- 
agreement 
Id  employ 
the  season 
m.  Held, 
tners,  and 
id  crew  of 
.  were  not 
9;  2  Am. 
y  of  a  tel- 

of  a  rail- 
njured  by 

upon  the 

1  the  com- 
telcgniph 
e  railroad 

the  fore- 
tiff  could 
0.,  G2  Ga. 


does  not 

for  the 
ccmcd  a 
who  are 
0  stands 
ured  by 
liable  to 


him  on  the  principle  respondeat  superior.'  So  where  the 
servant  is  at  the  time  on  a  private  errand  of  his  own, 
and  not  engaged  in  his  master's  work.''  So  where  he  is 
absent  from  his  place,  even  without  leave.'  A  railroad 
company  is  not  liable  for  an  injury  to  an  employee  occur- 
ring while  performing  an  individual  service  for  his  su- 
perior under  the  latter's  direction.* 

Illustrations. — B,  the  harbor-master  of  the  city  of  Balti- 
more, in  obedience  to  the  requirements  of  the  board  of  health, 
ordered  a  vessel  to  be  removed  from  the  wharf  and  to  be  moored 
in  the  stream.  He  employed  C  to  do  such  duty,  who,  having 
finished  it  with  his  assistants,*  returned  from  the  vessel  to  the 
shore  in  a  boat  belonging  to  the  vessel,  which  they  afterward 
abandoned  and  lost.  Held,  that  from  the  time  the  vessel  was 
moored  in  the  stream  C  ceased  to  be  B's  agent,  and  that  he  w'as 
not  responsible  for  any  acts  of  his,  or  their  consequences,  after 
such  time:  Brown  v.  Purviance,  2  Har.  &  G.  31G.  A  soap  manu- 
facturer employed  Avomen  to  work  at  one  end  of  a  room  seventy- 
two  feet  in  length,  to  wrap  the  soap  in  papers  which  were 
brought  to  them,  and  one  of  the  women,  returning  out  of  work- 
ing hours,  went  to  the  back  part  of  the  room  to  get  some  paper, 
and  there  fell  into  a  reservoir  of  lye.  Held,  that  the  employer 
was  not  liable:  Neff  v.  Broom,  70  Ga.  2o6.  A  laborer,  after 
loading  ice  from  a  wharf  upon  a  vessel,  went  on  board  for  the 
gratification  of  his  curiosity,  and  there  fell  down  an  open  hatch- 
way and  broke  his  leg.  Held,  that  he  was  a  mere  intruder,  and 
that  the  owners  of  the  vessel  were  not  liable  for  the  injury:  Scv- 
cry  V.  Nicherson,  120  Mass.  306;  21  Am.  Rep.  514.  Plaintiff's 
intestate  was  hired  from  day  to  day  as  brakeman,  running 
between  X  and  Y  every  day  except  Sunday,  for  which  day 
he  was  not  paid  unless  employed.  He  was,  however,  expected 
to  remain  at  X  from  Saturday  night  till  Monday  morning;  but 
his  family  residing  in  Y,  he  received  permission  one  Sunday  to 
visit  them,  and  while  traveling  thither  under  a  conductor's 
pass,  he  was  killed  by  the  negligence  of  the  company's  em- 
ployees. H'M,  that  he  was  not  a  co-employee:  State  v.  Bail- 
road  Co..  63  Md.  438.  The  plaintiff  was  in  the  employ  of  a 
railroad  company,  his  business  being,  with  other  laborers,  to 
ballast  part  of  their  road,  excavating  gravel  from  certain  banks, 


'  2  Thompson  on  Negligence,  sec. 
43,  p.  1046;  Baltimore  etc.  R.  R.  Co. 
r,  Trainor,  33  Md.  542;  Baird  v.  Pettit, 
70  Pa.  St.  477;  Brydon  v.  Stewart,  2 
Macq.  30. 


*  Washburn  v.  Railroad  Co.,  3  Head, 
638;  75  Am.  Dec.  784. 

^Washburn  v.  Railroad  Co.,  stipra. 

*  Hurst  V.  Railroad  Co.,  49  Iowa, 
76. 


§325 


PRINCIPAL  AND  AGENT. 


588 


loading  it  in  gravel-cars,  and  then  distributing  it  along  the 
track.  Some  of  the  workmen,  among  them  the  plaintiff,  lodged 
in  C,  a  village  two  miles  from  the  gravel  banks,  and  by  agree- 
ment with  the  company  were  to  be  conveyed  to  the  village  for 
meals  and  lodging,  and  then  back  to  the  banks.  While  so 
em])loycd,  the  plaintiff,  during  his  conveyance  on  a  gravel-car 
to  the  banks  to  work,  by  the  gross  negligence  of  the  engineer 
of  the  train  he  was  riding  on,  was  injured  and  his  leg  broken. 
Held,  that  the  company  was  liable  for  the  injury:  Fiizpatrick 
V.  Railroad  Co.,  7  Ind.  436.  A  servant  of  a  railroad  company 
took  down  the  bars  in  a  fence  on  the  side  of  the  track,  and  left 
them  down,  whereby  horses  escaped  at  night  from  an  adjoining 
field  upon  such  track  and  were  killed  by  the  engine  of  the  com- 
pany; at  the  time  of  taking  down  the  bars  the  servant  was  en- 
gaged in  a  business  which  concerned  himself,  and  in  which  the 
company  had  no  interest,  but  it  was  understood  that  by  virtue 
of  the  employment  of  the  servant  by  the  company,  that  if  the 
former  at  any  time  after  his  day's  labor  was  over  saw  anything 
amiss,  he  was  required  to  give  the  necessary  attention  to  it 
without  being  specially  directed  to  do  so.  Held,  that  the  ser- 
vant was  negligent  in  leaving  the  bars  down,  and  that  the  com- 
pany was  liable  in  damages  therefor:  Chapman  v.  Railroad  Co., 
33  N.  Y.  3G9;  88  Am.  Dec.  392. 


§  325.  Volunteer  Assisting  Servant. — A  volunteer  who 
assists  a  servant  in  an  emergency  cannot  recover  from 
the  master  for  an  injury  caused  by  the  negligence  of  the 
servant.^  But  it  is  otherwise  if  the  person  is  not  a  mere 
volunteer,  but  interferes  in  order  to  expedite  his  own  or 
his  master's  business.^    Where  an  employee  of  a  railroad 


^  Degg  V.  Railroad  Co.,  1  Hurl.  & 
N.  77.');  O.sborno  v.  Railroad  Co.,  C8 
:\Ic.  40;  23  Aia.  Rep.  IG;  Flower  v. 
Railroad  Co.,  GO  Ta.  St.  210;  8  Am. 
Rep.  251;  May  ton  v.  Railroad  Co., 
G3  Tex.  77;  51  Am.  Rep.  C37.  One 
who  at  t!io  request  of  a  person  in 
charge  assists  in  a  work  without  ex- 
pceting  p.iy  is  for  the  time  being  a 
servant:  Juhuson  v.  Ashland  Water 
Co.,  71  Wis.  553;  Central  Trust  Co. 
V.  Railroad  Co.,  32  Fed.  Rep.  448. 
In  an  English  case,  however  {Cleve- 
la:jd  r.  Spier,  10  Com.  B.,  N.  S.,  398), 
workmen  of  the  defendant,  a  gas-fitter, 
having  como  upon  two  pipes  in  the 
courio  of  tlicir  digging  in  the  road, 
and  being  doubtful  aa  to  which  con- 


tained gas,  asked  information  of  the 
plaintiff,  who  happened  to  bo  passing; 
the  plaintiflF  thereupon  going  to  tho 
trench  and  pointed  out  the  gas-main, 
into  which  the  defendant's  ^\•ol•!:nlQn 
proceeded  to  make  a  liolo  for  tlie  in- 
sertion of  a  service-pipe.  This  was 
done  in  a  manner  unnecessarily  haz- 
ardous, in  consequence  of  which  a 
chip  of  the  metal  entered  tlie  plaiii- 
tiflfs  eye,  while  he  stood  by  lodking 
on,  and  seriously  injured  him,  fcr 
which  tho  plaintiff  was  held  tiititled 
to  recover. 

'  Holmes  v.  Railroad  Co.,  L.  R.  4 
Ex.  254;  L.  R.  6  Ex.  123;  Wriglit  v. 
Railroad  Co.,  L.  R.  1  Q.  B.  Pi  v. 
252. 


688 

along  the 
tiff,  lodged 
]  by  agree- 
village  for 
While  so 
,  gravel-car 
le  engineer 
leg  broken. 
Fitzpatrlrk 
d  company 
ck,  and  left 
n  adjoining 
of  the  com- 
int  was  on- 
1  which  the 
it  by  virtue 

that  if  the 
w  anything 
3ntion  to  it 
lat  the  Ecr- 
at  tlie  com- 
ailroad  Co., 


inteer  w'ho 

over  from 

nco  of  the 

ot  a  mere 

IS  own  or 

a  railroad 

nation  of  the 
to  bo  p:i!5sing; 
going  to  thu 
the  gas-UKiiu, 
it's  vor!::iiou 
lo  for  tlio  in- 
e.  This  wa3 
icessarily  haz- 
of  which  ;\ 
cd  the   phiiii- 

l  by  looliing 
rod   him,   for 

held  entitled 

Co.,  L.  R.  4 
>3;  Wright  r. 
Q.  li.  Div. 


589 


LIABILITIES   OP  MASTER  AND  SERVANT. 


§326 


company,  engaged  in  its  service,  summons  his  son,  eleven 
years  old,  to  his  temporary  assistance,  and  the  son,  while 
so  assisting,  is  injured  by  the  negligence  of  another  rail- 
road company,  the  latter  is  liable  to  the  son  therefor.* 
And  where  a  servant  engages  in  a  temporary  work  for 
another,  on  the  false  representation  that  the  master  had 
directed  it,  he  does  not  become  the  servant  of  that  other 
so  as  to  be  remediless  for  an  injury  by  the  negligence  of 
the  latter's  servant.^ 

Illustrations.  — A  railroad  yard-man,  whose  business  is  not 
to  couple  cars,  attempts  to  do  so  to  accommodate  an  engineer, 
and  is  injured  by  the  negligence  of  the  engineer.  Held,  that 
the  company  is  not  liable:  Bradley  v.  Railroad  Co.,  14  Lea, 
374.  The  conductor  of  a  train  ordered  a  boy  standing  by,  and 
who  was  not  in  the  employ  of  the  railroad  company,  to  un- 
couple the  cars.  The  boy  refused,  but  on  being  threatened  by 
the  conductor  uncoupled  the  cars,  and  in  doing  so  was  injured. 
Held,  that  the  railroad  company  was  not  liable:  New  Orleans 
etc.  R.  R.  Co.  V.  Harrison,  48  Miss.  112;  12  Am.  Rep.  356.  The 
plaintiff  was  a  passenger  on  a  car  of  a  street-railroad  having 
but  one  track  with  occasional  turn-outs.  In  turning  out  to 
avoid  a  car  coming  in  the  other  direction,  the  car  ran  beyond 
the  turn-out,  and  the  driver  requested  the  plaintiff  to  assist  him 
in  backing  it  upon  the  turn-out.  While  so  engaged  he  was  in- 
injured  by  the  negligence  of  the  driver  of  the  other  car.  Held, 
that  the  railroad  company  was  liable:  Street  R.  R.  Co.  v.  Bolton, 
43  Ohio  St.  224;  54  Am.  Rep.  803.  The  owner  gave  general 
directions  to  his  servant  to  throw  the  snow  and  ice  from  his 
roof;  a  friend  of  the  servant  voluntarily  assisted  him  in  the  work. 
Held,  that  the  owner  was  liable  for  an  injury  caused  by  snow  and 
ice  thrown  down  by  either  of  the  two:  Althorp  v.  Wolje,  22  N.  Y. 
355.  A  Pennsylvania  statute  gives  one  injured  while  lawfully 
engaged  about  the  premises  of  a  railroad  company  only  an  em- 
ployer's right  of  action.  Held,  to  apply  to  one  who  was  injured 
while  unloading  his  own  goods  from  the  cars  of  the  company, 
permission  to  do  which  had  been  granted  by  the  agent  of  the 
company:  Ricard  v.  Railroad  Co.,  89  Pa.  St.  193. 

§  326.    Evidence  of  Incompetence  of  Fellow-servant. — 

The  incompetence  of  the  servant  may  be  shown  by  evi- 


*  Pennsylvania  R.  R.  Co.  v.  Galla- 
gher, 40  Ohio  St.  637;  48  Am.  Rep.  689. 


>  Kelly  V.  Johnson,  128  Mass.  530; 
35  Am.  Rep.  398. 


§327 


PRINCIPAL   AND   AGENT. 


590 


dence  of  general  reputation.*  Specific  acts  of  carelessness 
may  also  be  proved  to  show  that  the  master  had  retained 
the  servant  in  his  service  after  he  knew  or  ought  to  have 
known  him  to  bo  incompetent.''  Evidence  that  the  ser- 
vant was  notoriously  a  drunkard  is  admissible  in  aggra- 
vation of  damages.' 

§  327.  Evidence  of  Negligence  in  Selecting  and  Main- 
taining Machinery  and  Appliances — Cases  in  Which  It 
was  Held  Sufficiently  Shown. — The  following  instances 
are  given  by  a  recent  writer,*  where  it  was  held  that  there 
was  evidence  of  negligence  to  go  to  the  jury:  Where  an 
employee  was  killed  by  the  fall  of  an  elevator,  by  reason 
of  the  chain  being  worn;*  where  it  appeared  that  the  ser- 
vant knew  that  the  floor  over  which  he  was  required  to 
pass  was  decayed,  and  that  there  were  holes  in  it,  but  it 
did  not  appear  that  he  could  have  ascertained  that  the 
place  where  he  broke  through  was  dangerous,  without 
examining  part  of  the  floor  not  open  to  his  inspection;® 
where  a  railway  brakeman,  in  attempting  to  couple  cars 
at  a  way-station  in  the  night-time,  stepped  into  an  uncov- 
ered ditch  which  ran  across  the  track  and  was  killed;^ 
where  a  servant  went  upon  a  staging  by  his  master's 
directions,  and  was  injured  by  the  fall  of  it,  which  staging 
was  insecure  in  consequence  of  having  been  constructed 
of  unsuitable  materials,  or  in  consequence  of  their  having 
been  fastened  together  insecurely,  and  which  was  built 
before  the  plaintiff"  began  work,  by  persons  who  were 
afterwards  his  fellow-workmen,  and  he  had  directed  what 
lumber  should  be  used  in  it,  though  it  was  not  built  under 
his  personal  supervision." 


1  Frazier  v.  Railroad  Co.,  38  Pa.  St. 
10^;  80  Am.  Dec.  467. 

■■'  Pittsburg  etc.  R.  R.  Co.  ».  Ruby, 
38  Ind.  294;  10  Am.  Rep.  Ill;  Baulec 
V.  Railroad  Co.,  59  N.  Y.  356;  17  Am. 
Rep.  325:  contra,  Frazier  v.  Railroad 
Co.,  38  Pa.  St.  104;  80  Am.  Dec.  467. 

»  Cleghorn  v.  Railroad  Co.,  66  N.  Y. 
44;  15  Am.  Rep.  375. 


*2  Thompson  on  Negligence,  p. 
1054. 

■^Hackett  v.  Middlesex  Mfg.  Co., 
101  Mass.  101. 

"  Huddleston  v.  Lowell  Machine 
Shop,  106  Mass.  282. 

»  Plank  V.  New  York  etc.  R.  R.  Co., 
1  Thomp.  &  C.  319. 

8  Arkersonv.Deaiuflon,117Ma8S.407i 


590 


591 


LIABILITIES  OF   MASTER  AND  SERVANT. 


§  32S 


relessness 
I  retained 
t  to  have 
t  the  ser- 
in aggra- 

knd  Main- 
Which  It 

instances 
;hat  there 
Vhere  an 
by  reason 
it  the  ser- 
quired  to 
it,  but  it 
.  that  the 
,  without 
spection;^ 
uple  cars 
m  uncov- 
killed;^ 

master's 
1  staging 
istructed 
r  having 
vas  built 

ho  were 
ted  what 
ilt  under 

;ligence,  p. 

Mfg.  Co., 
U    Machine 

R.  R.  Co., 
7Ma8s.407. 


§  328.  Cases  in  Which  It  was  Held  not  Sufficiently 
Shown. — The  following  instances  are  given  by  the  same 
author  whore  it  was  held  that  there  was  no  evidence  of 
negligence  to  go  to  the  jury:  Where  a  railway  switch- 
conductor,  standing  on  a  flat-car,  signaled  to  the  engineer 
to  slack  up,  and  the  jerk  produced  by  this  movement 
threw  him  upon  the  track,  where  he  was  injured  by  two 
cars  passing  over  him;^  where  a  jury  found  specially  that 
the  defendant,  a  railroad  company,  was  negligent  in  not 
having  applied  a  sufficient  test  to  a  brake-shaft  or  rod, 
the  supreme  court,  on  an  examination  of  the  evidence, 
reversing  the  judgment  below; '^  where  a  charwoman, 
directed  by  her  employer's  wife  to  wash  clothes  in  the 
house,  was  cut  by  a  fragment  of  glass  which  was  found  in 
the  tub;^  where  a  manufacturer  of  locomotive  engines 
had  a  crane  worked  on  the  tramway,  supported  on  piers 
of  brick-work,  which  piers  were  of  insufficient  strength, 
so  that  they  gave  way,  causing  an  accident  to  one  of  the 
men  employed  in  working  the  crane;*  where  a  person  at 
work  on  a  bridge  fell  and  was  killed,  in  consequence  of 
the  breaking  of  a  plank  which  he  and  his  fellow-workman 
had  placed  in  position  as  part  of  a  scaffold; °  where  the 
gravamen  of  the  action  was,  that  the  defendant,  a  railroad 
company,  had  failed  to  exercise  due  care  in  selecting  and 
retaining  in  its  service  an  employee  through  whose  negli- 
gence the  injury  was  done,  and  the  court  ruled  that  there 
was  a  failure  of  proof  to  support  the  allegation;"  where  a 
proprietor,  proposing  to  erect  a  building,  employed  one 
man  to  do  the  mason's  work  and  another  to  do  the  car- 
penter's work,  and  a  servant  of  the  mason  was  injured 
by  the  fall  of  a  ladder  erected  by  the  carpenter,  it  was 
held  that  this,  without  more,  disclosed  no  cause  of  action 


'  Columbus  etc.  R.  R.  Co.  v.  Troescb, 
87  111.  155;  68  111.  545;  18  Am.  Rep. 
578. 

^  Smith  V.  Chicago  etc.  R.  R.  Co., 
42  Wis.  520. 

*  Flymi  V.  Beebe,  98  Mass.  575. 


*  Feltham  v.  England,  L.  R.  2  Q.  B. 
33,  reversing  4  Fost.  &  F.  4G0. 

*  Kelly  D.  Bridge  Works,  17  Kan.  558. 
"  Union  Pacific  R.  R.  Co.  v.  Milli- 

ken,  8  Kan.  647;  Union  Pacific  R.  R. 
Co.  V.  Young,  8  Kan.  658. 


329 


PRINCIPAL   AND   AGENT. 


592 


against  the  owner  of  the  building,  since,  for  anght  that 
appeared,  the  carpenter  erected  the  ladder  for  his  own 
use  merely,  and  not  for  the  use  of  the  mason  and  his 
servants;*  where  the  owner  of  a  factory  had  supplied  his 
building  with  proper  appliances  for  extinguishing  fire, 
the  care  and  use  of  which  were  necessarily  intrusted  to 
his  servants,  the  fact  that  the  water  failed  to  run  on  the 
occasion  of  the  burning  of  his  factory,  in  consequence  of 
which  an  employee  was  injured,  was  held  not  evidence  of 
negligence, — it  was  rather  to  be  attributed  to  tho  negli- 
gence of  fellow-servants;''  where  an  employee  sustains  an 
injury  by  falling  on  a  slippery  floor  against  an  uncovered 
cog  of  a  printing-press;*  where  a  gir'  sixteen  years  old  in 
the  habit  of  using  a  card-cutting  machine,  the  knife  of 
which  descended,  when  she  placed  her  foot  on  the  treadle, 
was  injured  by  the  descent  of  the  knife,  nothing  more 
appearing  to  show  neglect  on  the  part  of  her  employer.* 

§  329.  Liability  of  Servant  to  Third  Person. — A  servant 
is  not  liable  to  a  third  person  for  an  act  of  omission,  as 
for  failing  to  execute  his  master's  orders,  even  though  the 
third  person  is  injured  by  such  failure.®  But  if,  in  ex- 
ecuting his  master's  orders,  he  commits  an  act  of  rais- 


*  Mercer  v.  Jackson,  54  111.  397. 

'  Jones  V.  Granite  Mills,  126  Ma«s. 
84;  30  Am.  Rep.  661. 
8  Clark  V.  Barnes,  37  Hun,  389. 

*  Reardon  v.  New  York  Consoli- 
dated Card  Co.,  19  Jones  &  S.  134. 

"  Hill  V.  Caverly,  7  N.  H.  215;  26 
Am.  Dec.  735;  Harriman  v.  Stowe,  57 
Mo.  93;  Bissell  v.  Roden,  34  Mo.  63; 
84  Am.  Dec.  71.  "The  law  on  this 
subject,  as  to  principals  and  agents,  is 
founded  upon  the  same  analogies  as 
exist  in  tho  case  of  masters  and  ser- 
vants. The  master  is  always  liable  to 
third  persons  for  the  misfeasances, 
negligences,  and  omissions  of  duty  of 
his  servant,  in  all  the  cases  within  the 
scope  of  his  employment.  So  the 
principal,  in  like  manner,  is  liable  to 
third  persons  for  the  like  misfeasances, 
negligences,  and  omissions  of  duty  of 


his  agent,  leaving  him  to  his  remedy 
over  against  the  agent  in  all  cases 
where  the  tort  is  of  such  a  nature  that 
he  is  entitled  to  compensation.  Tho 
agent  is  personally  liable  to  third  per- 
sons for  his  own  misfeasances  and 
positive  wrongs;  but  he  is  not,  in  gen- 
eral, liable  to  third  iiersona  for  his  own 
non-feasances,  or  omissions  of  duty, 
in  the  course  of  his  employment.  His 
liability  m  these  latter  case.i  is  solely 
to  his  principal,  there  being  no  privity 
between  him  and  such  third  persons, 
and  the  privity  exists  only  between 
him  and  his  principal.  Tiiercfore,  the 
general  maxim  as  to  all  sucli  negli- 
geneea  and  omissions  of  duty  is,  in 
cases  of  private  agency,  respondeat 
superior,  and  such  is  the  general  doc- 
trme" :  Harriman  v.  Stowe,  57  Mo. 
93. 


592 


603 


LIABILITIES   OF   MASTER   AND    SERVANT. 


330 


ight  that 
his  own 
and  his 
plied  his 
ling  fire, 
rusted  to 
n  on  the 
lucnco  of 
idence  of 
ho  negli- 
stains  an 
ncovered 
irs  old  in 
knife  of 
e  treadle, 
ng  more 
ployer.** 

v.  servant 
ission,  as 
ougli  the 
if,  in  ex- 
;  of  rais- 

his  remedy 

;n  all  cases 
nature  that 
ation.  The 
o  third  pcr- 
isances  and 
not,  in  gcn- 

for  Ilia  own 
13  of  duty, 
ment.  His 
363  19  sohily 
5  no  privity 
rd  persons, 
ly  between 
crcforc,  the 
Buch  negli- 
duty  is,  in 

respondeat 
eneral  doc- 
;e,  57  Mo, 


feasance  or  trespass,  he  will  be  personally  liable  to  the 
person  injured.*  So  a  vice-principal  is  liable  to  an  in- 
ferior servant  injured  by  his  negligence.'^  A  servant  is 
not  liable  for  his  master's  wrongful  conversion  of  a  chattel 
that  had  been  lawfully  taken  by  the  servant  with  the 
owner's  consent.' 

§  330.  Liability  of  Servant  to  Master.— The  maxim 
respondeat  superior  does  not  apply  against  the  master  iu 
a  suit  against  a  negligent  servant;  and  hence  a  servant  is 
personally  liable  to  the  master  for  any  damage  occasioned 
by  his  misconduct  to  the  master  directly,  or  to  a  third 
person  whom  the  master  has  been  obliged  to  compen- 
sate.'' And  this  is  so  even  where  the  negligence  of  an- 
other servant  concurred  in  producing  the  injury.^  An 
engineer  of  a  tug-boat  was  held  to  be  liable  to  his  em- 
ployer for  any  damage  thereto,  by  fire  or  otherwise,  which 
could  be  fairly  attributable  to  any  act  done  or  omitted  by 
him  as  a  natural  result  or  just  consequence,  even  though 
not  directly  so  attributable.*  Employers  cannot  claim 
damages  from  a  laborer  for  faulty  construction  of  tho 
thing  they  have  employed  him  to  make,  if  the  defects 
in  the  plan  they  have  prescribed  and  the  tools  they  have 
fnrnishcd  for  tlie  work  have  contributed,  with  unskillful- 
ncss  of  the  employee,  to  render  the  result  faulty.^  In  the 
case  of  an  injury  to  a  third  person  that  tho  employer  has 
paid  for,  it  is  not  necessary  that  the  employer  should  resist 
tho  demand  to  action  and  judgment.  Ho  may  recover 
what  he  voluntarily  and  actually  paid,  but  not  exceeding 
the  sum  for  which  he  was  made  legally  liable.®     A  servant 


'  Harriinan  v.  Stowe,  57  Mo.  93; 
Wright  V.  Conipton,  53  Ind.  337; 
Suvdam  ;-■.  Moore,  8  Barb.  358;  Waul 
V.  ilardie,  17  Tox.  .OoS. 

■^  Fort  r.  Whipple,  1 1  Hun,  586. 

^  Silver  V.  Martin.  59  N.  H.  580. 

^  2  Thompson  on  Negligence,  p.  1061 ; 

S:nith  v.  Foran,  43  V.onn.  244;  21  Am. 

Rep.  617:   Mobile  etc.   R.   R.  Co.  v. 

Ciantou,  59  Ala.  .S92;  31  Am.  Rep.  15. 

Vol.  L-38 


An  express  messenger  is  not  an  insurer 
to  the  company  of  the  safety  of  goods 
intrusted  to  him:  Do  lleamer  v.  Pa- 
cific Express  Co.,  84  Mo.  529. 

'•>  Id.;  Zulkeo  V.  Wing,  20  Wis.  408; 
91  Am.  Dec.  425. 

«  Oilsou  V.  Collins,  60  111.  iSO. 

'  Wilder  V.  Stanley,  49  Vt.  105. 

*  Smith  V.  Foran,  43  Conn.  244;  21 
Am.  Rep.  047. 


§331 


PRINCIPAL  AND  AGENT. 


594 


requesting  his  master  to  defend  a  suit  for  injuries  occa- 
sioned by  the  servant's  misconduct  is  liable  for  the  costs 
and  counsel  fees  therein.* 


§  331.  Liability  of  Servant  to  Fellow-servant.— A  ser- 
vant is  liable  to  another  servant  engaged  in  the  same 
general  business  for  a  common  employer  for  injuries  re- 
sulting to  the  latter  from  the  negligence  of  the  former  in 
the  discharge  of  his  duties.^  Thus  where  a  road-master 
who  had  charge  of  all  second  hands  directed  one  to  bend 
a  bar  without  heating  it,  as  was  usual,  and  as  ho  had  been 
told  to  do  by  his  section-boss,  and  he  was  injured  by  so 
doing,  it  was  held  that  the  road-master  was  liable  to  the 
servant." 


'  Grand  Trank  R.  R.  Co.  v,  Latham, 
63  Me.  177. 

^HinJs  V.  Harl)ou,  68  Ind.  121; 
Hinds  V.  Overackor,  C6  Ind.  547;  .32 
Am.  Rep.  114;  Swainson  v.  Railroad 
Co.,  L.  R.  3  Ex.  Div.  341;  Griffiths  v. 


Walfram,  22  Minn.  185;  Rogers  v, 
Overton,  87  Ind.  410;  contra,  Albro  v. 
Jaquith,  4  Gray,  99;  C4  Am.  Dec.  .'jC; 
overruled  in  Osborne  v.  Morgan,  130 
Mass.  102;  39  Am.  Rep.  437. 
*  Rogers  v.  Overton,  87  Ind.  410. 


594 

ries  occa- 
the  costs 


. — A  ser- 
tho  same 
juries  re- 
former in 
id-master 
0  to  beufl 
had  been 
red  by  so 
le  to  the 


;  Rogers  v, 
tm,  Albro  r. 
im.  Dec.  r>6; 
Morgan,  130 
137. 
Ind.  410. 


TITLE    11. 


CORPORATIONS. 


Part        I.— CORPORATIONS  IN  GENERAL,  §§  332-508 

Part       II.— BANKS,  g§  509-537. 

Part      III.— RAILROAD    COMPANIES,  §§  538-569. 

Part      IV.— GAS   COMPANIES,  §§  570-579. 

Part  V.— BUILDING  AND  LOAN  ASSOCIATIONS, 
§§  580-593. 

Part      VI.— VOLUNTARY  ASSOCIATIONS,  §§  594-607. 

Part  VIL— RELIGIOUS  SOCIETIES  AND  CORPORA- 
TIONS, §§  608-621. 

Part  VIIL— CHARITABLE  ASSOCIATIONS  AND  CHAR- 
ITIES, §§  622-634. 


TITLE    II. 

CORPORATIONS. 


Part  I.— CORPORATIONS  IN    GENERAL. 


§332. 
§  333. 
§  3.34. 
§335. 
§336. 
§337. 
§338. 
§339. 
§340. 
§341. 
§  342. 
§343. 
§344. 
§345. 
§346. 

§  347. 
§348. 
§349. 
§350. 
§351. 


CHAPTER  XXIV. 

THE  FORMATION  OF  CORPORATIONS. 

DefimtioD  of  corporation  —  Tho  dififcrent  claase.j  of  corpoi  ation«. 

Corporation  is  created  by  state. 

Power  of  Congress  to  cliarter  corporations. 

Delegation  of  power  to  create  corporations. 

Form  of  grant  of  corporate  franchises. 

Ratification  by  state  of  unauthorized  corponitUm. 

Franchise  must  be  accepted. 

Form  of  acceptance  of  grant. 

Incorporation  under  general  laws  —  Procedure  —  Condii  long  precedent. 

Conditions  precedent  to  grant  —  Performance  when  necessary. 

Corporations  by  prescription. 

Who  may  be  corporators. 

Proof  of  incorporation,  how  r.iade. 

Proof  of  performance  of  conditions  precedent,  how  made. 

Foreign  corporations  —  Grant  of  franchise  cannot  extend  beyond  limits 

of  state. 
But  foreign  corporations  are  permitted  by  comity  to  do  business, 
Subject  to  local  laws. 

Citizenship  of  corporations  within  federal  laws. 
Foreign  corporations  may  be  sued. 
Service  of  process  on  foreign  corporations. 


§  332.  Definition  of  Corporation — The  Diflferent  Classes 
of  Corporations.  —  A  corporation  is  "an  artificial  being, 
invisible,  intangible,  and  existing  only  in  contemplation 


332 


CORPORATIONS. 


598 


of  law."^  It  is  "a  natural  person  or  body  of  persons 
upon  whom  has  been  conferred  a  distinct  legal  existence 
continued  by  succession  and  certain  characteristic  pow- 
ers possessed  and  exorcised  independent  of  any  changes 
of  members.  These  characteristics  ara  generally  power 
to  admit  and  remove  members,  to  act  by  a  common 
seal,  to  purchase,  hold,  and  dispose  of  property,  real  and 
personal,  to  sue  and  be  sued,  and  to  make  by-laws."^ 
Corporations  are  either  aggregate  or  sole.  The  formei* 
is  a  collection  of  individuals  united  into  one  body  under 
a  collective  name.  It  is  an  artificial  being  created  by 
law,  and  composed  of  individuals  who  subsist  as  a  body 
politic  under  a  special  denomination,  with  the  capacity 
of  perpetual  succession,  and  of  acting  within  the  scope 
of  its  charter  as  a  natural  person.'  A  corporation  sole 
consists  of  a  single  person  who  is  made  a  body  cor- 
porate and  politic.  In  the  American  law  the  latter  is 
not  in  use,  and  all  corporations  are  corporations  aggro- 
ate.'*  Corporations  are  also  public  or  private.  Public- 
corporations  are  such  as  are  created  for  the  discharge  of 
public  duties  in  the  administration  of  civil  government." 
Private  corporations  are  such  as  are  created  for  the  ad- 
vantage, benefit,  or  emolument  of  individuals.**  Quasi 
public  corporations,  those  corporations  arr  sometimes 
termed  which  have  in  view  to  promote  some  public  work 
in  which  the  pubro  is  interested,  but  for  the  private 
profit  of  the  members,  as  railroad,  turnpike,  or  canal 


^  Dartmouth  College  v.  Woodward, 
4  Wheat.  518. 

'^  1  Abbott  Law  Dictionary,  1,  p. 
290.  A  statute  restraining  any  per- 
sons from  doing  certain  acta  restrains 
corporations:  People  v.  Utica  lus.  Co., 
15  Johns.  358;  8  Am.  Dej.  243. 

'Fietsam  v.  Hay,  122  111.  293;  3 
Am.  St.  Rep.  492. 

*  Brunswick  v.  Dunning,  7  Mass.  447; 
Bank  of  Havana  v.  Wickham,  7  Abb. 


616;  Regents  v.  Williams,  9  Gill  &  J. 

365;  31  Am.  Dec.  72;  Weston  n  Hunt, 

2  Mass.  501. 
5  Regents  v.  Williams,  9  Gil!  k  T. 

365;    31   Am.    Dec.    72;    Tiusmaii   r. 

R.  R.  Co.,  26  N.  J.  L.  148;  Ten  Eyck 

V.  Canal  Co.,  18  N.  J.  L.  200;  37  Am. 

Dec.    233;    School    Commissioner    r. 

Putnam,  44  Ala.  566. 
*Id.;  Rundle  v.  Delaware  Canal,  1 

Wall.    Jr.    275;    Logwood    v.    Bank, 
Pr.  134;  Dartmouth  College  v.  Wood-     Minor,  30;  Cleavelaud  v.   Stewart,  3 
ward,  4  Wheat.  518;  Thomas  v.  Dakin,     Ga.  283. 
22  Wend.  9;  People  v.  Assessors,  1  Hill, 


598 


599 


FORMATION. 


§  333 


f  persons 
existence 
Istic  pow- 
(  changes 
lly  power 

common 

real  and 
>y-la\vs."- 
e  formei* 
dy  under 
eated  bv 
IS  a  body 

capacity 
he  scope 
tion  sole 
)ody  cor- 

latter  is 
»s  aggre- 
Public 
charge  of 
rnment." 
'  the  ad- 
.**  Quasi 
metimes 
die  work 

private 
or  canal 

9  Gill  &  J. 

;on  r.  Hunt, 

)  Gil!  k  T. 
rinsman  r. 
;  Ten  Eyck 
30;  37  Am. 
issioner    v. 

re  Canal,  1 

V.    Bank, 

Stewart,  3 


companies.^  Reclamation  districts  arc  public  corpora- 
tions;- so  are  levee  districts;^  so  is  the  establishment  and 
maintenance  of  a  wharf-boat  and  steam-elevator,  for  a 
general  storage  and  forwarding  business.''  An  English 
joint-stock  company,  having  the  powers  incident  to  a 
corporation,  will  bo  treated  as  a  corporation  in  this 
country,  although  acts  of  Parliament  declare  that  such 
companies  arc  not  corporations."  School  districts  arc 
quasi  corporations."  The  term  "franchise,"  in  its  legal 
sense,  is  confined  to  such  rights  and  privileges  as  arc 
conferred  upon  corporate  bodies  by  legislative  grant.  It 
is  the  right  or  privilege  of  being  a  cor;  jration,  and  of 
doing  such  things,  and  such  things  only,  as  are  author- 
ized by  the  corporation's  cliarter7 

§  333.  Corporation  is  Created  by  State. —A  corporation 
is  the  progeny  of  government, — it  cannot  form  itself.  In 
England  the  crown  or  Parliament  may  charter  a  corpora- 
tion. In  the  different  states  of  the  United  States  the  ris:ht 
to  create  corporations  is  usually  given  by  the  constitu- 
tions to  the  legislature,®  but  this  power  is  inherent  there 
unless  expressly  withheld  by  the  constitution."     A  corpo- 


'  Miners'  Ditch  Co.  v.  Zellerbach, 
37  Cal.  543;  9i)  Am.  Dec.  300;  Andrews 
V.  Estea,  11  ISlc.  207;  20  Am.  Dec. 
521;  Riddle  v.  Proprietors,  7  Mass. 
109;  5  Am.  Dec.  35;  Adams  v.  Bank, 
1  Me.  303;  School  District  v.  Wood, 
13  Mass.  198;  Mower  v.  Leicester,  9 
Mass.  247;  0  Am.  Dec.  63;  Bennett's 
Appeal,  05  Pa.  St.  212;  Louisville  etc. 
II.  R.  Co.  V.  County  Court,  1  Sneed, 
III  637;  62  Am.  Dec.  424;  Pierce  v.  Com- 

monwealth, 104  Pa.  St.  150. 

^  People  V.  Williams,  56  Cal.  647. 

^  Dean  v.  Davis,  51  Cal.  406. 

*  Glen  V.  Beard,  33  La.  "  Ann. 
875. 

'"  Liverpool  Ins.  Co.  v.  Massachu- 
setts, 10  Wall.  506. 

«  Gaskill  V.  Dudley,  6  Met.  546;  39 
Am.  Dec.  750.  See'j)as<,  Division  iv., 
Municipal  Corporations. 

'Fietsam  v.  Hay,  122  111.   293;  3 


Am.  St.  Rep.  492.  A  corporation  or- 
ganized for  the  purpose  of  Ijuilding  a 
union  depot  for  railroads,  and  of  own- 
ing, maintaining,  etc.,  tliflerent  lines 
therefrom  within  the  city  limits,  is 
not  an  ordinary  railroad  company: 
People  V.  Clieeseman,  7  Col.  370. 
Where  the  object  of  a  corporation  is 
to  advance  the  private  interests  of 
land-owners  in  the  incorporated  dis- 
trict, although  it  may  incidentally 
enhance  the  general  prosperity  of  the 
whole  comumnity,  it  is  nevertheless  a 
private  corporation:  Directors  etc.  v, 
Houston,  71  111.  318. 

"  Stowe  V.  Plage,  72  111.  401 ;  McKim 
V.  Odin,  3  Bland,  417;  Aurora  r.  WesJ, 
9  Ind.  74. 

*  Bank  of  Chenango  v.  Brown,  26 
N.  Y.  407;  Briscoe  v.  Bank,  11  Pet. 
257;  Bell  v.  Bank,  Peck,  209;  Frank- 
lin Bridge  Co.  v.  Wood,  14  Ga.  80. 


§334 


CORPORATIONS. 


600 


ration  cannot  be  constituted  by  the  mere  agreement  of 
parties.^  It  cannot  be  created  by  mere  acquiescence, 
but  only  by  an  act  of  the  legislature,  or  by  some  power 
thereto  authorized  by  a  legislative  act.^  In  some  of  the 
states  the  constitution  limits  the  power  of  the  legislature 
to  grant  charters;'  as,  for  example,  by  prohibiting  spe- 
cial charters.*  Such  limitations  are  binding  on  the  legis- 
lature, and  restrict  its  inherent  powers.  And  the  legisla- 
ture has  no  power  to  confer  upon  a  corporation  privileges 
or  exemptions  which  it  cannot  constitutionally  confer 
upon  a  private  person.  Therefore  a  provision  in  a  char- 
ter, granting  to  a  corporation  the  privilege  of  charging  a 
greater  rate  of  interest  than  the  general  laws  allow,  is 
unconstitutional  and  void.*^  But  although  an  act  creating 
a  corporation  may  be  void  as  being  within  a  constitu- 
tional prohibition  of  special  acts  for  that  purpose,  yet  it 
may  operate  as  a  legislative  license  or  authority  to  the 
parties  named  to  do  what  its  language  and  intent  author- 
ize  them  +o  do.®  The  legislature}  cannot  charter  a  cor- 
poration whose  object  is  to  violate  the  laws  of  the  United 
States;  as,  for  example,  an  association  formed  to  assist  a 
rebellion  against  the  national  government.''  Where  a 
corporation  seeks  to  escape  from  the  burdens  imposed 
upon  it  by  the  legislature,  clear  evidence  of  t>he  legislative 
assent  to  such  exoaeEation  is  neceasary.* 


§  334.    Power  of  Congress  to  Charter  Corporations.— 

The  power  to  charter  corporations  is  not  given  to  Con- 
gress by  the  United  States  constitution,  but  it  neverthe- 


1  Stowe  V.  Flagg,  72  111.  397;  State 
V.  Curtis,  35  Conn.  374;  95  Am.  Dec. 
263. 

■^  Washington  etc.  R.  R.  Co.  v. 
R.  R.  Co.,  19  Gratt.  592;  100  Am. 
Dec.  711. 

*  Green  v.  Graves,  1  Doug.  351. 

*  San  Francisco  v.  Spring  Valley 
Water  Works,  48  Cal.  493. 

"  Gordon?;.  Winchester  Building  etc. 
Ass'n,  12  Bush,  110;  23  Am.  Rep.  713. 


«  Brent  v.  State,  43  Ala.  297. 

'  Trustees  v.  Satchwell,  71  N.  C. 
Ill;  Chicora  Co.  v.  Crews,  C  Ricii. 
243.  •  A  charter  for  a  mutual  marriage 
benefit  association  has  been  refused, 
its  object  being  against  public  policy: 
In  re  Mutual  Aid  Assn,  15  Pliila. 
625;  In  re  Helping  Hand  Marriage 
Ass'n,  15  Phila.  644. 

^  Braaliu  v.  R.  R.  Co.,  145  Moss. 
64. 


600 

unent  of 
iescencc, 
le  power 
le  of  tho 
gislature 
:ing  spe- 
,he  legis- 
e  legisla- 
iriviloges 
y  confer 
1  a  cliar- 
larging  a 
allow,  is 

creating 
constitu- 
pe,  yet  it 
i-y  to  the 
t  author- 
3r  a  cor- 
e  United 
)  assist  a 
^Vhero   a 

imposed 
jgislative 


itions.— 

to  Con- 
leverthe- 

297. 

71  N.  C. 
1^3,  6  Rich, 
lal  marriage 
eu  refused, 
iblic  prilicy: 
15  Pliila. 
(i  Marriage 

145  Alaas. 


601 


FORMATION. 


§§  335,  336 


less  exists  in  that  body  as  an  incident  to  the  powers 
expressly  given;  and  as  a  means  for  carrying  out  a  federal 
purpose  Congress  may  charter  a  corporation.^ 

§  335,    Delegation  of  Power  to  Create  Corporations. 

—  As  a  rule,  a  power  to  grant  a  cliarter  cannot  be  dele- 
gated.^ But,  as  in  all  cases  of  agency,  mere  ministerial 
duties  may  be  delegated;  as  the  issuing  of  the  certificate;^ 
or  ascertaining  whether  the  objects  of  tho  association  fall 
within  the  provisions  of  the  law.^  It  has  boon  lield  that 
Congress  may  delegate  to  a  territorial  govcrununt  the 
power  to  create  corporations.^ 

§  336.  Form  of  Grant  of  Corporate  Fi'anchice.— Un- 
less so  required  by  the  constitution,  no  fo:  iiuil  terms  are 
necessary  in  the  grant  of  a  corporate  franchise,  'i'ho  use 
of  the  Avords  "incorporate"  or  "  corporation  "  is  not  even 
necessary.^     Any  expression  showing  tho  intention  of  tho 


'  McCulloch  V.  Maryuud,  4  ^Vl^eat. 
316;  Tlioinsoii  v.  R.  R.  Co.,  9  Wall. 
585;  Osbom  v.  Bank,  9  Wheat.  738; 
Farmera'  Nat.  Bank  v.  Dearing,  91 
U.  S.  'J9. 

'^  Morawetz  on  Corporations,  sec.  8. 
See  Bank  of  Chenango  v.  Brown,  20 
N.  Y.  '1(57. 

^  Franklin  Bridge  Co.  i\  Wood,  14 
Ga.  80;  III  re  Deveaux,  54  Ga.  G73. 

» In  re  Medical  College,  3  Whart. 
456. 

MVilliams  v.  Bank,  7  Wend.  539; 
Vincenuea  Univerai:v'  v.  Indiana,  14 
How. '_>70. 

"  Liverpool  Ins.  Co.  v.  Massachu- 
setts. 10  Wall.  56G;  Warner  v.  Beers, 
2.'J  Wend.  lOo;  People  v.  Assessors,  1 
Hill,  620;  Bow  v.  AUenstown,  34 
N.  H.  351;  69  Am.  Dec.  489.  In 
Tiiomas  r.  Dakin,  22  Wend.  103, 
Cowen,  J.,  says:  "  It  has  been  impossi- 
ble for  nie  to  see  tho  force  of  tho  argu- 
ment that,  because  the  legislature  have 
constantly  avoided  to  call  these  asso- 
ciations, or  any  of  their  machinery,  a 
corporation,  therefore  we  cannot  ad- 
judge them  to  be  so.  If  they  have 
the  attributes  of  corporatious,  if  they 


so  arc  in  tho  nature  of  thing.^,  wo  cm 
no  nio:c  rcfuje  to  regard  tlic.ii  as  faich 
than  v/o  could  rcfuae  to  ackiiowludge 
John  or  Guor'^o  to  be  naturid  ])crjon  , 
because  the  legislature  may,  iti  laa'c- 
ing  provisiona  for  their  l)jnelit,  have 
been  pleased  to  designate  them  as 
belonging  to  some  other  .sjiecie^. 
Should  the  legislature  expressly  de- 
clare each  of  them  to  l)e  corporations, 
without  giving  them  corporate  succes- 
sion, or  other  artiricial  attributes,  the 
declaration  would  not  make  them  so. 
On  the  other  hand,  even  an  express 
legislative  declaration  that  certain 
associations  are  not  inchuled  in  the 
definition  of  corporations  mmiuM  not 
change  their  character,  provided  they 
should  in  fact  bo  clothed  with  all  tho 
essential  powers  of  corporations.  Sup- 
pose the  legislature  should  attempt  to 
create  an  ordinary  safety-fund  bank, 
with  its  usual  machinery,  by  a  major- 
ity vote:  could  the  bank  thus  created 
maintain  its  ground  merely  because 
the  statute  might,  in  conclusion,  de- 
clare that  such  bank  should  not  be 
called  or  known  as  a  corporation?  The 
restrictive  provision  in  the  eoustitu- 


§337 


CORPORATIONS. 


602 


legislature  to  bo  to  grant  a  franchise  is  sufficient.*  A 
grant  of  the  power  to  perform  corporate  acts  implies  a 
grant  of  corporate  powers.*  An  act  of  incorporation  is 
not  void  because  it  omits  to  designate  and  limit  the 
amount  of  capital  stock,  or  prescribe  the  value  and  num- 
ber of  shares,  or  provide  for  the  election  of  directors  or 
administration  of  the  affairs  of  tlie  corporation  in  any 
mode  other  than  may  be  found  in  the  grant  of  "  the  usual 
rights  and  privileges  of  such  corporations."'  Charters  of 
private  companies  are  to  be  construed  strictly  in  favor  of 
the  state,  but  at  the  same  time  reasonably.*  Where  such 
intent  is  not  clear,  no  presumption  of  a  corporate  grant 
will  arise.*  Where  an  act  of  incorporation  expresses  the 
conditions  on  which  the  grant  of  a  franchise  is  to  de- 
pend, other  conditions  cannot  be  inferred  from  the  nature 
and  objects  of  the  grant."  Where  a  statute  recited  that 
A  had  purchased  property  for  educational  purposes,  and 
declared  "  that  said  institution  is  hereby  incorporated 
under  the  name  of  Ward's  Seminary  for  Young  Ladies," 
it  was  held  insufficient  as  an  act  of  incorporation/ 


§  337.  Ratification  by  State  of  Unauthorized  Corpora- 
tion.—  A  corporation  formed  without  lawful  authority 
may  be  legalized  by  the  legislature.  It  may  do  this  by 
simply  recognizing  it  as  a  valid  corporation.*  But  a  sim- 
ple recital  of  its  name  in  an  act,  with  no  intention  of  rati- 
fying its  existence,  will  not  legalize  it.*     By  a  subsequent 


tiou  was  leveled  at  the  thing,  not  the 
name;  at  that  species  of  legal  being 
already  known  to  the  law  as  a  corpo- 
ration, not  what  the  legislature  might 
call  so." 

'  Mahoney  v.  Bank,  4  Ark.  620. 

'^  Commonwealth  v.  R.  R.  Co.,  3 
Grant  Cas.  200. 

*  Kirksey  v.  Plank  Road  Co.,  7  Fla. 
2.S;  68  Am.  Dec.  427. 

*  Monongahela  Bridge  Co,  v.  ^irk, 
46  Pa.  St.  112;  84  Am.  Dec.  527. 

*  Gregory  v.  Shelby,  2  Met.  (Ky.) 
589;  Myera  v.  Irwin,  2  Serg.  &  K.  368. 


6  Cheraw  etc.  R.  R.  Co.  v.  White,  10 
S.  C.  155. 

'  Nashville  v.  Ward,  16  Lea,  27. 

*  Kanawha  Coal  Co.  v.  Kanawha  etc, 
Co.,  7  Blatchf.  391;  McDoiigaldn  Bel- 
lamy, 18  Ga.  412;  Society  v.  Pawlet,  4 
Pet.  480;  People  v.  Farnham,  35  III. 
562:  McAulay  v.  R.  R.  Co.,  83111.  348; 
Williams  v.  Union  Bank,  2  Humph. 
339;  Bow  v.  Allenstown,  34  N.  H.  351; 
69  Am.  Dec.  489. 

"Thornton  v.  R.  R.  Co.,  123  Mass. 
32;  Greea  v.  Seymour,  3  Sand.  Ch. 
2S5. 


602 

ent.*  A 
inplies  a 
ration  is 
imit  the 
id  num- 
3ctors  or 
I  in  any 
Ihe  usual 
arters  of 

favor  of 
lere  such 
ite  grant 
esses  the 
IS  to  de- 
le nature 
ited  that 
3ses,  and 
irporated 

Ladies," 

Corpora- 

luthority 
this  by 
at  a  sim- 
n  of  rati- 
bsequent 

;.  White,  10 

Lea,  27. 
inawha  etc. 
gald  r.  Bel- 
>y.  Pawlet,  4 
am,  35  III. 

83  111.  348; 

2  Humph. 
tN.  H.351; 

123  Mass. 
Sana.  Ch. 


603 


FORMATION. 


338 


legislative  ratification,  the  acts  done  before  by  the  corpora- 
tion become  as  valid  and  binding  as  if  previous  authority 
had  been  given.*  The  requirement  that  an  application 
be  filed  with  the  secretary  of  state,  and  acknowledged 
before  a  proper  officer,  may  be  waived  by  the  state  by  a 
subsequent  statute  recognizing  the  existence  of  a  corpo- 
ration organized  without  compliance  with  said  require- 
ment.'' 

§  338.  Franchise  must  be  Accepted. — A  person  cannot 
be  made  a  corporator  without  his  consent.'  In  like  man- 
ner a  grant  of  a  corporate  franchise  does  not  become  effec- 
tive until  it  is  accepted  by  tlie  grantees,*  and  no  right 
can  be  claimed  under  it  until  it  is  accepted.'^  A  grant  is 
an  offer  which  may  be  withdrawn  by  the  legislature  at  any 
time  before  it  is  accepted  by  the  grantees,**  and  if  not  ac- 
cepted within  a  reasonable  time  it  will  expire.'  A  statute 
granting  new  franchises  to  an  existing  corporation  upon 
specified  conditions  is  inoperative  until  it  is  accepted.* 
Where  an  act  of  incorporation  is  accepted,  and  the  com- 
pany organized  provisionally  thereunder,  no  subsequent 
withdrawal  of  any  of  the  corporators  will  affect  its  valid- 
ity.* It  must  be  accepted  as  offered;  the  grantees  cannot 
add  new  terms  to  it.'"  It  can  only  be  accepted  by  the 
grantees."  But  a  majority  «f  an  associatJi)n  ma^  accept 
a  franchise  on  behalf  of  all." 


» Illinois  etc.  R.  R.  Co.  v.  Cook,  29 
111.  237;  Goodrich  v.  Reynolda,  31  111. 
490;  83  Am.  Dec.  240;  Baashor  v.  Dres- 
sel,  34  Md.  503;  St.  Louis  etc.  R.  R. 
Co.  V.  R.  R.  Co.,  2  Mo.  App.  69. 

'^  Central  Agricultural  Mechanical 
Ass'n  V.  Alabama  Gold  Life  Ins.  Co., 
70  Ala.  120. 

» Lauman  v.  R.  R.  Co.,  30  Pa.  St. 
46;  72  Am.  Dec.  685;  Ellis  v.  Mar- 
shall, 2  Mass.  269;  3  Am.  Dec.  94; 
Lexington  etc.  R.  R.  Co.  v.  Chandler, 
13  Met.  315. 

'  Lincoln  etc.  Bank  v.  Richardson, 
1  Greenl.  79;  10  Am.  Dec.  34. 


"Green  v.  Seymour,  3  Sand.  Ch. 
285. 

*  State  V.  Dawson,  16  Ind.  40;  Chesa- 
peake Canal  Co.  v.  R.  R.  Co.,  4  Gill 
&  J.  1. 

'  State  V.  Bull,  16  Conn.  179. 
8  Lyons  v.  R.  R.  Co.,  32  Md.  18. 

•  Busey  v.  Hooper,  .35  Md.  15;  6 
Am.  Rep.  350. 

19  King  V.  Westwood,  2  Dow  &  C. 
21;  R.  V.  Amery,  1  Term  Rep.  589. 
Lyons  v.  R.  R.  Co.,  32  Md.  18. 

Ji  R.  w.  Amery,  1  Term  Rep.  589. 

'■J  St.  Paul  Sons  of  T.  v.  Brown,  II 
Minn.  356. 


339 


CORPORATIONS. 


604 


Illustrations.  —  Corporators  met  and  by  resolution  accepted 
the  charter,  elected  oflicers,  authorized  contracts,  and  the  stock 
was  all  subscribed  for.  Held,  tliat  "the  charter  was  in  opera- 
tion," within  the  meaning  of  the  Illinois  constitution:  McCartney 
V.  R.  R.  Co.,  112  111.  nil;  and  see  Ohio  etc.  R.  R.  Co.  v.  Mc- 
Phcrson,  35  Mo.  13;  86  Am.  Dec.  128.  A  voluntary  association 
Lt'canie  incorporated  by  an  act  of  the  legislature,  and  a  niajor- 
ily  of  the  members  accepted  the  charter.  IlcJd,  that  a  mem- 
ber who  had  united  in  tlie  application  for  a  charter,  and  had 
( ::prcssed  no  dissent  thereto,  could  not  repudiate  it,  though  ho 
was  not  present  at  tlio  organization  under  the  clmrter:  Ferris 
V.  Strong,  3  Edw.  Ch.  127.  A  charter  was  granted  by  the  legis- 
lature of  North  Carolina.  The  corporation  held  their  first 
meeting  in  Maryland,  and  accppted  the  charter:  Held,  an  in- 
valid acceptance:  Smith  v.  Silver  Valla i  Mining  Co.,  64  Md.  85; 
64  Am.  Rep.  760. 

§  339.  Form  of  Acceptance  of  Grant.  —  No  particular 
form  of  acceptance  is  essential.  An  intention  on  the  part 
of  the  grantees  to  accept  is  enough.*  Where  persons 
apply  for  a  charter  and  it  is  granted,  acceptance  of  it  by 
them  is  presumed;^  so,  too,  parties  are  presumed  to  have 


>  Bank  v.  Dandridge,  12  Wheat.  71; 
American  Bridge  Co.  t».  Bragg,  11 
N.  H.  102;  Sniead  v.  Railroad  Co.,  11 
Itul.  104;  Covington  ik  Covington 
Bridge,  10  Bush,  70;  Penobscot  Co.  v. 
Lamson,  IG  Me.  224;  33  Am.  Dec.  G5C 
Blanford  v.  Gibbs,  2  Cush.  39.  In 
Middlesex  v.  Davis,  3  Met.  1.37,  the 
court  say:  "It  is  ti  ae  that  it  does 
not  appear  by  the  records  of  the  soci- 
ety that  the  act  of  incorporation  has 
been  accepted  by  an  express  vote  to 
that  efifect;  nor  does  it  appear  in  what 
manner  the  first  meeting  of  the  corpo- 
ration was  called.  But  the  presump- 
tive proof,  both  of  the  acceptance  of 
the  act  of  incorporation  and  of  the 
legal  organization  of  the  society,  is 
exceedingly  strong,  and  quite  as  satis- 
factory as  direct  evidence.  That  such 
presumptive  evidence  is  admissible 
and  proper,  is  fully  maintained  by  the 
decisions  in  Dedham  Bank  v.  Chick- 
ering,  3  Pick.  335;  and  in  Bank  of 
United  States  r.  Dandridge,  12  Wheat. 
71;  and  by  the  numerous  authorities 
cited  in  the  latter  case.  By  these  au- 
thorities it  is  now  well  settled,  whatever 
may  have  beeu  the  aiicieut  dioctrine  as 


to  corporations,  that  as  the  acts  of 
private  persons,  even  of  the  most  yol- 
emn  nature,  may  be  presumed  or 
proved  by  presumptive  ei'ideuco,  so 
as  to  the  acts  of  a  corporation,  if  they 
cannot  be  reasonaljly  accounted  for 
but  on  the  supposition  of  otlier  acts 
done  to  make  them  legally  operative 
and  binding,  they  are  presumptive 
proofs  of  such  other  acts.  Thu;i,  as 
deeds  and  grants  to  private  persons, 
which  are  beneficial  to  them,  are  pre- 
sumed to  have  been  accepted,  ^30  also 
may  tlie  acceptance  of  an  act  or  char- 
ter of  incorporation,  beneficial  to  the 
corporation,  be  presumed  for  tlio  like 
reason.  And  a  long  lapse  of  time,  and 
the  continued  exercise  of  the  corporate 
powers  gi-anted  to  a  corporation,  sulli- 
ciently  justify  the  presumption  of  the 
acceptance  of  the  charter.  So  if  a 
particular  charter  is  applied  for,  and 
it  is  granted,  the  acceptance  may  lie 
presumed  from  such  previous  applica- 
tion." 

^  Middlesex  v.  Davis,  3  Met.  137; 
Atlanta  v.  Gas  Light  Co.,  71  Ga.  lOU; 
Astor  V.  II.  R.  Co.,  48  Hua,  5C2. 


604 


605 


FORMATION. 


339 


n  accepted 
1  the  stock 
a  in  opora- 
McCartncy 
Co.  V.  Mc- 
association 
(1  a  major- 
at a  mcni- 
r,  and  had 
though  ho 
ter:  Ferris 
y  the  Icgis- 
thcir  first 
eld,  an  in- 
64  Md.  85; 


particular 
1  the  part 
?  persons 
3  of  it  by 
d  to  have 

the  acts  of 
she  most  sol- 
presumud  or 
eiddeuce,  so 
ition,  if  they 
icouuted  for 
)f  other  acts 
lly  oiierative 
presumptive 
s.  Thus,  as 
,'ate  persons, 
lem,  are  pre- 
pted,  so  also 

act  or  char- 
jficial  to  tlie 

for  tlie  like 
of  time,  and 
;he  corporate 
ration,  sulH- 
iption  of  the 
Jr.  8o  if  a 
lied  for,  and 
mce  may  he 
ious  applica- 

3  Met.  137; 
71  (la.  100; 
Ji,  502. 


accepted  a  grant  beneficial  to  them.*    The  question  of  the 
acceptance  of  an  act  of  incorporation  is  for  the  jury,-    A 
charter  granted  to  certain  persons  therein  named  is  pre- 
sumed to  have  been  granted  at  their  instance,  and  to  have 
been  accepted  by  them;  but  such  presumption  is  rebutted 
by  evidence  that  no  proceedings  were  ever  had  under  tho 
charter,  although  seven  years  had  elapsed  since  its  date.s 
Though  it  is  optional  with  members  of  a  private  corpora- 
tion whether  they  will  take  tho  benefit  of  their  charter, 
yet  after  they  have  made  their  election  by  executing  tho 
power*  granted,  the  duties  and  liabilities  attach  which 
the  charter  imposes.*     Acceptance  of  a  charter  may  be 
shown    by  the  expenditures    and   other  transactions   in 
furtherance  of  the  purpose  thereof,  without  proof  of  any 
formal  organization  by  meeting,  election,  etc'    It  is  not 
essential  that  the  records  of  the  corporation  should  show 
a  formal  acceptance  of  the  act  by  the  persons  incorpo- 
rated."   A   company,  by   accepting   a  charter,   becomes 
bound  by  all  its  provisions,  and  cannot  insist  that  the 
enactment  of  any  provision  therein  was  fraudulently  ob- 
tained.^    Exercise  by  a  corporation  of  a  power  granted 
by  an  amendment  to  its  charter  raises  a  presumption  of 
an  acceptance  of  the  amendment.*    Where  a  corporation, 
which  is  already  in  existence,  and  acting  under  a  former 
charter  or  prescription  or  usage,  accepts  a  new  charter 
before  the  expiration  of  the  old,  the  corporatiim  may  still 
act  under  the  former,  or  partly  under  both." 


'  Bank  v.  Dandridge,  12  Wheat.  71, 
and  cases  supra;  Regents  v.  Williams, 
9  dill  &  J.  365;  31  Am.  Dec.  72;  Tal- 
ladega Ins.  Co.  V.  Landers,  43  Ala.  115. 

;  Hammond  v.  Straus,  53  Md.  1. 

^  Newton  v.  Carberry,  5  Cranch  C. 

c.  o:)2. 

*  Riddle  v.  Proprietors  of  Locks  etc. 
on  Merrimack  River,  7  Mass.  184;  5 
Am.  Doc.  35;  Goshen  Turnpike  v. 
Sears,  7  Conn.  80;  Commonwealth  v. 
Worcester  Turnp.  Corp.,  3  Pick.  327. 


*  McKay  v.  Beard,  20  S.  C.  15G. 

« Russell  V.  McLellan,  14  Pick. 
63. 

'  Bushwick  and  Newton  Bridge  Co. 
V.  Ebbets,  3  Edw.  Ch.  353. 

*  Wetumpka  etc.  R.  R.  v.  Bingham, 
5  Ala.  658;  Palfrey  o.  Paulding,  7  La. 
Ann.  363;  Bangor  etc.  R.  R.  Co.  v. 
Smith,  47  Me.  34;  Smead  v.  R.  R.  Co., 
11  Ind.  104. 

»  Woodfork  v.  Union  Bank,  3  Cold. 
488. 


§340 


CORPORATIONS. 


606 


Illustrations.  —  A  statute,  in  addition  to  a  former  act 
creating  a  corporation  for  the  management  of  a  trust  fund,  was 
passed  without  the  knowledge  or  request  of  the  corporation, 
and  was  never  adopted  by  any  direct  vote,  but  the  corporation 
elected  certain  officers,  provided  for  by  the  act  in  addition,  who 
exercised  the  powers  conferred  on  them  for  ten  years.  Held, 
sufficient  evidence  of  a  formal  assent  and  adoption  by  the  cor- 
poration: Third  School  District  in  Blandford  v.  Gihbs,  2  Cush. 
39.  A  statute  was  drawn  up  by  the  attorney  of  an  insurance 
company,  and  passed  upon  the  application  of  a  portion  of  the 
directors,  and  afterwards  recognized  by  the  board  of  directors 
in  various  ways.  Held,  that  it  would  be  presumed  to  have  been 
accepted  by  the  corporation:  Sumrall  v.  Sun  Mut.  Ins.  Co.,  40 
Mo.  27.  The  same  persons  composed  two  corporations,  and 
passed  a  vote,  as  members  of  one  of  them,  proposing  to  enter 
into  a  contract  with  the  other,  and  the  conditions  of  such  pro- 
posal were  partially  executed  by  both  corporations,  without 
any  corporate  vote  on  the  subject.  Held,  to  constitute  an  ac- 
ceptance of  the  proposal:  Proprietors  of  C  mat  Bridge  v.  Gordon, 
1  Pick.  297. 


§  340.  Incorporation  under  General  Laws — Procedure 
— Conditions  Precedent. — By  the  constitutions  of  most  of 
the  states,  the  legislature  is  forbidden  to  create  corpora- 
tions by  special  charter.  Under  such  general  corporation 
laws,  the  right  to  form  a  corporation  is  extended  to  all 
persons  who  comply  with  certain  prescribed  conditions.^ 
A  substantial  compliance  with  these  conditions  precedent 
is  generally  deemed  sufficient.'^  Such  an  irpegularity  as 
the  failure  of  the  notary  to  certify  that  those  signing  the 
articles  of  incorporation  were  personally  known  to  him, 
is  not  fatal.'  In  Iowa  the  filing  of  the  articles  of  incor- 
poration in  the  office  of  the  secretary  of  state  is  not  es- 
sential.* In  Nebraska  and  Arkansas  the  filing  of  articles 
of  incorporation  with  the  county  clerk  is  a  condition 
precedent  to  the  existence  of  any  corporate  franchise. 


■•  The  charter  of  a  private  corpora- 
tion organized  under  a  general  law  is 
as  inviolable  as  that  of  one  organized 
under  a  special  act:  People  v.  Keese, 
27  Hun,  483. 

'  Morawetz'oa.CorporatioQs,  sec.  17; 


Mokelumne  Co.  v.  Woodbury,  14  Cal. 
424;  73  Am.  Dec.  658. 

'  People  V.  Cheeseman,  7  Col.  37C. 

*  First  Nat.  Bank  of  Davenport  v. 
Davies,  43  Iowa,  424;  and  see  Cross  v. 
PinckneyviUe  MiU  Co.,  17  HI.  ^. 


606 


607 


FORMATION. 


§340 


rmer  act 
fund,  was 
rporation, 
>rporation 
ition,  who 
•s.  Held, 
y  the  cor- 
8,  2  Cush. 
insurance 
ion  of  the 
directors 
have  been 
IS.  Co.,  40 
ions,  and 
y  to  enter 
such  pro- 
»,  without 
ite  an  ac- 
V.  Gordon, 


•rocedure 

f  most  of 
corpora- 
'poration 
ed  to  all 
iditions.' 
>recedent 
ilarity  as 
ning  the 
L  to  him, 
)f  incor- 
5  not  cs- 
articles 
ondition 
anchise. 

try,  14  Cal. 

1  Col.  37C. 

wenport  v. 
see  Cro33  v. 
111.  54. 


The  law  and  the  articles  so  filed,  taken  together,  are 
considered  in  the  nature  of  a  grant  from  the  state,  and 
constitute  the  charter  of  the  company.'  In  Kansas  a 
corporation  is  created  when  the  certificate  of  incorpora- 
tion is  filed  with  the  secretary  of  state.'^  The  Nebraska 
act  does  not  authorize  corporations  formed  under  it 
to  commence  business  before  the  whole  capital  stock 
has  been  subscribed.'  In  Kentucky  the  statutory  re- 
quirements of  published  notice  of  names  of  corporators, 
amount  of  stock,  etc.,  must  be  complied  with.*  In  Indi- 
ana the  articles  must  specify  the  objects  of  such  associa- 
tion in  strict  accordance  with  the  statute.'^  In  California 
articles  of  incorporation  must  state  that  a  majority  of  the 
members  of  the  association  were  present  and  voted  at  the 
election  of  directors.®  A  defect  in  the  certificate  of  in- 
corporation of  a  company  incorporated  under  a  general 
statute  is  cured  by  a  legislative  recognition  of  such  cor- 
poration.' If  a  corporation  is  illegally  formed,  the  stock- 
holders are  not  relieved  from  individual  liabilit}'^  by  the 
good  faith  of  the  corporators,  or  the  actual  transaction  of 
business  by  the  corporation.^  The  neglect  of  the  trustees 
of  a  religious  society  to  make  the  record  of  its  certificate 
of  incorporation  that  the  statute  requires,  docs  not  pre- 
clude the  society  from  proving  its  corporate  existence  by 
evidence  of  acts  of  user."  A  requirement  that  one  half 
the  capital  stock  of  a  corporation  should  be  actually  paid 
in  money  is  substantially  complied  with  if  the  corpora- 
tion has  received  property  whose  market  value  is  greater 


*  Abbott  V.  Omaha  Smelting  Co.,  4 
Neb.  416;  Garnett  v.  Richardson,  35 
Ark.  144;  and  see  Bigelow  ^'.  Gregory, 
73  111.  197. 

''  Hunt  V.  Kansas  Missouri  Brid<:;e 
Co.,  11  Kan.  412;  St.  Louis  etc.  R.  R. 
Co.  r,  Tiernan,  37  Kan.  607. 

'  Livesey  v.  Omaha  Hotel  Co.,  5 
Neb.  50. 

*  Heinig  v.  Adams  and  Westlake 
Mfg.  Co.,  81  Ky.  300. 


*  West  V.  Bullskin  Prairie  Ditching 
Co.,  .32  Ind.  138;  O'Reiley  v.  Kanka- 
kee Valley  Draining  Co.,  32  Ind. 
169. 

«  People  V.  Sclfridge,  52  Cal.  331. 

'  Basshor  v.  Dressel,  34  Mil.  503. 

^  Kaiser  r.  Lawrence  Savings  Bank, 
56  Iowa,  104;  41  Am.  Rep.  So. 

'  Washington  Baptist  Church  v, 
R.  R.  Co.,  5  Mackey,  269. 


§040 


CORPORATIONS. 


60S 


than  tho  par  value  of  the  stock.'  Under  siich  a  statute, 
tlio  subsjcriptioiis  must  have  hcen  made  in  good  faith  by 
persons  having  a  reasonable  expectation  of  being  able  to 
pay."  Articles  of  association  are  properly  signed  although 
only  tho  initial  letter  of  christian  names  is  used.'' 

Under  a  constitution  which  provides  that  corporations 
may  ho  formed  under  general  laws  only,  the  legislature 
is  restricted  not  only  from  creating,  in  the  strict  sense 
of  tho  term,  a  business  corporation  by  a  special  act,  but 
also  from  conferring  by  a  special  act  any  powers  or  fran- 
chises upon  a  corporation.*  So  the  mere  recognition  of 
a  corporate  body  as  an  existing  corporation  in  acts  of 
the  legislature  cannot  operate  to  give  the  organization 
validity.'^  The  failure  of  tho  corporation  to  file  its  arti- 
cles of  incorporation  in  tho  county  in  which  it  owns 
property,  as  required  by  statute,  does  not  prevent  it  from 
defending  an  action  for  work  and  labor  done  on  said 
property."  The  certificate  of  incorporation  is  made  for 
tho  benefit  of  the  public,  and  not  for  tlie  corporation  or 
its  stockholders;  and  those  who  participated  in  the  incor- 
poration, and  by  a  certificate  made  in  pursuance  of  tho 
statute  announced  the  amount  of  tho  capital  stock  of 
the  corporation,  cannot,  as  against  its  creditors,  contradict 
the  certificate.'' 

Illusttratioxs. — The  language  of  the  charter  of  a  railroad 
corporation  imported  an  immediate  grant.  A  proviso  required 
the  commencement  of  operations  within  a  specified  time.  Held, 
that  no  condition  precedent  was  created  by  the  proviso:  Clieraw 
dr.  Ii.  Ji.  Co.  v.  White,  14  S.  C.  51.  A  railroad  company  was 
created  '"a  body  politic  and  corporate."  A  subsequent  section  of 
tho  charter  enacted  "that  when  one  hundred  thousand  dollars 
shall  have  been  subscribed,  and  one  dollar  on  each  share  sliall 
have  been  paid  in,  the  said  company  may  organize  and  proceed 


'-  State  V.  Wood,    84  Mo.    378;   13 
Mo.  App.  139. 

2  Holman  v.  State,  105  Ind.  569. 

3  State  V.  Beck,  81  Ind.  500. 

♦  City  of  Sail  Francisco  v.  Spring 
Ve.Mey  Water  Works,  48  Cal.  493. 


°  Oroville  etc.  R.  R.  Co.  v.  Plumaa 
County,  37  Cal.  354. 

«  Weeks  v.  Garibaldi  etc.  Co.,  73  Cal. 
599. 

'  Thompson  v.  Bank,  19  Nev.  103; 
3  Am.  St.  Rep.  797. 


608 

Rtatiito, 
faith  by 
5  able  to 
ilthougli 

orations 

^islttturo 

ct  sense 

net,  but 

or  fran- 

iiition  of 

I  acts  of 

mizatioii 

its  arti- 

it  owns 

t  it  from 

on  said 

nado  for 

•ation  or 

he  incor- 

e  of  the 

stock  of 

jutradict 


railroad 

required 

e.     Held, 

Cher  aw 

pany  was 

section  of 

d  dollars 

arc  shall 

proceed 

V.  Plumas 

Co.,73Cal. 

Nev.  103; 


609 


FORMATION. 


§  041 


to  work."  IleUlf  thirt  this  requirement  wafl  sufficiently  complied 
with  when  one  hundred  thousand  dollars  was  subscribed,  and  a 
Bum  in  gross  paid  in  equal  to  one  dollar  upon  every  share  sub- 
scribed: Spartanburg  etc.  li.  H.  Co.  v.  Ezdl,  14  S.  (J.  281.  A 
rille  club  was  organised  under  the  law  providing  for  the  «.rea- 
tion  of  corporations  for  "literary,  scientific,  and  charitable  pur- 
poses." Held,  that  the  object  of  the  association  was  not  witliin 
the  purview  of  the  law,  and  that  rifle-shooting  was  not  a  sci- 
ence, though  it  might  be  an  art:  Vrcdenburg  v.  Bchan,  oo  La. 
Ann.  G27. 

§341.  Conditions  Precedent  to  Grant  —  PerforLiance 
when  Necessary.  —  Where  the  grant  is  subject  to  tho  per- 
formance of  certain  conditions  before  the  grantees  can 
form  the  corporation,  those  conditions  precedent  must 
bo  complied  with  or  tho  corporation  is  not  legal.'  But 
where  the  performance  of  certain  conditions  is  only  a 
prerequisite  to  the  right  of  tho  corporation  to  carry  on 
business  after  it  is  formed,  a  failure  to  perform  those  con- 
ditions does  not  affect  the  existence  of  the  corporation." 
If  all  tho  requirements  of  tho  charter  are  observed,  al- 
though not  in  the  order  prescribed,  tho  organization  is 
sufficient.^  When  a  charter  is  granted,  and  tho  corpora- 
tion is  to  bo  brought  into  existence  by  some  future  acts 
of  the  corporators,  the  franchises  or  property  which  the 
charter  grants  to  tho  body  remain  in  abeyance  until  such 
acts  are  donC* 

Illustrations. — A  provision  in  a  conveyance  of  real  estate, 
that  part  of  the  purchase  price  should  be  paid  when  a  certain 
contemplated  corporation  should  be  organized,  held,  not  to  re- 
quire an  organization  of  tho  corporation  strictly  in  accordance 
with  the  statutory  requirements,  before  the  amount  should  be- 
come due,  but  to  be  satisfied  by  signing  the  certificate  of  incor- 
poration, adopting  by-laws,  electing  officers,  and  other  acts 
effecting  a  de  facto  organization:  Childs  v.  Smith,  46  N.  Y.  34. 
The  legislative  charter  of  a  religious  corporation  being  about  to 


>  People  V.  Chambers,  42  Cal.  201; 
Childs  V.  Smith,  55  Barb.  45. 

"Harrod  v.  Hamer,  32  Wis.  1C2; 
City  Hotel  v.  Dickinson,  6  Gray,  593; 
Central  Tp.  Co.  v.  Valentine,  10  Pick. 
Vol.  L— 39 


142;  Charles  River  Bridge  v.  Warren 
Bridge,  7  Pick.  344. 

3  Eakright  v.  II.  K.  Co.,  13  Ind.  404. 

*  Dartmouth  College  v.  Woodward,. 
4  Wheat.  518,  691. 


gg  342-344 


CORPORATIONS. 


610 


expire,  duo  application  for  a  renewal  was  made  to  the  clerk. 
Without  the  fault  of  the  corporation  there  was  delay  in  granting 
the  renewal.  Held,  that  when  granted  it  related  back  bo  as  to 
prevent  a  reverter  of  property:  St.  Phillipa  Church  v.  Zion  Prca. 
Church,  23  S.  C.  297. 

§  342.  Oorporations  by  Prescription. — Public  corpora- 
tions may  exist  by  prescription;  that  is  to  say,  after  a 
certain  length  of  time  a  grunt  to  them  will  bo  presumed, 
although  it  cannot  bo  found.'  But  there  is  no  such  rule 
in  favor  of  a  private  corporation.'  If  the  acts  and  pro- 
ceedings of  a  company  or  association,  of  however  long 
standing,  consist  only  of  such  as  it  is  competent  for  in- 
dividuals to  perform  without  an  incorporating  act,  a  grant 
of  such  an  act  cannot  be  inferred.* 

§  343.  Who  may  be  Corporators. — Any  poraon  capable 
of  contracting  may  be  a  corporator.  So  may  infants, 
married  women,  and  persons  non  compos  mentis  become 
stockholders  by  transfer  or  by  inheritance.  A  corporation 
may  be  a  stockholder  in  another  corporation,  and  so  may 
a  state  or  a  municipality.* 

§  344.  Proof  of  Incorporation,  how  Made. — That  a 
body  is  a  corporation  is  proved  by  showing  the  grant  of 
the  charter  and  its  acceptance.  Of  public  laws  only  will 
the  courts  take  judicial  notice.*  The  legality  of  the  ex- 
istence of  a  corporation  is  presumed.*  A  private  domestic 
corporation  must,  like  a  foreign  corporation,  aver  and 
prove  the  fact  of  its  incorporation.''    The  rule  that  the 


^  Jameson  v.  People,  16  III.  257;  63 
Am.  Dec.  304;  Bow  v.  AUenstown,  34 
N.  II.  351;  69  Am.  Dec.  489;  Robier. 
Sedi^wick,  35  Barb.  326;  Dillingham 
V.  Saow,  5  Mass.  547;  Sherwin  v. 
Bugbee,  16  Vt.  439;  Londonderry  v. 
Andover,  28  Vt.  41G;  New  Boston  r. 
Dunbarton,  15  N.  H.  201;  All  Saints 
Church  V.  Lovett,  1  Hall,  191. 

^  Alorawetz  on  Corporations,  sec.  22. 
But  see  Greene  v.  Dennis,  6  Conn.  293; 
16  Am.  Dec.  58;  Selma  etc.  R.  R.  Co. 


V.  Tipton,  5  Ala.  787;  39  Am.  Dec.  344. 
^  Greene  v.  Dennis,  6  Conn.  302;  10 
Am.  Dec.  58. 

*  Morawetzon  Corporations,  sec.  21. 

*  Morawetzon  Corporations,  sec.  23; 
Merchants'  Bank  v.  Harrison,  39  Mo. 
433;  93  Am.  Dec.  285. 

*  Hagerstown  Co.  v.  Creeger,  5  Har. 
&  J.  122;  9  Am.  Dec.  495;  Busey  v. 
Hooper,  35  Md.  15;  6  Am.  Rep.  350. 

'  Holloway  v.  R.  R.  Co.,  23  Tex.  465; 
76  Am.  Dec.  68. 


610 


CU 


FORMATION. 


§344 


ho  clerk. 

granting 

:  80  as  to 

Uon  Prc8. 


corpora- 
,  after  a 
resumed, 
uch  rule 
and  pro- 
!ver  long 
it  for  in- 
it,  a  grant 

n  capable 
r  infants, 
•8  become 
>rporation 
Ld  so  may 

—That  a 

grant  of 

only  will 

of  the  cx- 

j  domestic 

aver  and 

that  the 

A.m.  Dec.  344. 
Donn.  302;  lO 

itions,  sec.  21. 
itions,  sec.  23; 
xison,  39  Mo. 

■eeger,  5  Har. 
195;  Buaey  v. 
.m.  Rep.  350. 
,23  Tex.  465; 


existence  of  a  corporation  may  be  proved  by  producing 
its  charter  and  showing  acts  of  user  under  it  lias  no  ap- 
plication to  a  corporation  formed  under  the  provisions  of 
a  general  statute,  requiring  certain  acts  to  bo  performed 
before  the  corporation  can  bo  considered  in  esse,  or  its 
transactions  possess  any  validity.*  Proof  of  user  or  cor- 
porate acts  makes  a  prima  facie  case  of  the  entity  or  iden- 
tity of  a  corporation.'  Where  a  body  professing  to  be  a 
corporation  has  been  dealt  with  expressly  as  such,  those 
who  have  so  dealt  with  it  cannot  question  its  corporate 
existence  for  the  purpose  of  charging  its  members  in- 
dividually as  if  they  were  partners.'  A  body  sued  as  a 
corporation  is  not  estopped  from  denying  its  corporate 
existence  by  reason  of  having  done  acts  which  might  have 
been  done  equally  well  by  an  unincorporated  body.*  A  copy 
of  the  articles  of  association  of  a  corporation,  filed  in  the 
county  recorder's  office,  when  officially  certified  to  as  a 
full,  true,  and  complete  copy  from  the  record,  is  admissible 
as  evidence  of  the  original  articles  which  have  been  lost." 
A  charter  granted  by  a  sister  state  or  a  foreign  country  is 
proved  like  other  foreign  laws.*  A  copy  of  an  act  to  in- 
corporate a  foreign  corporation,  to  which  is  appended  the 
certificate  of  the  secretary  of  the  state  of  such  corporation 
with  the  seal  of  the  state  affixed,  is  admissible  to  show  the 
business  of  the  corporation.'  Where  a  corporation  sues 
in  a  federal  court,  it  need  not  prove  its  corporate  existence, 
where  defendant  has  pleaded  the  general  issue  only.*  The 
corporate  existence  is  not  admitted  from  the  mere  fact 
that  one  dealing  with  it  has,  in  a  contract  with  the  com- 
pany, designated  it  by  a  name  appropriate  to  a  corporate 


'  Mokelumne  Hill  Min.  Co.  v.  Wood- 
bury, 14  Cal.  424;  73  Am.  Dec.  658. 

^  Derrenbacher  V.  R.  B.  Co.,  21  Hun, 
612;  59  How.  Pr.  283;  St.  Paul  Ins. 
Co.  V.  Allis,  24  Minn.  75. 

^  Merchants'  Bank  r.  Stone,  38  Mich. 
779. 

*  Kirkpatrick  v.  Keota  United  Pres- 
bytcrian  Church,  63  Iowa»  372. 


'  Walker  v.  Shelbyrille  and  Rush- 
ville  Turnpike  Co.,  80  Ind.  452. 

'  United  States  Bank  v.  Stearns,  15 
Wend.  314;  Society  v.  Young,  2  N.  H. 
310;  State  v.  Carr,  5  N.  H,  367. 

'  Pacific  Guano  Co.  v.  Mullen,  66 
Ala.  682. 

"  Union  Cement  Co.  v.  Noble,  15 
Fed.  Rep.  602. 


§§  345,  346 


CORPORATIONS. 


612 


body,  unless  it  is  distinctly  stated  in  the  contract  that  it  is 
an  incorporated  company.  Such  designation  admits  only 
the  existence  of  an  association  acting  under  that  name.' 

Illustrations.  —  In  a  suit  on  a  con+ract,  the  question  of  the 
corporato  oxistence  of  a  company  came  up  collaterally.  ITeld, 
Ihiit  as  it  was  only  necessary  to  prove  that  the  company  as- 
t-unied  to  act  as  a  corporation,  the  duly  identified  book  of  rec- 
ords, showing  organization  and  acts  thereunder,  was  comp' lent 
evidence  on  that  point:  Reynolds  v.  Myers,  51  Vt.  444.  On  a 
trial  a  deed  of  trust,  issued  under  its  corporate  seal  to  secure  the 
plaintiff's  debt,  and  reciting  that  the  corporation  had  been  or- 
ganized in  pursuance  of  law,  was  introduced.  Held,  admissible 
to  prove  the  defendant's  legal  existence  as  a  corporation:  Ander- 
son V.  Kanawha  Coal  Co.,  12  W.  Va.  526. 

§  345.  Prcof  of  Performance  of  Conditions  Precedent — 
How  Made. — That  conditions  precedent  have  been  duly 
performed  may  be  proved  by  the  books  and  records  of 
the  company." 


346. 


Grant  of  Corporate  Franchise  cannot  Extend 
beyond  Limits  of  State. — A  state  cannot  grant  a  fran- 
chise outside  of  its  tf^rritorial  limits,  and  therefore  the 
grant  of  a  privilege  of  acting  in  a  corporate  capacity 
cannot   extend   into  a  foreign   state  or  country.^     The 


1  Holloway  v.  R.  R.  Co.,  23  Tex. 
405;  7G  Am.  Dec.  08. 

»  Grant  v.  Coal  Co.,  80  Pa.  St.  208; 
TVood  ('.  Jeflferson  Ba;ik,  9  Cow.  194; 
Penobscot  R.  11.  Co.  v.  L)uim,  39  Me. 
688;  Ryder  v.  Alton,  13  111.  523;  Hill 
r.  Carey,  5  Ga.  239;  Duke  v.  Naviga- 
tion Co.,  10  Ala.  82;  Mokelumne  Min- 
ing Co.  V.  V/oodbury,  14  Cal.  424;  73 
Am.  Dec.  058,  the  court  saying:  "The 
general  rule  ia,  that  the  existence  of 
a  corporation  may  be  proved  by  pro- 
ducing its  charter,  and  showing  acts  of 
juscr  under  it,  but  this  rule  has  no  ap- 
plication to  a  corporation  formed  under 
the  prov  isions  of  a  ge  aoral  statute,  re- 
quiring .  ertain  acts  to  bo  performed 
before  the  corporation  can  be  consid- 
ered ill  c-sse,  or  its  transacdons  possess 
any  validity.  The  existence  of  a  cor- 
poration thus  formed  must  be  proved 
Dy  showing  at  least  a  substautial  com- 


pliance with  the  requirements  of  the 
statute.  But  there  is  a  broad  and  ob- 
vious distinction  between  i.uch  acta  as 
are  declared  to  be  necessary  steps'  to 
the  process  of  incorporation,  and  such 
as  are  required  of  tlie  individual  seek- 
ing to  become  incorporated,  but  which 
are  not  made  prerequisites  to  the  as- 
sumption of  corporate  powers.  In  re- 
p-jcct  to  the  former,  any  inaturial 
omission  will  be  fatal  to  the  existence 
of  a  corporation,  and  may  be  taken 
advantage  of,  collaterally,  in  any  form 
which  the  fact  of  incorporation  can 
properly  be  called  in  question.  In 
respect  to  the  latter,  the  corporation 
is  responsible  only  to  the  government, 
and  in  a  direct  proceeding  to  forfeit 
its  charter." 

*  Bank  of  Auf^usta  v.  Earlo,  13  Pet. 
588;  Paul  v.  Virginia,  8  Wall.  181; 
Claike  V.  Bank,  10  Ark.  516;  52  Am. 


612 

that  it  is 
mits  only 
at  name.' 

;ion  of  the 
ly.  ITeld, 
uipany  as- 
)ok  of  rcc- 
comp'^'.cnt 
44.  On  a 
secure  the 
d  been  or- 
idmissiblo 
)n:  Ander- 


icedent — 

)een  duly 
ccords  of 


t  Extend 

t  a  fran- 

efore  the 

capacity 

\''     The 

nents  of  the 
road  and  ob- 
cucli  acts  as 
ary  step?  to 
>u,  and  such 
vidual  seek- 
l1,  but  which 
!3  to  the  as- 
/■ers.  In  re- 
ly  material 
he  existence 
i,y  be  taken 
iu  any  form 
oration  can 
lestion.  In 
corporation 
;overnniout, 
g  to  forfeit 

,rle.  13  Pet. 
Walk  181; 
IG;  52  Am. 


G13 


FORMATION. 


§34G 


residence  of  a  corporation  is  in  the  state  which  created 
it,  and  in  the  place  where  its  principal  office  is.*  Tho 
memhers  of  a  foreign  corporation,  where  it  sues  or  is 
sued  in  a  United  States  court,  are  conclusively  presumed 
to  be  citizens  of  the  state  or  country  which  created  it.^ 
A  national  bank  located  in  New  York  is  a  domestic,  not 
a  foreign,  corporation,  and  may  sue  as  such.'  A  corpora- 
tion does  not,  by  purchasing  and  operating  property  in 
another  state,  under  enabling  acts  of  that  state,  become  a 
corporation  of  that  state.*  In  New  York  a  corporation 
created  by  the  laws  of  that  state  is  deemed  a  resident 
thereof,  although  the  bulk  of  its  property  and  l)usiuess 
lies  in  a  foreign  state.'  When  the  charter  of  a  corpora- 
tion in  one  state  is  duplicated  ir    another  state,  and  tho 


Dec.  218;  AUeghciiy  v.  R.  R.  Co., 
51  Pa.  St.  228;  88  Am.  Dec.  579;  Bal- 
timore etc.  R.  R.  Co.  r.  Glenn,  28 
Mil  287;  92  Am.  Dec.  CSS;  Phoenix 
Ins.  Co.  V.  Com.,  5  Bush,  OS;  96  Am. 
Dec.  331.  A  court  may  enjoin  it  with- 
out intrusting  property  in  litigation 
to  the  custody  of  a  non-resident,  under 
circumstances  indicating  an  intention 
to  remove  it  for  kt  ng  or  manage- 
ment outside  of  til'  ate:  Matthews 
V.  Theological  Seminary,  2  Brewst. 
5U.  In  Miller  r.  Ewer,  27  Me.  509, 
4.5  Am.  Dec.  619,  the  court  say: 
"There  are  a  variety  of  corporations. 
It  will  only  be  necessary  on  this  occa- 
.sion  to  speak  of  one  class  of  them, 
corporations  aggregate,  composed  of 
natur  il  persons.  It  is  often  stated  in 
the  books  that  such  a  corporation  is 
created  by  its  charter.  This  is  not 
precisely  correct.  Tho  charter  only 
confers  tho  power  of  life,  or  tho  right 
to  come  into  existence,  and  provides 
the  instruments  by  which  it  may  be- 
come an  artificial  being,  or  acting  en- 
tity. Such  a  corporation  has  ueen 
well  defuied  to  !)e  an  artificial  being, 
invisible,  intangible,  and  existing  only 
in  cr.ntemplation  of  law.  The  instru- 
ments provided  to  bring  tho  artificial 
being  into  life  and  active  operation 
are  the  persons  named  in  tho  charter, 
and  thoso  who,  by  virtuo  of  its  pro- 
visions, mny  become  associated  with 
them.    Those  persons  or  corporationfi, 


as  natural  persons,  have  no  such  power. 
The  charter  confers  upon  them  a  new 
faculty  for    this  purpose;    a   faculty 
which  they  can  have  only  by  virtue  of 
the  law  which  confers  it.     That  law 
is  inoperative  beyond  the  bounds  of 
the  legislative  power,  by  which  it  is 
enacted.     As  tho  corporative  faculty 
cannot  accompany  the  natural  persons 
beyond  the  bounds  of  the  sovereignty 
which    confers  it,    and    they   cannot 
possess  or  exercise  it  there,  —  can  have 
no  more  power  there  to  make  the  arti- 
ficial being  act  than  other  persons  not 
named  cr  assG:;iated  as  corporators,  — 
any  attempt  to  exercise  such  a  faculty 
th;;:  is  merely  a  usurpation  of  author 
ic;  by  persons  destitute  of  it,  and  act 
ing  without  any  legal  capacity  to  ac 
in  that  manner.     It  follows  that  al 
votes  and  proceedings  of  persons  xiro 
fessing  to  act  in  the  capacity  of  cor 

E orators,  when  assembled  without  the 
ounds  of  tho  sovereignty  granting 
the  charter,  are  wholly  void." 

*  Sangamon  R.  R.  Co.  i'.  ^Morgan 
Co.,  14111.  163;  56  Am.  Dec.  497. 

2  National  S.  S.  Co.  v.  Sugman,  106 
U.  S.  118. 

^  Market  Bank  v.  Pacific  Bank,  64 
How.  Pr.  1. 

*  Wilkinson  v.  R.  R.  Co.,  22  Fed. 
Rep.  353. 

s  Crowley  v.  R.  R.  Co.,  30  Barb. 
99;  Inter.  Life  As.  Co.  v.  Sweetland, 
14  Abb.  Pr.  240. 


§347- 


COBPORATIONS. 


614 


legislature  assumes  to  create  a  Jiome  corporation,  the 
eflfect  is  to  consolidate  the  two;  but  for  purposes  of  juris- 
diction it  is  a  separate  corporation  within  the  state  of  its 
adoption/  A  railroad  corporation  chartered  in  Indiana, 
with  authority  to  own  and  manage  property  in  Ohio,  is 
not  thereby  empowered  to  change  its  domicile  to  that 
state.^  A  corporation  chartered  by  two  states  by  the  same 
name  and  style,  clothed  with  the  same  powers,  and  in- 
tended to  accomplish  the  same  objects,  fulfilling  the  same 
duties  in  both  states,  is  a  distinct  and  separate  bd  ■  in 
each  state.^  The  new  corporation  resulting  froi  tho  con- 
solidation of  a  domestic  and  a  foreign  corporation  is  a 
domestic  corporation.* 

Illustrations.  —  A  New  York  corporation  was  authorize- 1  by 
its  charter  to  hold  real  estate  and  to  act  as  trustee,  and  way  ap- 
pointed by  a  New  York  court  trustee  under  the  will  of  a  citizen 
of  that  state.  Held,  that  it  had  no  power  to  hold  real  esta*o  of 
the  testator  in  Illinois:  United  States  Trust  Co.  y.  Lee^l''  ]\L 
142;  24  Am.  Rep.  236.  A  foreign  corporation  took  a  morigaj;': 
on  lands  in  New  Jersey,  to  secure  a  loan  already  made  to  the 
mortgagor  on  stock  collateral,  which  became  depreciated.  Held, 
that  although  its  charter  may  not  have  authorized  the  taking 
of  a  mortgage  in  another  state  as  an  original  investment,  yet 
the  corporation  might  take  such  mortgage  by  way  of  additiaual 
security:  National  Trust  Co.  v.  Murphy,  30  N.  J.  Eq.  408. 

§  347.  But  by  Comity  Foreign  Corporations  are  Per- 
mitted to  do  Business. — But  by  the  comity  of  states,  cor- 
porations chartered  by  foreign  states  are  permitted  to 
carry  on  their  business  and  operations  within  the  powers 
granted  by  their  charters  in  states  outside  the  state  which 
chartered  them.^  Acts  done  by  a  corporation  out  of  the 
state  which  created  it,  unless  forbidden  by  its  charter  or 
the  laws  of  the  state  in  which  it  may  attempt  to  act,  aio 

*  In  re  St.  Paul  etc.  R.  R.  Co.,  36 
Minn.  85. 

°  Bank  of  Augusta  v.  Earle,  1^  Pet. 
619;  Christian  Union  v.  Yount,  101 
U.  S.  356;  Commonwealth  v.  Milton, 
12  B.  Mon.  212;  54  Am.  Dec.  52-J;  Cow 
ell  V.  Colorado  Springs  Co.,  JOO  U.S.  55, 


» Blackburn  v.  R.  R.  Co.,  12  Flip. 
625. 

^  Aspinwall  v.  R.  R.  Co.,  20  Ind. 
492;  83  Am.  Dec.  329. 

'  County  of  Allegheny  v.  R.  R. 
Co.,  51  Pa.  St.  228;  88  Am.  Dec. 
573. 


614 


615 


FORMATION. 


§347 


,tion,  the 

of  juris- 

;ate  of  its 

Indiana, 

Ohio,  is 

3  to  that 

the  same 

,  and  in- 

the  same 

I  bo'l  '  in 

tho  con- 

tion  is  a 


lorizc]  by 

>d  was  ap- 
f  a  citi/Cn 
1  estate  of 


€e,  1  :^ 


I'l  1 

I  u.. 


ade  to  the 
ed.  Held, 
;he  taking 
;ment,  yet 
additiaual 
408. 

are  Per- 

ates,  cor- 
nitted  to 
le  powers 
•ite  which 
ut  of  the 
liarter  or 
>  act,  aie 

.  R.  Co.,  36 

irle,  nVet. 
Yount,  101 
h  V.  Milton, 
c.  52i!;  Cow- 
JIOOU.S.65. 


valid.*  But  the  state  in  giving  this  permission  may 
annex  such  conditions  thereto  as  it  wishes.^  A  Texas 
law,  recognizing  the  existence  of  a  corporation  organized 
under  Kansas  law,  and  conferring  on  it  within  Texas  the 
same  rights  and  powers  as  are  granted  it  by  Kansas, 
within  its  territory,  but  not  purporting  to  create  a  new 
corporate  body,  does  not  make  it  a  corporation  or  citizen 
of  Texas.^  A  railroad  corporation  organized  by  the  legis- 
lature of  one  state,  but  having  portions  of  its  line  in  a 
second  state,  will  be  considered  a  corporation  of  the  sec- 
ond state  so  far  as  to  be  amenable  to  its  laws.'*  So  one 
incorporated  in  Maryland,  but  leasing  and  operating  a 
railroad  in  Virginia,  is  subject  to  suit  in  Virginia,  and  is 
not  entitled  to  a  removal  of  the  cause  to  the  federal  court.^ 
A  federal  court  cannot  interfere  to  prevent  the  orga.iiza- 
tion  of  a  corporation  bearing  the  same  name  as  that  of  a 
foreign  corporation  doing  business  in  the  state.^  Tlie 
effect  of  an  omission  to  comply  with  the  requirements  of 
a  statute,  prescribing  terms  on  which  foreign  corporations 
may  do  business  within  the  state,  is  not  to  avoid  the  con- 
tracts which  agents  of  the  corporation  may  make,  but  to 
preclude  enforcing  such  contracts  until  the  statute  has 
been  complied  with  '  Soliciting  and  receiving  subscrip- 
tions for  anev.spaper  published  by  a  corporation  in  an- 
other state  is  not  "doing  business"  in  the  state.*  The 
right  of  a  foreign  corporation  to  do  business  in  a  state 
can  only  be  questioni^d  by  the  state  itself."  A  corpora- 
tion, though  doing  no  business  in  the  slate  where  it  is 


^  New  York  Floating  Derrick  Co.  v. 
New  Jersey  Oil  Co.,  3  Duer,  048: 
Mutnforu  ■*•.  American  Life  las.  etc. 
Co.,  4  N.  Y.  403;  Bar«l  v.  Foole,  12 
N.  Y.  495. 

-  State  ?>.  Lathrop,  10  La.  Ann.  398; 
Eri  1  R.  R.  Co.  v.  State,  31  N.  J.  L. 
631;  80  Am.  Dec.  220. 

'Missouri  etc.  R.  R.  Co.  v.  R.  R. 
Co.,  4  Woods,  360. 

♦  McGregor  v.  R.  R.  Co.,  35  N.  0.  L. 

lis. 


*  Baltimore  etc.  R.  R.  Co.  r.  Wif;ht- 
man,  29  Gratt.  431;  20  Am.  Rep. 
384. 

*  Lehigh  Vallcv  Coal  Co.  v.  Ham- 
blen, 23  Fed.  R,  p.  225. 

'  Wood  blowing  etc.  Co.  i'.  Cald- 
well, 54  Inu.  270;  23  Am.  Rep.  M\. 
But  sec  In  re  Comstock,  3  Saw.  218. 

''  Beard  v.  Union  and  American 
Publishing  Co.,  71  Ala   GO. 

'  Deringer  v.  Dcringer,  5  Houst. 
410;   1  Am.  St.  Rep.  150. 


§  348 


CORPORATION!!. 


GIG 


organized,  may  hold  and  deal  in  land  in  another  state.' 
A  foreign  corporation  may  buy  at  execution  sales  on 
judgments  in  its  favor,"  or  may  acquire  land  in  satisfac- 
tion of  a  debt  due  to  it."*  So  foreign  corporations  may 
sue  one  another  if  both  are  doing  business  within  the 
state,  and  the  cause  of  action  accrued  there.^  A  foreign 
corporation  cannot  purchase  and  hold  real  estate  in  Illi- 
nois beyond  what  is  necessary  for  the  transaction  of  its 
business,  or  the  collection  of  its  debts,  either  for  its  own 
benefit  or  in  trust  for  others.^ 

Illustrations. — A  company  was  incorporated  under  the 
laws  of  Pennsylvania,  and  its  charter  provided  that  it  might 
do  business  anywhere,  "except  in  the  state  of  Pennsylvania." 
Held,  that  it  could  not  do  business  in  Kansas:  Land  Grant  etc 
Co.  V.  Coffey  County,  G  Kan.  245.  A  railroad  corporation  char- 
tered in  Connecticut  bought  the  franchises  and  property  of  a 
railroad  corporation  created  vmder  the  laws  of  Connecticut  and 
Rhode  Island.  The  Rhode  Island  legislature  ratified  the  sale, 
and  autliorizcd  the  former  company  to  exercise  the  rights  thus 
acquired.  Held,  that  the  coir  oany  thus  became  the  successor  of 
the  former  company,  and  a  Uhode  Island  corporation:  Clark  v. 
Barnard,  108  U.  S.  436. 

§  348.     Subject,  however,  to    Local  Laws.  —  But  its 

charter  can  give  the  foreign  corporation  no  power  to  do 
acts  forbidden  by  the  V-.ws  of  the  country  which  it  has 
entered.®  So  a  corporation  which  cannot  take  real  estate 
by  devise  in  Hs  own  state  cannot  take  by  devise  in  another 
state.''  A  corporation  created  ii.  Connecticut  for  the  sole 
purpose  of  buying  and  selling  lands  cannot  buy  and  sell 
or  hold  in  perpetuity  lands  in  Illinois.*     A  foreign  insur- 


'  New  Hampshire  Land  Co.  v.  Til- 
ton,  19  Fed.  Hop.  73. 

^  Elston  r.  Piggott,  94  Ind.  14. 

"  Columbus  Buggy  Co.  v.  Graves, 
108  111.  459;  see  Thompson  v.  Waters, 
25  Midi.  214;    12  Am.  Rep.  243. 

*  Emersou  v.  McCormick  Harvesting 
Machine  Co.,  51  Mich.  5;  Thompson 
r.  Waters,  25  Mich.  211;  12  Am.  Rep. 
243. 

'•>  United  States  Trust  Co.  v.  Lee,  73 
III.  J 42;  24  Am.  Rep.  236. 


•M.inor  v.  Railroad  Co.,  53  N.  Y. 
363;  Bard  v.  Poole,  12  N.  Y.  505; 
Stetson  n  Bank,  2  Ohio  St.  174;  Lewis 
V.  Bank,  12  Ohio,  132;  40  Am.  Dec. 
469;  Bank  v.  Earle,  13  Pet.  539;  Blair 
V.  Ins.  Co.,  10  Mo.  559;  47  Am.  Dec. 
129;  People  v.  R.  R.  Co.,  48  Barb. 
478. 

'  Starkweathers.  Am.  Bible  Soc.,  72 
111.  50;  22  Am.  Rep.  133. 

*  Carroll  v.  East  St.  Louis,  67  111. 
568;  16  Am.  Rep.  632. 


61G 


617 


FORMATION. 


§348 


Qother  state.* 
ion  sales  on 
I  in  satisfac- 
orations  may 
s  within  the 
.■*  A  foreign 
istate  in  Illi- 
action  of  its 
r  for  its  own 

?d  under  the 
that  it  might 
ennsylvania." 
and  Grant  etc. 
poration  char- 
proporty  of  a 
nnecticut  and 
tified  the  sale, 
be  rights  thus 
le  successor  of 
tion:   Clark  v. 

S. — But  its 
power  to  do 
irhich  it  has 

0  real  estate 
e  in  another 

for  the  sole 
3uy  and  sell 
reign  insur- 

1  Co.,  5.3  N.  Y. 
12  N.   Y.    505; 

3  8t.  174;  Lewis 
;  40  Am.  Dec. 
Pet.  539;  Blair 

9;  47  Am.  Deo. 
Co.,  48  Barb. 

n.  Bible  Soc.,72 
33. 
Louia,  G7  111. 


ance  company  cannot,  without  first  complying  with  the 
state  laws  enacted  for  its  regulation,  make  contracts 
which  it  may  enforce;  and  where  the  company  fails  to  file 
the  statement  of  its  condition  and  the  consent  of  the 
auditor  to  transact  business  within  the  state,  as  required 
b}'^  law,  the  company  cannot  recover  on  a  note  given  in 
such  state  for  stock  and  premiums,  notwithstanding  the 
law  imposes  a  penalty  for  doing  business  in  such  state  in 
violation  of  its  provisions.*  A  prohibition  against  foreign 
corporations  doing  business  in  the  state,  without  'laving 
a  known  place  of  business  therein,  and  an  agent  on  whom 
process  may  be  served,  does  not  prohibit  a  single  contract 
of  sale  by  a  foreign  corporation  to  a  citizen  of  the  state, 
and  the  maintenance  of  an  action  in  the  state  by  the  cor- 
poration for  a  breach  of  the  contract.^  Comity  cannot 
extend  to  the  point  of  granting  to  a  foreign  corporation 
privileges  which  its  charter  does  not  permit  it  to  exercise; 
and  in  applying  for  privileges,  it  must  show  that  it  lias 
power  to  exercise  them.^  In  a  suit  by  a  foreign  corpora- 
tion, it  must  show  not  only  the  papers  and  proceedings  of 
incorporation,  but  the  statute  of  the  state  where  it  was 
incorporated,  authorizing  such  incorporation.* 

Illustrations. — A  Maryland  corporation  is  authorized  by 
its  charter  to  take  and  receive  devises.  A  devise  is  made  to  it 
in  New  York,  but  by  the  laws  of  New  York  devises  to  corpora- 
tions are  not  legal.  Held,  thnt  the  corporation  cannot  take: 
White  V.  Howard,  46  N.  Y.  144.  A  corporation  is  authorized 
by  its  charter  to  charge  on  its  loans  a  rate  of  interest  wliicli  by 
the  laws  of  the  state  of  B  is  usurious.  Held,  that  it  cannot 
charge  that  rate  in  the  state  of  B:  Hitchcorl:  v.  Banl-,  7  Ala.  435. 
A  corporation  by  its  charter  was  prohibited  from  lending  nioney 
at  a  rate  of  interest  exceeding  the  legal  rate.  It  lent  money  in 
another  state  at  a  rate  of  interest  which,  although  legal  there, 
was  higher  than  the  legal  rate  in  the  state  of  its  incorporation. 
Held,  within  its  powers:  United  States  Mortgage  Co.  v.  Sperry, 
24  Fed.  Rep.  838.     A  statute  required  agents  of  foreign  corpo- 

'  Cincinnati     etc.     Assur.     Co.     v.  U.  S.  727;  Sherwood  v.  Alvis,  83  Ala. 

llosenthal,   55   111.   85;    8   Am.    Rep.  115;  3  Am.  St.  Rep.  005. 
020.  »  Match  Co.  r.  rowers,  51  Mich.  145, 

*  Cooper  Mfg.  Co.  v.  Ferguson,  113        *  Savage  v.  Ruaaell,  84  Ala.  103. 


§349 


CORPORATIONS. 


G18 


rations  to  file  in  certain  offices  evidence  of  their  appointment, 
and  of  their  authority  to  accept  service  of  process  for  the  cor- 
poration, and  imposed  a  penalty  on  them  for  failing  so  to  do; 
and  provided  that  no  such  corporation  should  enforce  a  contract 
made  with  its  agents  before  compliance  with  the  act.  Held,  — 
1.  That  the  act  did  not  apply  to  the  agent  of  a  foreign  corpora- 
tion engaged  in  manufacturing  a  patented  article;  and  2.  That 
the  act  did  not  avoid  contracts  so  made,  but  onl}  suspended  tlie 
remedy  on  them  until  the  act  was  complied  with:  Walter  A. 
Wood  Mowing  Machine  Co.  v.  Caldwell,  54  Ind.  270;  23  Am. 
Rep.  641.  A  stntute  required  foreign  insurance  companies,  as 
a  condition  pr*  dent  to  receiving  a  license  to  do  business  in 
the  state,  to  agree  not  to  remove  into  the  United  States  courts 
any  actions  brought  against  them  in  the  state  courts;  and  en- 
acted that  on  violation  of  such  agreement  by  an  insurance  com- 
pany it  should  "be  the  imperative  duty  of  the  secretary  of  state 
to  revoke  its  license."  Held,  —  1.  That  the  statute  was  consti- 
tutional; and  2.  That  the  secretary  might  be  compelled  to 
revoke  the  license  by  mandamus  at  the  relation  of  any  person 
interested:  State  v.  Doyle,  40  Wis.  175;  22  Am.  Rep.  692. 


§  349.  Citizenship  of  Gorporations  within  Federal 
Laws. — The  cojistitution  of  the  United  States  provides 
that  the  judicial  power  of  the  United  States  shall  extend 
to  "controversies  between  citizens  of  the  different  states," 
and  that  the  laws  made  in  pursuance  of  the  constitution 
shall  bo  the  supreme  law  of  the  land.  The  judiciary  acts 
provide  that  in  any  suit  of  a  civil  nature  at  law  or  in 
equity,  where  the  matter  in  dispute  exceeds,  exclusive  of 
costs,  the  sum  or  value  of  five  hundred  dollars,  in  which 
there  is  a  controversy  between  the  citizens  of  different 
states,  the  United  States  courts  shall  have  jurisdiction.' 
It  was  at  first  held  in  the  federal  courts  that  a  corporation 
was  not  a  "citizen"  within  these  provisions.''  But  this 
decision  has  been  overruled,  and  it  is  now  settled  that  a 
corporation  is  a  citizen  of  the  state  which  created  it.* 
A  corporation  chartered   and   created   by  two  or  more 

1  Act  1789,  1  Stats.  79,  c.  20,  aec.  '■'  U.  S.  v.  Devaux.  5  Oanch,  CI. 

12;   Act  180(5,  14  Stats.  306,    c.  288;  »  R.   R.  Co.  v.  Whitton,   13  Wall. 

Act  18G7.  14  Sfcats.  388,  c.  196;  Act  270;  Marshall  v.  R.  R.  Co.,  16  How. 

1S75,  18  Stain.  SO,  c  137.  329. 


618 

ointment, 
r  the  cor- 
80  to  do; 
a,  contract 
Held,— 
1  corpora- 
d  2.  That 
ended  the 
Walter  A. 
I;  23  Am. 
panics,  as 
asincss  in 
ites  courts 
;  and  en- 
ance  com- 
ry  of  state 
as  consti- 
ipelled  to 
,ny  person 
692. 


Federal 

provides 

11  extend 

t  states," 

istitution 

iary  acts 

aw  or  in 

elusive  of 

in  which 

different 

sdiction.^ 

rporatiou 

But  this 

ed  that  a 

eated  it.^ 

or  more 


inch,  61. 

13  Wall. 
0.,  10  How. 


G19 


FORMATION. 


§  350 


n 


states  is  a  citizen  of  each  state.*  Where  existing  corpora- 
tions of  different  states  are  authorized  by  their  respective 
states  to  consolidate  and  form  one  and  the  same  company, 
such  corporation  is  a  citizen  of  each  state.' 

§  350.  Foreign  Corporations  may  be  Sued. — A  foreign 
corporation  may  be  sued,  provided  it  is  brought  into  court 
in  a  proper  way.'  For  a  tort  committed  by  a  foreign 
corporation  within  a  state,  such  corporation  is  liable  to 
be  sued  therein  if  found  in  the  state  in  the  person  of  an 
officer  or  agent  upon  whom  process  may  be  served.'*  The 
members  of  a  corporation  are  legally  presumed  to  be  citi- 
zens of  the  state  by  the  laws  of  which  it  was  created,  and 
in  which  alone  the  corporate  body  has  a  legal  existence. 
And  a  suit  by  or  against  such  corporation  in  its  corporate 
name  must  be  presumed  to  be  a  suit  by  or  against  citizens 


'  Ohio  etc.  R.  R.  Co.  v.  Wheeler,  1 
Black,  280;  Insurance  Co.  v.  Francis, 
11  Wall.  210;  R.  R.  Co.  v.  Whitton, 
13  Wall.  270.  In  Baltimore  etc.  R. 
R.  Co.  V.  Harris,  12  Wall.  82,  the 
court  held  that  a  legislative  enactment 
of  one  state,  "connrming"  an  act  of 
incorporation  of  another  state,  and 
granting  the  same  rights  and  privi- 
leges, and  subjecting  it  to  the  same 
pains  and  penalties  and  obligations  aa 
imposed  by  the  original  act,  and  re- 
serving the  same  rights,  privileges, 
and  immunities  as  is  reserved  in  the 
original  act,  did  not  create  a  new  cor- 
poration, but  granted  a  license,  and 
nothing  more;  its  unity  and  ownership 
were  unchanged,  and  therefore  such 
corporation  was  amenable  in  the  Dis- 
trict of  Columbia  for  an  injury  com- 
mitted in  Virginia. 

''  Insurance  Co.  v.  French,  18  How. 
404;  Sprague  v.  R.  R.  Co.,  5  R.  I. 
233;  Marylaid  v.  R.  R.  Co.,  18  Md. 
193. 

*  Bushel  V.  Com.  Ins.  Co.,  15  Serg. 
&  R.  176;  Lafayette  Ins.  Co.  v.  French, 
18  How.  407;  City  Fire  Ins.  Co.  v. 
Carrugi,  41  Ga.  670;  North  Mo.  R.  R. 
Co.  V.  Akers,  4  Kan.  453;  90  Am.  Dec. 
183;  Foigerv  lus,.  Co..  89  Mass.  267: 


96  Am.  Dec.  747.  In  Libby  v.  Hodgson, 
9N.  H.  394, Wilcox,  J.,  said:  "If,  upon 
principles  of  law  or  comity,  corpora- 
tions created  in  one  jurisdiction  are  al- 
lowed to  hold  property  and  maintain 
suits  in  auof  her,  it  would  be  strange  in- 
deed if  the}  should  not  also  be  liable  to 
be  sued  in  ,ho  same  jurisdiction.  If  we 
recognize  tlieir  existence  for  one  pur- 
pose, we  must  also  for  the  other.  If 
we  admit  and  vindicate  their  rights, 
even-handed  justice  requires  that  we 
9,lso  enforce  their  liabilities,  and  not 
send  our  citizens  to  a  foreign  jurisdic- 
tion in  quest  of  redress  for  injuries 
committed  here.  There  may  be  diffi- 
culties in  procuring  legal  service  of  a 
writ  upuQ  a  foreign  corporation;  and 
so,  in  case  of  an  individual  residing  in 
a  foreign  jurisdiction,  it  may  be  diffi- 
cult or  impossible  to  procure  such  ser- 
vice of  process  upon  him  as  to  subject 
him  to  the  jurisdiction  of  our  courts. 
But  in  either  case,  when  the  service 
can  be  made,  or  when  the  person  of 
the  corporation  appears  and  submits 
to  our  jurisdiction,  we  see  no  objection 
to  the  authority  of  the  court  to  pro- 
ceed." 

*Gray     v.     Taper-Sleeve     Pulley 
Works,  15  Fed.  Rep.  436. 


§851 


CORPORATIONS. 


620 


of  tho  state  creating  the  corporation.*  An  action  against 
a  foreign  corporation  having  an  agency  in  the  state  where 
tho  action  is  commenced  is  not  prevented  from  proceed- 
ing to  judgment  by  a  subsequent  decree  dissolving  the 
corporation  and  appointing  receivers  to  wind  up  its  af- 
fairs made  iii  the  state  of  its  creation,  unless  it  is  shown 
that  the  corporation  is  utterly  extinct.^  A  foreign  cor- 
poration can  only  be  sued  in  Massachusetts  by  means  of 
attachment  of  its  property,  unless  by  virtue  of  an  express 
statutory  provision.' 

Illustrations.  —  The  provisions  of  a  statute  of  Pennsylvauia 
limited  the  amount  of  the  debts  and  liabilities  (not  including 
capital  stock)  of  certain  companies  to  the  amount  of  their  capi- 
tal actually  paid  in,  and  further  provided  that  "if  any  debts 
or  liabilities  shall  be  contracted  exceeding  the  said  amount,  the 
directors  and  officers  contracting  the  same,  or  assenting  thereto, 
shall  be  jointly  and  severally  liable,  in  their  individual  capaci- 
ties, for  the  wh  ole  amount  of  such  excess,  and  the  same  may  be 
recovered  by  action  of  debt  as  in  other  cases."  In  an  action  to 
recover  for  a  violation  of  this  statute,  held,  that  the  liability  so 
created  was  in  the  nature  of  a  penalty,  and  was  not  enforceable 
by  action  outside  of  the  state  which  enacted  the  law:  First  Na- 
tional Bank  of  Plymmith  v.  Price,  33  Md.  487;  3  Am.  Rep.  204. 

§  351.    Service  of  Process  on  Foreign  Corporations. — 

At  common  law,  service  of  process  on  the  managing  agent 
of  the  corporation  in  the  state  is  the  usual  mode  of  obtain- 
ing jurisdiction.*  But  it  is  generally  provided  by  statute 
that  service  on  certain  agents  of  a  foreign  corporation 
shall  be  good,^  or  that  the  corporation  shall  designate  an 
attorney  on  whom  service  of  process  may  be  made."  Ser- 
vice of  process  upon  an  officer  of  a  foreign  corporation, 
who  is  temporarily  in  another  state,  and  who  does  not 
voluntarily  appear  to  the  action,  does  not  give  the  courts 


'  Hobbs  V.  Insurance  Co.,  56  Me. 
4)7;  90  Am.  Dec.  472. 

*  Huntf.  Insurance  Co.,  55  Mo.  290; 
92  Am.  Dec.  592. 

^  Andrews  v.  Railroad  Co.,  99  Mass. 
634;  97  Am.  Dec.  61. 


*  Newby  v.  Manufacturing  iJo.,  L. 
R.  7  Q.  B.  293;  Libby  v.  Hodgson,  9 
N.  H.  394. 

^  M  orawetz  on  Corporations,  sec.  524. 

«  Gibbs  V.  Queen  Ins.  Co.,  C3  N.  Y. 
114;  20  Am.  Rep.  513. 


620 

n  against 
ate  where 
I  proceed- 
Iving  the 
up  its  af- 
is  shown 
eign  cor- 
means  of 
n  express 

nsylvauia 
including 
iheir  capi- 
any  debts 
nount,  the 
g  tiiereto, 
al  capaci- 
le  may  bo 
I  action  to 
lability  so 
iforceable 
First  Na- 
Rep.  204. 

itions. — 

ng  agent 
f  obtain- 
y  statute 
poration 
gnate  an 
e.«  Ser- 
joration, 
rloes  not 
le  courts 

mg  Oo.,  L. 
Hodgson,  9 

ns,  sec.  524. 
.,  63  N.  Y. 


621 


rORMATICN. 


§351 


of  that  state  jurisdiction  over  the  corporation.'  But  it  is 
not  necessary  under  the  Michigan  statute  that  the  officer 
or  agent  of  a  corporation  upon  whom  scrvioe  is  made 
while  in  the  state  should  be  in  the  state  upon  official 
business  for  his  corporation,  or  be  specially  authorized 
by  it  to  receive  service  of  process.^  A  voluntary  appear- 
ance  of  a  foreign  corporation  will  confer  upon  a  court 
having  jurisdiction  of  the  subject-matter  full  power  to 
decide  the  matter  in  controversy,  and  the  defendant  cor- 
poration  cannot  afterwards  set  up  as  a  defense  want  of 
jurisdiction  of  the  person.' 

wl^^*iry  ^S-^o4*^.^°'A'^^'    Co..  61   Mich.  226;   1  Am.  St.  Rep. 
way,    43    Mo.    105;    97    Am.    Dec.     571.  ^ 

^'^cu-  n     T        r^  ^  ^  North  Missouri  R.  R.  Co.  v.  Akera. 

Shackle  Iron  Co.  v.  Construction    4  Kan.  388;  96  Am.  Dec.  183. 


CORPORATIONS. 


622 


CHAPTER   XXV. 

THE  POWERS  OP  CORPORATIONS  AND  THE  VALmiTY  OF  COR. 

PORATE  ACTS. 


S  352.  Powers  of  corporation  are  only  those  conferred  by  charter. 

S  353.  Acts  or  contracts  of  corporations  in  violation  of  rules  of  law. 

§  354.  Acts  or  contracts  of  corporations  in  violation  of  statutes. 

§  355.  Acts  or  contracts  of  corporations  in  violation  of  charter. 

fi  35G.  Statutory  prohibition  against  exercising  powers  not  granted  by  charter. 

§357.  Prohibitions  in  charter — If  legislative  intent  be  that  prohibited  act 

shall  be  void,  courts  will  so  hold. 

I  358.  Prohibitions  in  charter  —  AlUer  where  prohibition  is  merely  for  benefit 

of  share-holders. 

8  359.  Prohibitions  in  charter  —  Formalities  prescribed  by  charter. 

%  360.  Acts  of  majority  of  corporators  bind  corporation. 

8  361.  But  only  where  act  is  authorized  by  charter. 

§  362.  Contracts  ultra  virea  —  May  be  avoided  if  unexecuted. 

S  363.  Defense  of  ultra  vires  —  Not  good  against  person  without  notice. 

§  364.  Transfers  of  property  —  Valid  though  ultrc  oirea. 

8  365.  Executed  contracts  —  Valid  though  ultrn  virea. 

%  366.  Contracts  unenforceable  because  ultra  v.  'ea — Benefits  received  must  be 

repaid. 

8  367.  Corporations  liable  for  torts. 

8  368.  Corporation  liable  for  torts  committed  in  ultra  virea  transaction. 

8  369.  De  facto  corporation — Validity  of  acts  of. 

8  370.  Fraud  in  obtaining  charter — Misuser  or  non*user  no  defense  in  collat* 

eral  proceeding. 

8  371.  Corporation  must  be  in  existence  demure  or  de/acto. 

8  372.  Proof  of  existence  of  corporation. 

8  373.  Powers  of  corporation  are  only  those  given  by  charter. 

8  374.  Or  those  implied  from  nature  of  business. 

8  375.  Grants  of  special  privileges  to  corporations  strictly  construed. 

8  376.  What  are  franchises. 

§  377.  Franchises  cannot  be  transferred  nor  mortgaged. 

8  378.  Consolidation  of  corporations. 

8  379.  Implied  powers  of  corporations — To  purchase  and  hold  property. 

8  380.  Implied  powers  of  corporations  —  To  transfer  and  sell  property. 

8  381.  Implied  powers  of  corporations  —  To  hold  property  in  trust. 

§  382.  Implied  powers  of  corporations  —  To  take  by  devise. 

8  383.  Implied  powers  of  corporations  —  To  borrow  money  and  make  debts. 

8  384.  Implied  powers  of  corporations  —  To  mortgage  property. 

8  385.  Implied  powers  of  corporations — To  issue  negotiable  paper. 

8  386.  Implied  powers  of  corporations — To  sue  and  be  sued. 


623 


POWERS. 


352 


ived  must  be 


g  387.     Implied  powers  of  corporations  —  Other  acts. 

§  3SS.     Implied  powers  of  corporations  —  Power  of  expulsion  of  members. 

§  .389.     Implied  powers  of  corporations  —  Remedies  for  wrongful  expulsion  — 

Restoration. 
§  300.     Corporation  may  do  business  in  foreign  state. 
§  .391.     May  employ  its  surplus  or  property  to  best  advantage. 
§  392.     May  alter  its  business  to  suit  changes  of  time  and  circumstances. 
§  393.     Power  to  issue  preferred  stock. 

§  394.     Power  to  issue  preferred  stock  —  Eights  of  preferred  stockholders. 
§  395.     Power  to  alter  charter. 
§  390.     Power  to  alter  charter  —  What  not  "alterations"— •Grant  of  additional 

franchises  —  Discharge  of  obligations  to  state. 
§  397.     Effect  of  alteration  on  stockholder's  liability. 
§  398.     Caunot  engage  in  different  business  from  that  which  it  was  chartered 

to  engage  in  —  Illustrations. 
§  399.     Authority  to  wind  up  business. 
§  400.    No  implied  power  to  enter  into  partnership. 
§  401.     No  implied  power  to  deal  in  shares  of  other  covporations. 
§  402.    No  implied  power  to  alter  amount  of  capital  stock,  or  purchase  its  own 

shares. 
§  403.    No  implied  power  to  give  away  property  gratuitously. 
§  404.     The  corporation  name. 
§  405.    The  corporation  seal. 

§  362.  Powers  of  Corporation  are  only  Those  Conferred 
by  Charter. — A  corporation  has  only  such  rights  and 
powers  as  are  expressly  conferred  by  its  charter,  or  as  are 
necessary  to  carry  its  rights  and  powers  into  effect.*  The 
term  ultra  vires,  when  used  in  reference  to  corporations, 
is  employed  in  different  senses.  An  act  is  said  to  be  ultra 
vires  when  it  is  not  in  the  power  of  the  corporation  to 
perform  it  under  any  circumstances;  and  an  act  is  also 
said  to  be  ultra  vires  with,  reference  to  the  rights  of  certain 
parties,  when  the  corporation  cannot  perform  it  without 
their  consent;  and  it  may  also  be  ultra  vires  with  reference 


nake  debts. 


'  Head  v.  Providence  Ins.  Co.,  2 
Cranch,  127;  New  York  Fireman's  Ins. 
Co.  V.  Ely,  5  Conn.  560;  13  Am.  Dec. 
100;  Leggett  v.  New  Jersey  Mfg.  Co., 
1  N.  J.  Eq.  641;  23  Am.  Dec.  728; 
Franklin  Co.  v.  Lewiston  Inst,  for  Sav- 
ings, 68  Me.  43;  28  Am.  Rep.  9; 
Matthews  v.  Skinker,  62  Mo.  329;  21 
Am.  Rep.  425;  Weckler  v.  Bank,  42 
Md.  581;  Commonwealth  V.  R.  R.  Co., 


27  Pa.  St.  339;  67  Am.  Dec.  471 ;  Daxt- 
mouth  College  V.  Woodward,  4  Wheat. 
636;  Beatty  v.  Marine  Ins.  Co.,  2 
Johns.  109;  3  Am.  Dec.  401;  People 
V.  Utica  Ins.  Co.,  15  Johns.  358;  8 
Am.  Dec.  243;  State  v.  Mayor  of  Mo- 
bile, 5  Port.  279;  30  /  Dec.  504; 
Chicago   G.  L.  Co.  v.  1  's  G.  L. 

Co.,  121  111.  530;  2  Aiu.  St.  Rep. 
124 


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Hiotographic 

Sciences 

Corporation 


23  WEST  MAIN  STREET 

WEtSTER.N.Y.  USSO 

(716)  872-4503 


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5§  353,  354 


COEPORATIONS. 


624 


to  some  specific  purpose,  when  the  corporation  cannot 
perform  it  for  that  purpose.*  When  the  act  of  the  cor- 
poration is  ultra  vires  in  the  first  sense,  it  is  void  in  toto, 
and  the  corporation  may  avail  itself  of  the  plea;  but  when 
it  is  ultra  vires  in  the  second  or  third  sense,  the  right  of 
the  corporation  to  avail  itself  of  the  plea  will  depend  upon 
the  circumstances  of  the  case.^  Corporations  are  pre- 
sumed to  contract  within  their  powers;  and  general  words 
used  in  a  corporate  contract,  which  admit  a  double  con- 
struction, will  be  construed  consistently  with  the  charter.' 
A.  corporation  which  sets  up  a  lack  of  power  to  do  a  par- 
ti" oular  act  within  the  scope  of  its  general  powers  assumes 
t!  <  L^rden  of  proving  such  defense.*  The  burden  of 
showing  that  any  contract  of  a  corporation  exceeds  its 
oc  porate  powers  rests  on  the  party  objecting.'  A  cor- 
poration acting  within  the  scope  of  its  authority  has  all 
the  powers  of  ordinary  persons.* 

§  353.  Acts  or  Contracts  of  Corporations  in  Violation 
of  Rules  of  Law. — Any  contract  made  or  act  done  by  a 
corporation,  contrary  to  a  rule  of  law,  is  as  invalid  as 
such  a  contract  or  act  wtmld  bo  in  the  case  of  an  indi- 
vidual.^ 

§  354.  Acts  or  Contracts  of  Corporations  in  Violation 
of  Statutes. — The  same  principle  applies  to  contracts  or 
acts  prohibited  by  statute.®  Thus  it  has  been  held  that 
a  statute  providing  that  in  addition  to  the  powers  enu- 
merated in  the  first  section  of  the  act  (which  are  the  or- 
dinary powers  of  all  corporations),  "and  to  those  expressly 


'  Miner's  Ditch  Co.  v.  Zcllcrbach, 
37  Cal.  543;  99  Am.  Dec.  300. 

2  Miner's  Ditch  Co.  v.  Zellerbach, 
37  Cal.  M3;  99  Am.  Dec.  300. 

'Morris  etc.  R.  R.  Co,  v.  R.  R. 
Co.,  20  N.  J.  Eq.  542. 

*  Kappel  V.  Chaari  Zedek  Congrega- 
tion, 19  Hun,  3G4. 

*  Downing  v.  Mount  Washington 
etc.  Co.,  40  N.  H.  230. 


•Deringer's  Adm'r  v.  Deringcr'a 
Adm'r,  5  Houst.  416;  1  Am.  St.  Rep. 
150. 

7  Thomas  v.  R.  R.  Co.,  101  U.  S.  71; 
Hartford  K.  R.  Co.  v.  R.  R.  Co., 
3  Robt.  416;  Messenger  v.  R.  R. 
Co.,  36  N.  J.  L.  413;  13  Am.  Rep. 
457. 

*  Pangborn  v.  Westlake,  36  Iowa, 
646;  Harria  v.  Runuels,  12  How.  79. 


624 


625 


POWERS. 


§§  355,  350 


given  in  its  charter,  or  in  ti  e  act  under  which  it  is  or 
shall  be  incorporated,  no  corporation  shall  possess  or  exer- 
cise any  corporate  powers  except  such  as  shall  be  necessary 
to  the  exercise  of  the  powers  so  enumerated  and  given," 
—  is  a  prohibition  of  any  acts  not  within  the  scope  of  the 
powers  permitted.* 

§  355.  Acts  or  Contracts  of  Corporations  in  Violation 
of  Charter. — The  same  principle  also  applies  where  the 
act  or  contract  is  in  violation  of  any  provision  in  the 
charter  or  act  of  incorporation.^  Where  a  bank  charter 
provides  that  no  director  shall  be  indebted  to  it  beyon<l 
a  certain  amount,  a  note  given  to  it  by  a  director  beyond 
that  amount  is  void.'  Parties  dealing  with  corporations 
are  chargeable  with  notice  of  the  limitations  imposed  by 
the  charter  upon  their  powers,* 

§  356 .  Statutory  ^Prohibition  against  Exercising  Powers 
not  Granted  by  Charter.  —  Where  a  sta'ute  prohibits  a 
corporation  from  exercising  any  powers  or  doing  any  act 
except  those  granted  to  it  by  its  charter,  it  is  held  in 
some  states  that  contracts  made  or  acts  done  in  violation 
of  such  statute  are  void.**  In  other  states,  such  a  provision 
is  not  considered  as  rendering  such  unauthorized  con- 
tracts or  acts  wholly  void.® 


)eringcr  a 
St.  Rep. 


lU.  S.  71; 
R.   Co., 
R.   R. 
&ep. 


Lm. 


|36  Iowa, 
low.  79. 


»  Morris  etc.  R.  R.  Co.  v.  R.  R. 
Co.,  23  N.  J.  Eq.  542. 

^Taylor  v.  R.  R.  Co.,  L.  R.  2  Ex. 
379;  I:i  iM<_'oik  R.  R.  Co.,  L.  R.  4Ch. 
App.  748;  In  re  Hitchcock,  7  Ala., 
N.  S.,  3So;  I'hiladulplua  Loiiu  Co.  i\ 
Towner,  13  Caiiu.  249;  Whitney  v. 
Peay,  24  Ark.  22;  Rutland  R.  R.  Co. 
V.  Proctor,  29  Vt.  93;  Ohio  Life  Ins.  Co. 
r.  Merciiaiitd' Ins.  Co.,  11  Uuniph.  24; 
63  Ain.  Dec.  742;  State  Board  v.  R.  R. 
Co.,  47  lud.  411;  Wood  Mac.  Co,  v. 
Caldwell,  54  luil.  271;  Bankr.  Owens, 
2  Pet.  527;  Martin  v.  ZoUerbach,  38 
Cdl.  .300;  99  Am.  Dee.  365;  Crocker  v. 
Whituey,  71 N.  Y.  161;  People  f.  Utica 
Vol.  L- 40 


Ins.  Co..  15  Johns. 583;  8  Am. Dec.  243; 
Bank  ?•.  Swayue,  8  Ohio,  2.')7;  32  Am. 
Dec.  707;  Sherwood  v.  Alvis,  83  Ala. 
115;  3  Am.  St.  Rep.  095. 

•'  Workingmcn'.s  Banking  Co.  v. 
Rautenberg,  103  111.  4G0;  42  Am.  Rep. 
26. 

*  Franklin  Co.  v.  Lcwiston  Insti- 
tution for  Savings,  08  Me.  43;  28  Am. 
Rep.  9. 

"  Ashbury  R.  R.  Co.  v.  Riche,  L.  R. 
7  H.  L,  053;  Morris  etc.  R.  R.  Co.  r. 
R.  R.  Co.,  20  N.  J.  Eq.  542. 

"  Whitney  Arms  Co.  v.  Barlow,  OS' 
N.  Y.  62:  20  Air..  Hep.  504;  Moss  v. 
AvereU,  10  N.  Y.  460. 


§§  357,  358 


CORPORATIONS. 


626 


§  357.  Prohibitions  in  Charter — If  Intent  of  Legisla- 
ture was  that  Prohibited  Act  should  be  Void,  Courts  will 
so  Held.  —  Where  it  appears  clear  from  the  words  of  the 
charter  that  tlie  legislature  intended  that  a  forbidden  act 
or  contract  should  be  absolutely  void,  it  will  bo  so  held 
by  the  courts.' 

ILLUSTH..VT10NS. —  The  charter  of  a  bank  prohibits  it  from 
charging  interest  in  excess  of  a  certain  rate.  A  contract  violat- 
ing this  provision  is  void:  Bank  v.  Owens,  2  Pet.  527;  Bank  v. 
Sivaync,  8  Ohio,  257.  A  statute  prohibits  any  banking  corpora- 
tion from  issuing  or  circulating  any  bill  or  note  not  payable  on 
demand  and  without  interest.  A  bill  or  note  issued  contrary 
to  this  enactment  is  void:  Tranj  v.  Tallmagc,  14  N.  Y.  162;  67 
Am.  Dec.  132.  A  statute  makes  it  unlawful  for  the  agents  of 
foreign  insurance  companies  to  transact  business  before  procur- 
ing a  certificate  of  authority  from  the  state.  A  promissory  note 
given  to  an  insurance  company  which  had  not  obtained  tlie 
certificate  is  void:  Cincinnati  etc.  Ass^n  Co.  v.  Rosenthal,  55  111. 
85;  8  Am.  Rep.  626. 

§  358.  Aliter  where  Prohibition  is  Merely  for  Benefit 
of  Share-holders. — On  the  other  hand,  where  the  prohibi- 
tion in  a  charter  appears  to  have  been  inserted  for  the 
benefit  of  the  share-holders  only,  a  contract  or  act  in  viola- 
tion of  the  prohibition,  though  ultra  vires,  is  not  absolutely 
void,  but  may  be  executed  and  ratified  by  the  corpora- 
tion." A  statute  prohibiting  savings  banks  from  loaning 
money  on  the  security  of  names  alone  is  directory  to  the 
trustees,  and  designed  for  the  protection  of  the  deposi- 
tors, and  will  not  prevent  a  bank  from  enforcing  payment 
of  a  promissory  note,  whether  the  purchase  was  o'*  was 
not  in  conformity  with  its  provisions.'  Where  property 
which  a  corporation,  under  certain  circumstances,  is  au- 
thorized by  its  charter  to  acquire  is  purchased  in  a  mode 
or  for  a  purpose  not  authorized,  the  title  of  the  corpora- 


» In  re  Comstock,  3  Saw.  218;  Bank 
V.  Page,  G  Or.  431. 

•'  Hazlehurst  v.  R.  R.  Co.,  43  Ga. 
13;  Ayres  v.  Banking  Co.,  L.  R.  3 
P.  0.  548;  National  Bajik  v.  Matthews, 


98  U.  S.  621;  Thornton  v.  Bank,  71 
Mo.  221;  Mott  v.  U.  S.  Trust  Co.,  19 
Barb.  568. 

'  Farmington  Savings  Bank  v.  Fall, 
71  Me.  49. 


626 

3gisla- 
ts  will 
of  tVio 
en  act 
0  held 


it  from 
t  violat- 
Bank  v. 
:;orpora- 
'able  on 
jontrarv 
162;  67 
gents  of 
I  procur- 
iory  note 
incd  the 
il,  55  III. 


Benefit 

brohibi- 


m 


or  the 
viola- 
solutely 
orpora- 

oaning 
y  to  the 

deposi- 
layment 

o"  was 
)roperty 
s,  is  au- 

a  mode 

'orpora- 

Bank,  71 
i8t  Co.,  19 

Fall, 


627 


POWERS. 


359-561 


tion  to  the  property  cannot  be  defeated  by  a  party  who 
is  a  stranger  to  the  agreement  by  which  the  property  was 
acquired,  and  who  is  not  injured  by  the  transfer.'  A 
corporation  which  has  been  duly  organized  in  pursuance 
of  the  laws  of  a  state  has  the  power  to  transact  such 
business  as  its  charter  contemplates,  although  the  entire 
amount  of  the  capital  stock  as  fixed  by  tlie  charter  has 
not  yet  been  subscribed  for  or  taken.^ 

§  359.    Same — Formalities  Prescribed  by  Charter. — 

Of  provisions  of  the  kind  referred  to  in  the  last  section 
are  those  in  corporation  charters  or  acts  of  incorporation 
prescribing  certain  formalities  to  be  observed  in  corpo- 
rate acts.  Acts  done  not  in  conformance  with  these  pro- 
visions are  not  absolutely  void.' 

Illustrations.  — The  charter  requires  the  contracts  of  the 
corporation  to  be  executed  in  a  certain  form.  Held,  that  it  is 
liable  upon  its  contracts  made  in  a  different  form :  Bulklcy  v. 
Fishing  Co.,  2  Conn.  252;  7  Am.  Dec.  271;  Kilgore  v.  Bulldey, 
14  Conn.  362.  A  by-law  provided  that  contracts  signed  by  the 
president  and  p  cretary  should  be  binding.  Held,  that  this 
did  not  exclude  other  modes  of  contracting:  De  Graff  \.  Ameri- 
can etc.  Linen  Co.,  21  N.  Y.  124. 

§  360.  Acts  of  Majonty  of  Corporators  Bind  Corpora- 
tion.—  A  majority  of  the  members  of  a  corporation  may 
bind  it,  and  the  will  of  the  majority  is  presumed  to  be 
the  act  of  the  whole,  and  binds  the  dissenting  minority.* 

§  361.    But  only  where  Act  is  Authorized  by  Charter. 

— But  the  majority  can  only  bind  the  entire  body  within 
the  limits  of  its  powers,  and  therefore  a  corporation  is 
not  bound  by  a  majority  of  its  members,  unless  the  act 
was  authorized  by  the  charter.*    The  principle  of  this 


'  Ehrman  v.  Union  Central  Life  Ins. 
Co.,  .35  Ohio  St  324. 

^  Massey  v.  Citizens'  Building  etc. 
Ass'n,  22  Kan.  624. 

'Zabriskie  v.  R.  R.  Co.,  23  flow.  381; 
Bank  v.  Dandridge,  12  Wheat.  64; 
Steam  Nav.  Co.  v.  Weed,  17  Barb. 


383.     But  see  Kinzie  v.  Trustees,  3 
111.  187;  33  Am.  Dec.  443. 

*  New  Orleans  etc.  R.  R.  Co.  v.  Har- 
ris, 27  Miss.  537. 

*  Burgess's  Case,  31  L.  J.  Ch.  749; 
Nalush  V.  Irving,  Gow  on  Partner- 
ehip;  Ormaby  t;.   Vermoat  etc.   Co, 


§3G1 


CORPORATIONS. 


62S 


rule  is,  that  wlicn  several  persons  enter  into  a  contract, 
the  terms  of  the  contract  cannot  be  altered,  except  with 
the  consent  of  all.  On  this  ground  it  has  been  held  that 
a  nuijority  of  the  stockholders  cannot  accept  an  altoru- 
tion  of  their  charter,  —  even  from  the  legislature,  —  but 
lliat  the  consent  of  every  member  is  essential.*  Nor  can 
the  majority  effect  a  consolidation  with  another  corpora- 
tion.^ 


60  N.  Y.  G23;  Kean  v.  Johnson,  9  N. 
J.  Eq.  407,  where  it  is  Biiicl:  "  As 
stockhoMors,  they  own  tlic  roail  ia 
coiiiiiion,  to  be  eniphiycd  in  specifieil 
U'JL'S.  E:ieh  owns  a  tshiiro  in  the  whole, 
and  is  to  have  a  ])roi>ortio!iatc  share  iu 
itj  profits.  They  hive  invested  a  por- 
tion of  tlieir  capital  iii  it, and  in  it  alone. 
Tli-y  iiavc  a  riglit  in  tlio  road  and  in 
every  dollar  it  eariiS).  Tlio  directors 
are  tlieir  trnstoes  to  cniidoy  the  joint 
cai)it;!l  in  the  managenjent  of  the  road, 
and  the  road  only,  to  the  end  that 
from  the  inve;">tment  the  stockholders 
have  chosen  they  may  reap  the  con- 
teinplated  jtroi  ts.  An<l  this  is  the 
agreement  of  tho  stocklioldcrs  among 
themselves.  They  each  contract  with 
tho  other  that  their  money  sliall  bo  so 
employed.  Wliat  tho  majority  deter- 
mine vithht  the  Kcrifp  of  this  nuitnal 
contract,  they  each  agree  to  abide  by; 
but  tlicro  their  nuitnal  contract  ends, 
and  no  majority,  however  large,  has  a 
right  to  divert  one  cent  of  the  joint 
capital  to  any  purpose  not  consistent 
with,  and  growing  out  of,  this  original 
fundamental  joint  intention.  To  sell 
tho  road,  to  a1)andon  tho  contemplated 
investment  and  embark  in  another 
Bcheme,  whether  entirely  different,  or 
only  more  extensive  than  the  original 
contemplation  as  apparent  on  the  face 
of  the  charter,  is,  it  seems  to  me, 
clearly  contrary  to  the  rights  of  tho 
individual  stockholders.  If  they  had 
any  right  as  partners  or  beneficiaries, 
it  would  seem  to  be  this,  that  their 
mo'iey  should  be  devoted  to  that  use, 
antl  never  employed  in  any  other,  nor 
returned  to  them  before  they  desire  it. " 

*  New  Orleans  etc.  R.  11.  Co.  v.  Har- 
ris, 27  Miss.  517. 

■i  Mowery  v.  11.  R.  Co.,  4  Biss.  78; 
Clearwater  v.  Meredith,  1  Wall.  23; 
Pearce  v.  R.  R.  Co.,  21   How.  441; 


Stevens  v.  R.  R.  Co.,  29  Vt.  .'ii;.'): 
New  Orleans  etc.  P..  R.  Co.  r.  lln- 
ris,  27  Miss.  MC;  Tuttlc  v.  R.  K. 
Co.,  35  Mich.  247.  In  Lauinan  r. 
R.  R.  Co.,  30  Pa.  St.  40,  72  Am. 
Dec.  CS5,  the  court  said:  "He  [tlio 
dissenting  stockholder]  may  objint 
that  it  is  a  violation  of  the  contract  nf 
association  by  which  ho  and  his  a-<.-i)- 
'  ates  agree  to  become  one  corporate 
)mpany  for  a  given  purpose;  that  he 
united  in  tho  association  for  one  pur- 
pose, then  agreed  on,  and  now  tho 
majority  arc  diverting  their  eapit;d  to 
a  different  purpose.  This  is  a  violu- 
lion  of  chartered  contract, — not  tlio 
supposed ono  lietweon  the  governnuut 
and  the  corporators,  but  tho  one  lit'- 
twecn  tho  cor|)orators  themselves.  I  [e 
may  object  that  his  co-corporators 
have  no  power  to  make  a  new  contract 
for  him,  and  thereby  constitute  liiiii  a 
member  of  a  new  aud  different  corpn- 
ration;  for  it  is  of  tho  very  nature  ot  a 
contract  relation  that  it  can  bo  insti- 
tuted only  by  the  real  parties  to  it, 
uule.ss  it  be  a  mere  constructive  con- 
tract, which  is  only  a  convenient  furm 
or  fiction  of  law,  invented  to  enforce 
a  corresponding  legal  duty.  He  may 
object  that  oven  the  legislature  ca:i- 
not  authorize  this,  for  by  dniii,^  mi, 
they  would  authorize  the  destructicm 
of  ono  private  contract,  and  the  com- 
pulsory creation  of  another  in  its  iittail, 
and  would  take  away  the  remedy  by 
due  course  of  law,  which  tlie  dis.sc  iit- 
ing  stockholder  is  entitled  to,  because 
of  tho  departure  or  diversion  of  the 
association  from  its  agreed  purpose  •; 
and  would,  besides  this,  chaugo  the 
essential  nature  of  contracts,  wliicli 
even  legislative  power  cannot  do,  ami 
much  less  legislative  authority.  Hi' 
may  object  that,  though  iu  corporate 
action,  after  the  corporation  is  cousti- 


628 


G29 


POWERS. 


§§  3G2,  303 


I  contract, 
cccpt  willi 
held  tliat 
an  altora- 
uro,  —  but 
Nor  can 
r  corpora- 


29  vt.  ni;.-): 

.  Co.  r.   Hur- 
tle V.   R.    U. 
ti   Lauiniiii   '-. 
40,  7:2  Airi, 
d:    "Hu    [tlio 
may    object 
he  contniut  uf 
ami  his  assn- 
nno  corporal  0 
■pose;  that  ho 
I  for  ono  pur- 
anil  now  tlie 
heir  capital  ti» 
liis  is  €-1  vidla- 
ict,  — not  thi' 
10  govermiuut 
fc  tlio  oao  hc- 
lemselvo.s.   I  le 
co-corporators 
mew  contract 
nstitutc  hiin  a. 
iffurcnt  corpii- 
ry  nature  ot  a 
can  ho  insli- 
parties  to  it, 
structivo  cou- 
nvenieiit  furiii 
,;eJ  to  ciiforto 
ity.     He  i.iay 
gislaturc  ca:i- 
by  tloiiig  so, 
ic  destructicm 
anil  the  com- 
er in  its  sstcad, 
he  renieily  hy 
li  the  (lis.suit- 
ill  to,  because 
•ersion  of  tiie 
eed  purposiM; 
s,  change   tlio 
tracts,   which 
mnot  tlo,  ami 
.ithority.     He 
in  corporate.' 
tion  is  coasti- 


§  362.  Contract  Ultra  Vires  may  be  Avoided  if  Unexe- 
cuted.— A  contract  ultra  vires — that  is  to  say,  outside  of 
and  not  authorized  by  its  charter  —  may  bo  avoided  by 
either  party  so  long  as  it  remains  unexecuted.'  Courts 
^vill  not  compel  a  corporation  to  perform  a  contract  ultra 
vires."  Nor  will  they  enforce  specific  performance  of  a 
contract  ultra  vires  at  the  suit  of  the  corporation.' 

§  363.  Defense  of  Ultra  Vires— Not  Good  against  Per- 
son without  Notice. — That  the  corporation  had  no  au- 
thority to  make  a  contract  cannot  be  set  up  by  the  corpo- 
ration as  a  defense  against  a  person  who  had  no  notice  of 
such  want  of  authority.* 

Illustrations.  —  A  company,  supposing  itself  to  be  incorpo- 
rated, issued  paper  in  its  corporate  name,  but  afterwards  find- 
ing that  it  was  not  properly  organized,  it  dissolved,  and  was 
legally  incorporated  under  a  different  name.  Held,  that  it 
could  not  repudiate  its  paper:  Empire  Mfg.  Co.  v.  Stuart, 
M)  Mich.  482.  A  corporation  was  authorized  to  issue  bonds 
secured  by  mortgage  to  the  amount  of  two  thirds  of  its  capital 
paid  in,  and  it  issued  bonds  to  an  amount  less  than  two  thirds 


tuti^d,  and  its  province  defined,  the  de- 
tails of  its  business  and  the  making  of 
its  contracts  must  necessarily  be  un- 
der the  control  of  a  majority;  yet  it  is 
ot'  the  nature  of  things  that,  in  the  act 
of  constituting  the  corporation,  and  of 
taking  stock,  each  man  must  act  for 
hiiiisolf,  and  therefore  that  he  cannot, 
hy  a  vote  of  a  corporate  majority  of 
the  Lebanon  Company,  and  against 
his  consent,  bo  constituted  a  member 
of  tlio  Reading  Company. " 

•Bradley  v.  Ballard,  55  111.  413, 
8  Ain.  Rep.  C5G,  the  court  saying: 
"This  doctrine fof  estoppel]  is  applied 
only  for  the  purpose  of  compelling 
corporations  to  be  honest,  in  the  sim- 
plest and  commonest  sense  of  honesty, 
and  after  whatever  mischief  may  be- 
long to  the  performance  of  an  act  ultra 
rirea  has  been  accomplished.  But 
while  a  contract  remains  executory,  it 
is  perfectly  true  that  the  powers  of 
corporations  cannot  bo  extended  be- 
yond their  proper  limits,  for  the  pur- 
pose of   enforcing   a  contract,     xfot 


only  so,  but  on  the  application  of  a 
stochaolder,  or  of  any  other  person 
authorized  to  make  the  application,  a 
court  of  chancery  would  interfere  and 
forbid  the  execuJon  of  a  contract 
ultra  vires.  So,  too,  if  a  contract  ultra 
vires  is  made  between  a  corporation 
and  another  person,  and  while  it  is 
yet  wholly  unexecuted  the  corpora- 
tion recedes,  the  other  contracting 
party  would  probably  have  no  claim 
for  damages." 

2  Hitchcock  V.  Galveston,  90  U.  S. 
341;  Bank  v.  Niles,  Walk.  Ch.  'JO; 
New  York  etc.  R.  R.  Co.  v.  Schuyler, 
34  N.  Y.  30. 

3  Bank  v.  Niles,  1  Doug.  (Mich.) 
401;  41  Am.  Dec.  575;  Nassau  Bank 
V.  Jones,  95  N.  Y.  115. 

♦Saflford  r.  Wvckoflf,  4  Hill,  442; 
Stoneyr.  Am.  Lire  Ins.  Co.,  11  Paigo, 
035;  Bradley  v.  Ballard,  55  111.  413;  8 
Am.  Rep.  050;  Manufacturing  Co.  v. 
Canney,  54  N.  H.  290;  Page  v.  R.  R. 
Co.,  31  Fed.  Rep.  257. 


g§  0G4,  365 


CORPORATIONS. 


G30 


of  its  authorized  capital,  but  much  moro  than  the  amount  paid 
in.  Held,  that  the  bonds  were  enforceable  in  the  hands  of  bona 
fide  holders:  Ilackenaack  Water  Co.  v.  De  Kay,  36  N.  J.  Eq. 
548. 

§  364.  Transfers  of  Property  Valid  though  Ultra 
Vires. — Transfers  of  property — real  or  personal — by  or 
to  a  corporation  will  bo  recognized  as  valid,  even  though 
the  transfer  may  have  been  beyoud  the  power  or  ultra 
vires  the  corporation.' 

§  365.    Executed  Contracts  Valid  though  Ultra  Vires. 

— And  where  the  contract  has  been  performed  or  par- 
tially performed  by  either  of  the  parties,  the  other  cannot 
set  up  as  a  defense  to  an  action  that  the  corporation  had 
no  authority  to  enter  into  it.^    A  corporation  which  has 


1  Shewalter  v.  Pimer,  55  Mo.  218; 
Runyau  v.  Coster,  14  Pet.  122;  Cow- 
ell  V.  Springs  Co.,  100  U.  S.  65;  Na- 
tional Bank  v.  Matthews,  98  U.  S.  621 ; 
Barrow  v.  Nashville  etc.  Co.,  9  Humph. 
304;  Chicago  etc.  R.  R.  Co.  v.  Lewis,  53 
Iowa,  101;  Leazuret;.  Hillegas,  7  Serg. 
&  R.  313;  Groundio  v.  Northampton 
W^ater  Co.,  7  Pa.  St.  233;  Grant  v. 
Henry  Clay  Co.,  80  Pa.  St.  218;  Kelly 
V.  Transportation  Co.,  3  Or.  189;  R.  R. 
Co.  I'.  Howard,  7  Wall.  393;  Natoma 
Water  Co.  v.  Clarkin,  14  Cal.  552; 
Miner's  Ditch  Co.  v.  Zellerbach,  37 
Cal.  544;  99  Am.  Dec.  300;  Edwards 
V.  Fairbanks,  27  La.  Ann.  449;  Parish 
V.  Wlieeler,  22  N.  Y.  494;  National 
Bankv.  Porter,  125  Mass.  33?,  28  Am, 
Rep.  235;  Hough  v.  Cook  Co.  Land  Co., 
73  HI.  23;  24  Am.  Rep.  230. 

^  Morawetz  oa  Corporations,  sec. 
100;  Hitolicock  v.  Galveston,  96  U.  S. 
311;  Steam  Nav.  Co.  v.  Weed,  17 
Barb.  378;  Arnot  v.  R.  R.  Co.,  67 
N.  Y.  319;  SUte  Board  r.  R.  R. 
Co.,  47  Ind.  407;  17  Am.  Rep,  702; 
Newburg  Petroleum  Co.  v.  Weare,  27 
Ohio  St.  343;  Merchants'  Bank  v.  Cen- 
tral Bank,  1  Ga.  418;  44  Am.  Dec. 
GGo;  Germantown  Mutual  Ins.  Co.  v, 
Dhein,  43  Wis.  420;  28  Am.  Rep. 
549;  Wright  v.  Pipe  Line  Co.,  101  Pa, 
St.  204;  47  Am.  Rep.  701;  San  Fran- 
cisco Gas  Co.  V.  San  Francisco,  9  Cal, 
453;    American    Union   Tel,    Co.    v. 


R.  R.  Co.,  1  McCrary,  188.  In 
Whitney  Arms  Co.  v.  Barlow,  63 
N.  Y.  62,  20  Am.  Rep.  504,  a  com- 
pany chartered  to  manufacture  lirc- 
arms  entered  into  a  contract  to  make 
railroad  locks.  Having  made  and  de- 
livered a  large  number  of  them,  it  was 
held  that  it  could  recover  the  contract 
price.  Said  the  court:  "It  must  be 
conceded  that  tho  manufacturing  ana 
vending  of  'railroad  locks'  is  not 
within  the  purposes  for  which  tho 
plaintiff  was  incorporated,  or  within 
the  powers  conferred  by  its  charter. 
Neither  is  such  business  incidental  to 
the  purposes  of  tho  incorporation,  or 
in  any  way  necessary  to,  or,  as  far  as 
appears,  even  an  aid  in,  the  exercise  of 
the  powers  conferred  upon  the  plain- 
tiff uy  its  constitution,  so  that  it 
could  be  regarded  as  among  tho  im- 
plied powers  granted  by  tho  legisla- 
ture, and  assumed  by  the  corporators. 
Did  the  question  now  made  ariso  upon 
an  application  by  the  stockholders  and 
corporators,  to  restrain  the  corporate 
agents  from  applying  tho  corporate 
funds  to  purposes  foreign  to  the  cor- 
poration, or  engaging  in  business  out- 
side of  that  for  which  the  company 
was  formed,  or  on  proceedings  by  tlio 
sovereign  power  to  annul  tho  charter 
for  an  abuse  of  the  powers  granted,  or 
in  a  proceeding  to  enforce  and  for 
the  performance  of  an  executory  con- 


631 


POWERS. 


§3G5 


had  the  henefit  of  another's  bona  fide  performance  of  a 
contract  cannot  avail  itself  of  the  defense  of  ultra  vires 


tract,  where,  upon  a  rescission  or  an- 
nulling tiiu  agreement,  both  parties 
would  have  the  same  position  as  if  no 
couti'iict  liuil  been  made,  the  rules  of 
decision  would  ho  diflfcrent  from  those 
which  must  prevail  in  the  present  ac- 
tion. In  either  of  the  cases  suggested, 
it  is  very  likely  the  courts  would  be 
compelled  to  give  full  effect  to  the  ob- 
jection, and  hold  the  business  unau- 
thorized, and  a  violation  of  the  char- 
ter, and  a  forfeiture  of  the  chartered 
rights,  and  the  contract  null,  and  re- 
fuse to  perform  it  or  give  effect  to  it. 
The  manufacture  of  the  locks,  or  con- 
tract to  sell  them  to  the  Sual  Lock 
Company,  were  not  acts  immoral  in 
themselves,  or  forbidden  by  ai.y  stat- 
ute, ueichyr  mala  in  aese  or  mala  pro- 
hihild,  so  as  to  make  the  contract  il- 
legal and  incapable  of  being  the 
foundation  of  an  action,  — such  a  con- 
tract as  the  law  will  not  recognize  or 
enforce;  but  applying  the  maxim,  Ex 
facto  illicitj  non  oritur  actio,  leave  the 
parties  as  it  finds  them.  When  acts 
of  corporations  are  spoken  of  as  ultra 
virc.%  it  is  not  intencfed  that  they  are 
unlawful,  or  even  such  as  the  corpo- 
ration cannot  perform,  but  merejy 
those  which  are  not  within  the  powers 
conferred  upon  the  corporation  by  the 
act  of  its  creation,  and  are  in  violation 
of  the  trust  reposed  in  the  managing 
board  by  the  share-holders,  that  the 
affairs  shall  be  managed,  and  the  funds 
applied  solely,  for  carrying  out  the  ob- 
jects for  which  the  corporation  was 
created:  Earl  of  Shrewsbury  v.  North 
Staffordshire  K.  Co.,  L.  11.  1  Eq. 
593;  Taylor  v.  Chichester  and  Mid- 
hurjt  K.  Co.,  L.  R.  2  Ex.  35U;  Bissell 
V.  Michigan  C.  R.  Co.,  22  N.  Y.  258. 
Whelhcr  the  contract  as  originally 
made  was  itllra  vlris  is  not  a  very  im- 
portant inquiry  at  this  time.  If  it 
was,  the  Ktate  under  whose  sovereign- 
ty it  dwells,  and  by  whose  act  and 
favor  it  exists,  has  no  interest  in  ar- 
resting its  action  for  the  recovery  of 
moneys  equitably  due  upon  a  contract 
fully  execu  ced,  and  a  work  fully  accom- 
plished, whatever  may  be  its  right  to 
annul  its  charter.  The  share-holders 
whose  confidence  has  been  abused,  and 
whose  funds  have  been  diverted  from 


their  proper  use,  have  a  direct  inter- 
est in  reclaiming  and  restoring  to 
proper  custody,  and  applying  to  kgiti- 
mate  uses,  the  fund.s  wiiich  have  been 
diverted  and  improperly  used  for  jjiir- 
poses  dehorn  the  legitimate  buaiiicss 
of  the  corporation.  Tlio  i>loa  of  tiltra 
vires  should  not,  as  a  general  rule,  pre- 
vail, whether  interposed  for  or  against 
a  corporation,  when  it  would  not  ad- 
vance justice,  but  on  tiie  contrary 
would  acco'-iplisii  a  legal  wrong.  Here, 
as  between  two  corporations,  tlio 
debtor  and  creditor  corporation,  tiio 
contract  has  bcLU  fully  performed  by 
the  creditor,  tlie  plaintiff  in  this  ac- 
tion, and  tlio  SjuI  Lock  Company  has 
received  the  full  consideration  of  its 
promise  to  pay.  The  plaintiff  has 
parted  with  its  propjrty  to  the  latter 
corporation,  and  unless  a  lethal  liabil- 
ity exists  oil  the  part  of  tlie  latter  to 
pay,  the  plaintiff  can  neither  rucLiiia 
the  property  or  recover  conipcnsaiion, 
and  under  this  technical  pica  a  great 
wrong  will  bo  perpetrated.  A  pur- 
chaser who  acquired  by  contract,  and 
under  an  agreemunt  to  piy  f(ir  it,  the 
property  of  a  corporation,  cannot  de- 
feat the  claim  for  the  pAirchase  price 
by  impeaching  liie  riglit  of  tiie  corpo- 
ration to  become  the  owner  of  the 
property.  One  who  has  received  from 
a  corporation  the  full  consideration  of 
his  engagement  to  pay  money,  either 
in  services  or  property,  cannot  avail 
himself  of  the  objection  that  the  con- 
tract thus  fully  perronned  by  the  cor- 
poration was  ultra  virv.t,  or  nut  within 
its  chartered  privil-jjues  and  powers. 
It  would  be  contrary  to  tiie  lir.jt  prin- 
ciple3  «'f  equity  to  allow  such  a  deieuse 
to  prevail  in  au  action  by  the  corjjora- 
tioa.  It  is  now  very  well  settled  tliat 
a  corporation  cannot  avail  itself  of  the 
defense  of  ultra  i-irr-i  wlien  the  con- 
tract has  been  ia  good  faith  fully  jjcr- 
formed  by  the  other  party,  and  tiie 
corporation  has  had  the  full  benefit  of 
the  performance  and  of  tlie  toutract. 
If  an  action  cannot  be  brouglit  dire^aly 
upon  the  agreement,  eitlier  c(iuity  will 
grant  relief  or  an  action  in  some  o.lier 
form  will  prevail.  The  same  ruloli  dds 
e  convemo.  If  the  other  party  has  had 
the  benefit  of  a  contract  fully  pjr- 


§3C5 


corpohations. 


C32 


aj^ainst  a  decree  for  specific  performance.^    A  railroad 
corporation  which,  ultra  vires,  has  taken  a  lease,  and  oc- 
cupied under  it,  cannot,  when  sued  for  the  rent,  set  up  its 
want  of  power  to  take  the  lease.^    A  fire  insurance  com- 
pany having  insured  against  hail,  which  it  was  not  au- 
thorized to  do,  the  insured  having  performed  his  part  of 
the  contract,  and  the  company,  having  accepted  the  bene- 
fit, is  estopped  to  set  up  its  want  of  power  to  issue  such  a 
policy.^     One  who  has  giveu  a  mortgage  to  a  corporation 
from  which  he  has  received  a  loan  is  estopped  to  deny,  in 
a  suit  to  foreclose,  that  it  had  authority  to  make  the  loan.'' 
Where  the  payment  of  bonds  issued  by  one  company  is 
guaranteed  by  another  company,  and  the  guaranty  is 
jDartly  performed,  the  former  company  cannot  avoid  a 
mortgage  executed  to  indemnify  the  latter  on  the  ground 
that  the  guaranty  was  ultra  vires,  at  least  so  far  as  the 
actual  payments  were  concerned.®     A  corporation  which 
without  legal  authority  has  discounted  commercial  paper 
may  recover  the  money  loaned,  although  the  securities 
are  void.**     A  recovery  may  be  had  for  work  and  labor 
in    iigraving  bills  for  a  corporation,  although  the  corpo- 
ration is  jirohibited  by  law  from  engaging  in  the  business 
of  banking.^    It  cannot  resist  an  action  to  recover  money 
loaned  to  it,  upon  the  ground  that  the  money  was  bor- 
rowed and  expended  in  a  business  beyond  the  corporate 
powers.^     It  is  bound  by  its  note  in  the  hands  of  an  inno- 
cent holder  for  value,  although  in  executing  it  the  corpo- 

formed  by  tho  corporation,  he  will  not        *  Denver  Ina.  Co.  r.   McClellan,  9 
bo  heard  to  object  that  the  contract    Col.  11;  59  Am.  Rep.  135, 


and  )jorforniauce  were  not  within  the 
legitimate  powers  of  the  corporation. 
Ex  parte  Chippendale,  4  Do  Gex,  M. 
&  G.  19;  la  re  National  P.  B.  Build. 
Soe.,  L.  R.  5  Ch.  App.  309;  In  re  Cork 
etc.  R.  C,  L.  R.  4  Ch.  App.  748; 
Fishmongers'  Co.  v.  Robertson,  5 
McG.  131." 

'  People's  Gas  Light  and  Coke  Co.  v. 
Gas  Lisht  etc.  Co.,  20  Hi.  App.  473. 

^  Camden  etc.  R.  R.  Co.  v.  R.  R. 
Co.,  43  N.  J.  L.  530. 


*  Pancoast  v.  Travelers'  Ins.  Co.,  79 
Ind.  172. 

*  Macon  etc.  R.  R.  Co.  v.  R.  R.  Co., 
63  Ga.  103. 

0  Pratt  V.  Short,  79  N.  Y.  437;  35 
Am.  Rep.  531. 

''  Underwood  v.  Newport  Lyceum, 
5  B.  Mon.  129;  41  Am.  Dec.  200. 

»  Bradley  v.  Ballard,  55  111.  413;  8 
Am.  Rep.  056;  Coon.  River  Savings 
Bank  v.  Fiske,  60  N.  H.  363. 


632 


633 


POWERS. 


§§  3G6,  367 


ration  exceeded  the  amount  of  indclDtecbiess  which  it  was 
authorized  to  incur.' 

§  366.  Contracts  not  Enforceable  because  Ultra  Vires — 
Benefits  Received  Recoverable. — Whore  tlio  contract  can- 
not bo  enforced  because  it  is  ultra  vires,  the  benefits  which 
cither  party  has  received  under  the  contract  the  courts 
will  require  to  bo  repaid  to  the  other."  A  corporation 
cannot  retain  property  acquired  under  a  transaction  vltra 
vires,  and  at  the  same  time  repudiate  its  oblifjations  under 
the  same  transaction.'  It  cannot  retain  money  borrowed, 
and  plead  ultra  vires  to  a  suit  for  its  recovery.*  An  olhcer 
of  a  corporation,  sued  by  the  corporation  for  unlawfully 
converting  stock  purchased  by  him  for  the  corporation, 
cannot  plead  ultra  vires  in  defense.® 

Illustrations.  —  A  company  incorporated  to  do  business  as 
a  common  carrier  made  a  contract  with  defendant  to  buy  a 
quantity  of  grain.  Held,  that  the  contract  was  xdtra  vires,  and 
that  therefore  plaintiff  could  maintain  no  action  for  non-dolivcry 
of  the  grain,  hut  that  it  could  recover  back  the  part  of  the 
purchase-money  already  paid:  Northwestern  Union  Packet  Co. 
v.  Shaw,  37  Wis.  655;  \9  Am.  Rep.  781. 

§  367.  Corporations  Liable  for  Torts. — Though  at  one 
time  the  courts  held  that  a  corporation  could  not  commit 
a  tort,**  this  doctrine  is  obsolete,  and  it  is  now  the  settled 
law  that  a  corporation  is  liable  for  the  torts  of  its  agents 
to  the  same  extent  as  an  individual,'  and  the  doctrine  of 


'  Auerbach  v.  Lo  Sueur  Mill  Co.,  28 
Minn.  291 ;  41  Am.  Rep.  285. 

■'  Brice's  Ultra  Vires,  2il  ed.,  769; 
Hardy  v.  Lfin.l  Co.,  L.  R.  7  Ch.  427; 
la  ro  Phoenix  Life  Ass.  Co.,  2  Johns. 
&  H.  441;  Humphrey  v.  Patrous' 
Ass'n,  50  Iowa,  007;  In  re  German 
Mining  Co.,  4  De  Gex,  M.  &  G.  19; 
In  re  Electric  Tul.  Co.,  29  Beav.  353; 
In  ro  Cork  etc.  R.  R.  Co.,  L.  R.  4  Ch. 
7G0;  New  Castle  R.  R.  Co.  v.  Simpson, 
23  Fed.  Rep.  214. 

^  Memphis  etc.  R.  R.  Co.  v.  Dow, 
19  Fed.  Rep.  388. 

*  Millard  v.  St.  Francis  Xavier  Fe- 
male Academy,  8  111.  App.  341. 


*  St.  Louis  Stoneware  Co.  v.  Par- 
tridge, 8  Mo.  App.  217. 

«  See  Orr  v.  Hank,  1  Ohio,  30;  13 
Am.  Dec.  588. 

'  Main  v.  R.  R.  Co.,  12  Rich.  82;  75 
Am.  Dec.  725;  Whiteman  r.  R.  R.  Co., 
2  Harr.  (Del.)  514;  .•J3  Am.  Dec.  411; 
Underwood  v.  Newport  Lyceum,  5 
B.  Mon.  129;  41  Am.  Dec.  200;  Mearea 
V.  Commissioners  of  Wiliniiij^ton,  9 
Ired.  73;  49  Am.  Dec.  412;  Walling 
V.  Mayor,  5  La.  Ann.  000;  52  Am. 
Dec.  008;  Raymond  v.  City  of  Lowell, 
6  Cush.  524;  53  Am.  Dec.  57;  Atlantio 
etc.  R.  R.  Co.  V.  Dunn,  IjOliioSt.  102; 
2  Am.  Kep.  382;  Alexander  v.  Reli'e, 


307 


CORPORATIONS. 


C34 


ultra  vires  has  no  application  in  favor  of  corporations  for 
wrongs  committed  by  thorn.*  Therefore  a  corporation  is 
liable  for  the  deceit  or  false  "opresentations  of  its  agents;" 
for  assault  and  battery;'  for  the  damages  caused  by  th« 
wrongful  canceling  of  a  cortificaie  of  its  stock  by  its 
president  and  secretary;*  for  libel  or  slander;*  for  the  tori 
of  its  agent  in  refusing  to  deliver  chattels  to  their  owner;'' 


74  Mo.  495;  Moore  r.  R.  R.  Co.,  4 Gray, 
4GJ;  04  Am.  Dec.  83;  Jonea  r.  R.  R 
Co.,  27  Vt.  399;  05  Am.  Dec.  207;  First 
Nat.  Bank  v.  Graliam,  100  U.  .S.  G99, 
Mr.  Justico  Swayno  flaying:  "Corpora- 
tions arc  liable  for  every  wrong  they 
commit,  and  in  Huch  oases  the  doctrine 
of  vltra  vires  lias  no  application.  Tiicy 
are  aI»o  liable  for  tbe  acts  of  their 
servants  while  such  servants  are  en- 
gaged in  the  business  of  their  princi- 
im\,  in  the  -mme  manner  and  to  the 
same  extent  that  imlividuald  are  liable 
under  like  circumstances:  Merchants' 
Bank  v.  State  Bank,  10  Wall.  C04. 
An  action  may  t>o  maintained  against 
a  corporation  for  its  malicious  or  neg- 
li;^eiit  torts,  however  foreign  they  may 
h^  to  the  object  of  its  creation  or  bo- 
yo  id  its  granted  powers.  It  may  bo 
sued  for  assault  and  battery,  for  fraud 
and  deceit,  for  false  imprisonment,  for 
malicious  prosecution,  for  nuisance, 
and  for  libel.  In  certain  cases  it  may 
bo  indicted  for  misfea.sance  or  non- 
feasance, touching  duties  imposed 
upon  it  in  which  the  public  are  inter- 
ested. Its  offenses  may  be  such  as 
will  forfeit  its  existence:  R.  R.  Co.  v, 
Quigley,  21  How.  201);  2  Wait  on  Ac- 
tions and  Defenses,  pp.  337-339;  An- 
gell  and  Ames  on  Corporations,  seca 
186,  385;  Cooley  on  Torts,  pp.  119, 
120." 

^  National  Bank  v.  Graham,  100  U. 
S.  699. 

*  Peebles  v.  Patapsco  Co.,  77  N.  C. 
2.33;  24  Am.  Rep.  447;  New  York  etc. 
R.  R.  Co.  r.  Schuyler,  .34  N.  Y.  30;  Fogg 
V.  Griffin,  2  Allen,  1;  Butler  v.  Wat- 
kins,  13  Wall.  45(5.  But  not  unless  it 
has  authorized  them,  or  there  is  proof 
of  bad  faitli,  or  absence  of  reasonable 
grounds  of  belief:  Houston  etc.  R.  R. 
Co.  V.  McKmney,  55  Tex.  176;  Erie 
City  Iron  Works  r.  Barber,  106  Pa. 
St.  125;  51  Am.  Rep.  508. 


» Philadelpiiia  etc.  R.  R.  Co.  v. 
Derby,  14  How.  468;  Hewitt  v.  .Swift, 
3  Allen,  420;  Ramsden  r.  R.  R.  Co., 
104  Mass.  117;  6  Am.  Rep.  200;  (1,1- 
cago  te.  R.  R.  Co.  r.  Williams,  ")."» 
111.  185;  8  Am.  Rep.  641;  St.  Louis 
etc.  R,  R.  Co.  I'.  Dalby,  19  111.  :ut; 
Pennsylvania  R.  R.  Co.  v.  Vandivur, 
42  Pa.  St.  365;  82  Am.  Dec.  520. 

*  Factors'  etc.  Ins.  Co.  v.  Marino 
Dry  Dock  etc.  Co.,  31  La.  Aim. 
149. 

»  Howe  Co.  r.  Souder,  53  Ga.  64; 
Aldriehv.  Press  Co.,  9  Minn.  133;  86 
Am.  Dec.  84;  Hewitt  r.  Pioneer  Pn'.ss 
Co.,  23  Minn.  178;  23  Am.  Rep.  680; 
Vinas  v.  Merchants'  Ins.  Co.,  27  La. 
Ann.  367;  Johnson  c.  St.  Louis  etc.  Co., 
1  Mo.  App.  565;  65  Mo.  5:59;  27  Am. 
Rep.  293;  l)aily  Post  Co.  v.  McArtiiur, 
16  Mich.  447;  Philadelphia  etc.  R.  R. 
Co.  r.  Quigley,  21  How.  202;  Tench  v. 
R.  R.  Co.,  33  U.  C.  Q.  B.  8;  Mayuar  I  r. 
Fireman's  Ins.  Co.,  34  Cal.  48;  91  Am. 
Dec.  672;  McDermott  v.  Evening  Jour- 
nal, 43  N.  J.  L.  488.  Alita-  whoru  it 
is  not  in  the  course  of  the  duty  of  the 
agent  who  published  it,  and  is  not 
authorized  or  ratified  by  tlie  corpora- 
tion: Southern  Express  Co.  (•.  Fitziier, 
59  Misb.  581;  42  Am.  Rep.  379.  (Mc 
corporation  may  maintain  au  action 
against  another  which  slandcra  its 
business  and  represents  its  product  to 
be  of  inferior  quality:  Buflhlo  Lubri- 
cating Oil  Co.  V.  Standard  Oil  Co.,  42 
Hun,  153.  An  allegation  tiiat  the  presi- 
dent of  a  cor]Joration  interfereil  with 
plaintiff's  trade  and  calling  as  a  niur- 
chant,  by  telling  others  that  he  had  no 
right  to  sell  his  goods,  etc.,  does  not 
state  a  cause  of  action  against  the  cor- 
poration: Perkins  v.  Maysville  dis- 
trict Camp-Meeting  Association,  Ky., 
1888. 

« Sherman  v.  Commercial  Printing 
Co.,  29  Mo.  App.  31. 


C04 

itions  for 
)rution  is 
i  agents;" 
(1  by  tlio 
k  by  its 
r  the  tori 


r  owner 


R.    Co.    V. 

ntt  r.  Swift, 
R.  R.  Co., 
•p.  '200;  Cl.i- 
A'illiaiiis,  i').') 
1;  8t.   Loiiix 

li)  111.  :{:).'t; 

I'.   VaiulivLT, 
oc.  C-JO. 
).  I'.  Marino 
[    La.    Ann. 

53  Ga.  04; 

inn.  133;  8(j 

'ioneer  1'iv.s.s 

11.  Rep.  (580; 

Co.,  'J7  La. 

lOniactc.  Co., 

CSi);  27  Am. 

•.  McArtlmr, 

[a  etc.  R.  R. 

)'2;  Tench  v. 

Maynarl)'. 

48;  "J I  Am. 

veiling  Jour- 

tvr  vAmjt'j  it 

duty  of  tlie 

ami   is   not 

tiio  corpora- 

•(.'.  Fitzner, 

379.     One 

all   action 

slanderj   its 

s  product  to 

il'iio  Lul)ri- 

Oil  Co.,  42 

atthcpresi- 

rfered  with 

ig  as  a  inur- 

Lit  ho  hail  no 

does  not 

nst  the  cor- 

ysvillc   l>is- 

iation,  Ky., 

al  Printing 


C35 


POWERS. 


8§  3G8,  SCO 


for  malicious  prosecution  and  false  imprisonment;'  or  for 
a  trespass.' 

§  368.  Corporation  Liable  for  Torts  Oommitted  in  Ultra 
Vires  Transaction.  — A  corporation  is  liable  for  u  tort  com- 
mitted by  it  while  acting  in  or  carrying  on  an  under- 
taking or  business  or  doing  any  act  beyond  its  cburtercd 
powers.' 

§  369.    De  Facto  Corporation  —Validity  of  Acts  of.  — 

The  validity  of  corporate  acts  performed  by  an  associa- 
tion which  is  not  legally  incorporated  is  governed  by  the 
same  rules  as  the  validity  of  corporate  acts,  performed  by  a 
lawfully  incorporated  company  b.  yond  its  chn;  lor  powers.* 
A  dc  facto  corporation  is  estopped  to  dony  its  existence  as 
t  )  those  who  deal  with  it,  but  this  do(  s  not  preclude  proof 
of  the  subsequent  cessation  of  its  corporate  functions.^ 
As  in  the  case  of  an  incorporated  company,  contracts  en- 
tered into  by  a  corporation  dc  facto  are  binding  if  exe- 


*  Goodspeed  v.  East  Haddani  B:ink, 
22  Conn.  530;  58  Am.  Dec.  439;  Colly  w. 
Grover,  2  Woods,  494;  Carter  r.  IIowc, 
51  Md.  290;  34  Am.  Rep.  311;  Iron 
Mountain  Bank  v.  Mercantile  Rank,  4 
Mo,  App.  505;  Williams  i'.  Planters' 
Ins.  Co  ,  57  Miss.  759;  34  Am.  Rep. 
494;  Wheless  v.  Nat.  Bank,  57  Tenn. 
469;  25  Am.  Rep.  783;  Vance  v.  R. 
R.  Co.,  32  N.  J.  L.  334;  90  Am.  Dec. 
605;  Fenton  i\  Wilson  Sowing  Machine 
Co.,  9  Phila.  189;  Rood  r.  Home 
Savings  Bank,  130  Mass.  443;  39  Am. 
Rep.  469;  Jordan  v.  R.  R.  Co.,  74 
Ala.  85;  49  Am.  Rep.  800;  Ricord  v. 
R.  R.  Co.,  15  Nev.  167;  American  Ex. 
Co.  V.  Patterson,  73  Ind.  430;  Wheeler 
and  Wilson  Mfg.  Co.  v.  Boyce,  36  Kan. 
350;  59  Am.  Rep.  571;  Hussey  v.  R. 
R.  Co.,  98  N.  C.  34;  2  Am.  St.  Rep. 
312.  See  Gillett  v.  R.  R.  Co.,  55  Mo. 
315;  17  Am.  Rep.  653,  overruled  in 
Boogher  v.  Life  Ass'n,  75  Mo.  319;  42 
Am.  Rep.  413.  A  corporation  which 
ratifies  or  accepts  the  unauthorized 
malicious  acts  of  its  agents  is  lia- 
ble ia  exemplary  damages:   Galves- 


ton etc.  R.  R.  Co.  V.  Donahoe,  50 
Tex.  162.  In  Maryland,  wlicro  a 
criminal  prosecution  foreinhczxlemcnt 
was  set  in  motion  hy  an  omplovee  or 
the  corporation,  it  was  held  that,  to 
render  the  corporjition  lialile,  express 
authority  or  ratification  and  adoption 
by  the  corporation  must  bo  shown: 
Carter  ?'.  Howe  Machine  Co.,  51  Md. 
290;  34  Am.  Rep.  311. 

■^  Riddle  V.  Proprietors,  7  Mass.  109; 
5  Am.  Dec.  .35;  Che.-itiiut  Hill  Co.  v. 
Rutter,  4  Serg.  &  R.  6;  8  Am.  Dec.  675; 
Main  r.  R.  K.  Co.,  12  Rich.  82;  75 
Am.  Dec.  725;  Brokaw  v.  R.  R.  Co., 
32  N.  J.  L.  328;  90  Am.  Dec.  059. 

*  New  York  etc.  R.  R.  Co.  v.  Haring, 
47  N.  J.  L.  137;  54  Am.  Rep.  123;  Bnf- 
fcttr.  R.  R.  Co..  40  N.  Y.  108:  Hnteh- 
inson  v.  R.  R.  Co.,  53  Tenn.  634,  Bird- 
sell  V.  R.  R.  Co.,  22  N.  Y.  2.")8;  Central 
R.  R.  Co.  V.  Smith,  76  Ala.  572;  25 
Am.  Rep.  353;  Tinsman  v.  R.  R.  Co., 
26  N.  J.  L.  148;  69  Am.  Dec.  505. 

*  Morawetz  ou  Corporations,  sec. 
136. 

*  Dobson  V.  Simonton,  86  N.  C.  492. 


§370 


CORPORATIONS. 


636 


cuted.*    And  the  same  rule  applies  to  transfers  of  property 
made  by  or  to  a  corporation  de  facto? 

Illustrations.  —  Certain  perrons  drew  up  and  signed  articles 
of  incorporation  of  a  cattle  company,  and  before  they  were  filed 
for  record,  and  before  the  time  fixed  for  the  commencement  of 
the  business  of  the  corporation,  they  selected  a  president,  who, 
in  their  presence  and  with  their  approval,  executed  and  deliv- 
ered to  M.  a  note,  in  consideration  of  certain  property  for  the 
corporation,  which  after  the  organization  was  perfected,  and 
after  the  time  fixed  for  the  commencement  of  its  business  came 
into  its  possession  and  ownership,  and  was  used  and  enjoyed 
by  it.  Ileld,  that  M.'s  indorsee  could  recover  on  the  note 
against  the  corporation:  Paxton  Cattle  Co.  v.  Bank,  21  Neb. 
621;  59  Am.  Rep.  852. 

§  370.  Charter  Obtained  by  Fraud  —  Misuser  or  Non- 
user  —  No  Defense  in  Collateral  Proceeding.  —  "  It  cannot 
be  shown  in  defense  to  a  suit  by  a  corporation  that  the 
charter  was  obtained  by  fraud.  Neither  can  it  be  shown 
that  the  charter  has  been  forfeited  for  misuser  or  non- 
user.  Advantage  can  only  be  taken  of  such  forfeiture  by 
process  on  behalf  of  the  state,  instituted  directly  against 
the  corporation  for  the  purpose  of  avoiding  its  charter, 
and  individuals  cannot  avail  themselves  of  it  in  collateral 
suits  until  it  be  judicially  declared.'"    Nor  can  the  validity 


^Palmer  v.  Lawrence,  3  Sand.  161; 
Platto  Valley  Bank  v  Harding,  1 
Neb.  461;  Douglas  Co.  v.  Bolles,  94 
U.  S.  104;  Aller  v.  Cameron,  3  Dill. 
198;  Dooley  v.  Chester  Glass  Co.,  15 
Gray,  494;  Ohio  etc.  R.  R.  Co.  v.  Mc- 
Pherson,  35  Mo.  13;  86  Am.  Dec.  128. 

2  Smith  V.  Sheeley,  12  Wall.  385; 
Snyder  v.  Studebaker,  19  Ind.  462;  81 
Am.  Dec.  41o;  Case  v.  Benedict,  9 
Cush.  540;  West  Winsted  Bank  v. 
Ford,  27  Couu.  282;  71  Am.  Dec.  66; 
Palmer  v.  Lawrence,  3  Sand.  161; 
Thompson  i\  Candor,  60  111.  244; 
Dooley  v.  Woleott,  4  Allen,  406. 

^  Kayser  r.  Bremen,  16  Mo.  90; 
County  of  Macon  v.  Sliores,  97  U.  S. 
277;  Pattison  v.  Building  Asi'n,  63 
Ga.  373;  Minor  v.  Mechanics'  Bank,  1 
Pet.  66;  Cliestor  Glass  Co.  r.  Dewey, 
16  Mass.  94;  8  Am.  Dec.  129;  Trustees 


V.  Hills,  6  Cow.  23;  16  Am.  Dec.  429; 
Penobscot  Boom  Co.  v.  Lamson,  16 
Me.  224;  33  Am.  Dec.  656;  Mitkles  v. 
Rochester  Bank,  11  Paige,  118;  42 
Am.  Dec.  103;  Cahill  v.  Ins.  Co.,  2 
Doug.  (Mich.)  124;  43  Am.  Dec.  457; 
Jones  V.  Bank,  8  B.  Mon.  122;  46  Am. 
Dec.  540;  Connecticut  etc.  R.  R.  Co.  v. 
Bailey,  24  Vt.  465;  58  Am.  Dec.  181; 
Southern  Ins.  Co.  v.  Lanier.  5  Fla.  110; 
68  Am.  Dec.  448;  Butchers'  etc.  Bank 
V.  McDonald,  130  Mass.  264;  Hacken- 
sack  Water  Co.  v.  De  Kay.  36  N.  J. 
Eq.  548;  Turnpike  Co.  v.  McCarty,  8 
Ind.  392,  65  Am.  Dec.  768;  Taggartr. 
R.  R.  Co.,  24  Md.  503;  89  Am.  Dec. 
760.  The  state  may  complain  if  a  cor- 
poration violates  its  cliarter,  but  a 
third  party  cannot,  unless  he  is  spe- 
cially damaged:  Belcher  Sugar  Renn- 
iug  Co.  V.  St.  Louia  Grain  Elevator 


637 


POWERS. 


§371 


of  the  incorporation  be  impeached  by  proving,  aliunde  the 
certificate  of  incorporation,  that  certain  prerequisites  of 
the  law  have  not  been  complied  with;*  nor  by  irregular- 
ities in  adopting  its  by-laws  or  electing  its  officers.''  The 
validity  of  the  articles  of  incorporation  of  an  association 
cannot  be  inquired  into  collaterally;'  and  thus  the  own- 
nership  of  a  wagon-road  claimed  by  a  corporation  can- 
not be  inquired  into  in  a  proceeding  by  a  third  party 
to  compel  the  county  authorities  to  fix  rates  of  toll.*  No 
party  except  the  state  can  object  that  a  corporation  is 
holding  real  estate  in  excess  of  its  rights.^  Until  the 
statutory  requirements  to  organize  a  corporation  have 
been  complied  with,  a  subscriber  to  the  articles  of  asso- 
ciation is  not  estopped  to  deny  the  existence  of  the  corpo- 
ration.* 

Illustrations.  —  A  corporation,  authorized  to  receive  grants 
of  land  for  its  purposes,  brings  suit  against  a  trespasser  to  re- 
cover possession  of  lands  granted  to  it.  Held,  that  the  tres- 
passer will  not  be  heard  to  question  its  title  on  the  ground  that 
it  had  no  authority  to  take  them:  Southern  Pacific  R.  R.  Go.  v. 
Orton,  G  Saw.  157.  There  was  a  law  authorizing  the  formation 
of  railroad  companies,  under  which  articles  of  association  were 
prepared  and  filed  with  the  secretary  of  state,  who  issued  the 
certificate  provided  for.  There  was  a  user  of  the  franchise 
purporting  to  be  invested  with  the  association,  and  the  road  was 
built  and  used  under  this  authority.  Held,  that  the  association 
became  a  dc  facto  corporation,  and  neither  the  eligibility  of  the 
directors,  nor  the  rightfulness  of  the  existence  of  tiic  corpora- 
tion, could  be  questioned  collaterally  in  a  suit  by  the  company: 
Cincinnati  etc.  R.  R.  Co.  v.  R.  R.  Co.,  75  111.  113. 

§  371.  Corporation  must  be  in  Existence,  either  de 
Jure  or  de  Facto.  —  But  a  corporation  must  bo  in  existence 


Co.,  10  Mo.  App.  401.  Judgment 
obtained  against  corporation  as  such 
estops  party  from  afterwards  denying 
its  corporate  existence:  Pochelu  v. 
Kemper,  14  La.  Ann.  308;  74  Am. 
Dec.  433. 

'  Laflin  and  Rand  Powder  Co.  v.  Sina- 
heimer,  46  Md.  315;  24  Am.  Rep.  522. 

"  Ginrich  v.  Patrons'  Mil"  Co.,  21 
Kan.  61. 


»  Keene  v.  Van  Reuth,  48  Aid.  184; 
Swartwout  v,  R.  R.  Co.,  24  Mich. 
389. 

*  Weaverville  etc.  Wagon  Road  Co. 
V.  Trinity  County  Supervisors,  64  Cal. 
69. 

*  Alexander  v.  ToUeston  Club,  110 
111.  05. 

°  Indianapolis  etc.  Mining  Co.  v. 
Herkimer,  46  Ind.  142. 


§§  372,  373 


CORPORATIONS. 


638 


either  de  jure  or  de  facto.  In  an  action  upon  a  contract 
brought  by  a  corporation,  the  defendant  may  always  deny 
the  existence  of  the  corporation.*  A  contract  with  a  cor- 
poration does  not  estop  the  party  making  it  to  dispute  its 
existence,  if  there  be  no  law  which  authorized  the  sup- 
posed corporation,  or  if  the  statute  authorizing  it  be  un- 
constitutional and  void.' 

§  372.  Proof  of  Existence  of  Gorporation. — In  order 
to  establish  the  existence  of  a  corporation,  it  is,  as  a  rule, 
necessary  to  show  the  adoption  of  a  charter  or  articles  of 
association,  and  that  the  corporation  has  held  itself  out  to 
the  world  as  such.'  The  mere  acting  as  a  corporation  for 
any  length  of  time  is  not  sufficient.  If  the  law  provides 
that  a  corporation  may  be  formed  upon  a  subsequent 
compliance  with  prescribed  regulations  and  forms,  some 
of  those  regulations  and  forms  must  have  been  observed, 
although  others  have  been  omitted.*  The  fact  that  a  per- 
son has  entered  into  a  contract  with  a  corporation,  as 
such,  is  prima  facie  evidence  that  it  is  a  corporation  de 
facto  at  least.^  A  corporation  in  suing  need  not  aver  how 
it  was  incorporated."  That  the  corporation  is  mis-named 
in  a  contract  is  not  material,  if  its  identity  can  be  estab- 
lished.' 


§  373.  Powers  of  Corporation  are  only  Those  Given  by 
Charter. — The  powers  of  a  corporation  are  those  and  those 
only  which  expressly  or  impliedly  are  given  to  it  by  its 
charter  or  act  of  incorporation.  Whatever  acts  are  not 
so  authorized  are  prohibited.     "The  charter  of  a  corpora- 


'  Morawetz  on  Corporations,  sec. 
138. 

•^  Snyder  v.  Studebaker,  19  Ind.  462; 
81  Am.  Dec.  415. 

*  Morawetz  on  Corporations,  sec.  139. 

*  De  Witt  V.  Hastings,  40  N.  Y. 
Super.  Ct.  463;  Abbott  v.  Omaha 
Smelting  Co.,  4  Neb.  416. 

*  Williams  v.  Cheney,  3  Gray,  215; 


Jones  V.  Type  Foundry,  14  Ind.  90; 
Dutchess  M^.  Co.  v.  Davi»,  14  Johns. 
238;  7  Am.  Dec.  459;  Cahill  v.  Kala- 
mazoo Ins.  Co.,  2  Doug.  (Mich.)  124; 
43  Am.  Dec.  457. 

•  Bank  r.  Smalley,  2  Cow.  770;  14 
Am.  Dec.  526. 

'  Berks  etc.  Road  Co.  v,  Myers,  6 
Seig.  &  R.  12;  9  Am.  Deo.  402. 


638 


639 


POWERS. 


§374 


tion  is  the  measure  of  its  powers,  and  the  cnumcrfrtion  of 
these  powers  implies  the-exelusion  of  all  others."^ 

§  374.  Or  Implied  from  Nature  of  Business, — In  addi- 
tion to  the  powers  given  in  the  charter,  all  powers  neces- 
sary for  the  carrying  out  of  those  express  powers  are 
impliedly  given,  and  the  courts  are  liberal  in  construing 
charters  so  as  to  include  them.''  The  right  to  construct 
and  to  own  boats  includes  the  right  to  employ  or  navigate 
them;'  to  manufacture  and  sell  musical  instruments  gives 
authority  to  purchase  of  an  agent  a  note  which  he  had 
acquired  by  the  sale  of  an  article  manufactured  by  the 
corporation;*  to  make  all  contracts  necessary  for  the  erec- 
tion of  a  specified  building  gives  power  to  accept  an  order 
in  favor  of  a  material-man,  drawn  by  the  contractor,  and 
payable  from  the  money  due  the  latter  by  the  corpora- 
tion.*^  A  turnpike  company  has  a  right  to  take  and  hold 
under  lease  premises  necessary  for  storing  implements 
used  in  road  repairs  and  for  sheltering  its  servants."  A 
power  to  carry  on  an  iron  furnace  confers  the  power  to 
keep  a  "supply  store"  connected  therewith.^  An  associa- 
tion formed  to  promote  municipal  reform  may  expend  its 
money  in  any  way  calculated  to  promote  its  object.^  Au- 
thority to   construct  and  maintain  a  railroad,  to  make 


1  Thomas  v.  R.  R.  Co.,  101  U.  S. 
82;  Dartmotith  College  v.  Woodward, 
4  Wheat.  6.1G;  Perrine  v.  Canal  Co.,  9 
How.  184;  Bellmeyer  v. School  District, 
44  Iowa,  504;  Metropolitan  Bank  v. 
Godfrey,  '23  111.  679;  Weckler  o.  P'irst 
Nat.  Bank,  42  Md.  581 ;  20  Am.  Rep. 
95;  Matthews  v.  Skiuker,  62  Mo.  329; 
21  Am.  Rep.  425;  Overmyer  v.  Wil- 
liams, 15  Ohio,  31;  Com.  v.  R.  R.  Co., 
27  Pa.  St.  339;  Brooklyn  Gravel  Co.  v. 
Slaughter,  33  Ind.  185;  City  Council 
V.  Plank  Road  Co.,  31  Ala.  76;  Van- 
dall  V.  South  San  Francisco  Dock  Co., 
40  Cal.  83;  Beach  v.  Fulton  Bank,  3 
Wend.  583. 

■■'  Whitewater  Valley  Canal  Co.  v. 
Vallette,  21  How.  424;  Barry  v.  Mer- 
chants' Ex.  Co.,  1  Sand.  Ch.  289;  Old 


Colony  R.  R.  Co.  v.  Evans,  6  Gray,  .38; 
66  Am.  Dec.  394;  Union  Bank  v.  Ja- 
cobs, 6  Humph.  525;  Ohio  Life  Ins. 
Co.  t).  Merchants'  Ina.  Co.,  11  Humph. 
22;  53  Am.  Dec.  74-2;  Clark  v.  Farring- 
ton,  11  Wis.  333;  Willmarth  r.  Craw- 
ford, 10  WenrV  342;  Dana  v.  Bank,  4 
Minn.  385;  St.  Louis  r.  Weber,  44  Mo. 
547;  State  v.  Noyes,  47  Me.  189. 
» Bridgeford  r.  Hall,  18  La.  Ann.  211. 

*  Western  Cotta^re  Organ  Co,  r. 
Reddish,  51  Iowa,  55. 

*  Prairie  Lodge  Trustees  v.  Smith, 
68  Miss.  301. 

^  Crawford  v,  Longstreet,  43  N.  J.  L. 
325 

'  Searight  v.  Payne,  6  Lea,  283. 

8  Ingham  v.  Reform  Club,  12  Pbila. 
264. 


§371 


CORPORATIONS. 


640 


contracts,  and  "to  do  all  acts  needful  to  carry  into  effect 
the  objects  for  which  it  was  created,"  gives  power  to  make 
contracts  for  transportation  for  a  fixed  future  period.*  A 
corporation  organized  to  manufacture  a  certain  article 
may  assume  the  filling  of  a  contract  made  with  another  for 
the  same  article.''  Although  the  charter  of  a  corporation 
may  not,  in  terms,  authorize  the  company  to  incur  ex- 
pense, on  account  of  injury  received  by  their  employees, 
yet  they  may,  in  exercising  such  franchises,  incur  such 
liability.^  The  fact  that  the  articles  of  incorporation  of 
an  institution  did  not  authorize  it  to  raise  an  endowment 
fund,  was  not  a  prohibition  against  raising  f.nch.  fund.* 
A  corporation  having  the  right  to  mine,  in  organizing 
another  corporation  for  mining  purposes,  or  in  dealing 
in  the  stock  of  such  corporation,  acts  without  the  scope 
of  its  powers.^ 

Ir.LusTRATioNS.  —  A  ral'-^ad,  which  extended  from  Lake 
Michigan  to  the  Mississippi  River,  was  authorized  to  make 
"such  contracts  as  the  management  of  its  railroad  and  tlio 
convenience  and  interests  of  the  corporation  might  require," 
and  "to  build  and  run  as  a  part  of  its  corporate  property  such 
number  of  steamboats  as  they  may  deem  necessary,"  and  "to 
accept  from  any  other  state  and  use  any  powers  or  privileges 
....  applicable  to  the  carrying  of  persons  and  property  by 
railway  or  steamboat."  Held,  to  have  the  power  to  employ 
steamboats  belonging  to  others  to  carry  passengers  and  freight 
in  connection  with  its  own  road:  Green  Bay  etc.  R.  R.  Co.  v. 
Union  Steamboat  Co.,  107  U.  S.  98.  The  charter  of  a  corpora- 
tion authorized  it  to  purchase  and  hold,  "in  fee-simple  or  other- 
wise," real  and  personal  estate  to  the  amount  of  fifty  thousand 
dollars,  which  was  increased  by  subsequent  statutes  to  six  hun- 
dred thousand  dollars;  and  provided  that  it  might  appropriate 
its  funds  to  charitable  purposes,  and  that  its  annual  income 
should  be  employed,  among  other  purposes,  "to  promote  inven- 
tions and   improvements   in   the   mechanic   arts,  by  granting 

•  Cleveland  etc.  R.  R.  Co.  v.  Himrod  rigues,    47    111.    188;    95    Am.    Dec. 

Furnace  Co.,  37  Ohio  St.  321;  41  Am.  484. 

Rep.  509.  *  Simpson     Centenary     College   v. 

^  Louis  Cook  Mfg.  Co.  v.  Randall,  62  Bryan,  50  Iowa,  293. 

Iowa,  244.  '  McMillan  v.   Carson    Hill  Unioo 

Toledo    etc.   R.  R.   Co.  v.   Rod-  Mioiag  Co ,  12  Phila.  404. 


640 


C41 


POWERS. 


§§  375,  37G 


to  effect 
to  make 
iOiV     A 
L  article 
)ther  for 
poration 
icur  ex- 
iployees, 
;ur  such 
i'ation  of 
lovvmeut 
:h  fund/ 
ganizing 
.  dealing 
;he  scope 


cm    Lake 
to  make 
I  and  the 
require," 
jerty  Buch 
'^"  and  "to 
privileges 
operty  by 
,0  employ 
nd  freight 
R.  Co.  V. 
corpora- 
or  other- 
thousand 
six  hun- 
propriate 
1  income 
ote  inven- 
granting 

Am.    Dec. 
College   V. 
I  Hill  Unico 


premiums  for  said  inventions  and  improvements."  Neither 
the  charter  nor  the  subsequent  statutes  directed  the  mann(;r  in 
>vhich  the  provisions  for  granting  these  premiums  should  be  car- 
ried out.  Held,  that  it  might  purchase  land  and  erect  a  per- 
manent building  thereon,  in  which  to  hold  exhibitions  an<l  its 
luoetings:  Richardson  v.  Massachusetts  Charitable  etc.  Ass^n,  Vol 
Mass.  174. 

§  375.  Grants  of  Special  Privileges  to  Corporations 
Strictly  Construed.  —  On  the  other  hand,  grants  of  special 
privileges  are  strictly  construed  by  the  courts.  Where 
the  corporation  claims  by  virtue  of  its  charter  the  right 
to  do  things  which  the  citizen  cannot  do,  or  an  exemption 
from  duties  to  which  the  citizen  is  subject,  nothing  will 
be  presumed  in  its  favor.  The  proof  is  on  the  corpora- 
tion, and  every  doubt  is  construed  against  the  corporation.' 
One  clause  of  a  charter  is  not  to  be  construed  in  as  large 
a  sense  as  to  silence  other  clauses,  where,  without  violence 
to  the  language,  a  construction  can  be  given  which  will 
make  all  harmonize.*  Ambiguous  words  are  to  be  con- 
strued most  strongly  against  the  corporation.^  Mere 
general  words  in  a  charter  do  not  authorize  the  corpora- 
tion to  do  acts  which  are  prohibited  by  the  general  public 
law  of  the  state.*  Doubtful  expressions  in  a  statute  con- 
ferring franchises  are  construed  to  the  benefit  of  the  pub- 
lic rather  than  to  that  of  the  corporation.*  A  legislative 
intent,  upon  change  or  reorganization  of  a  corporation, 
to  absolve  it  from  existing  liabilities  cannot  be  inferred." 

§  S76.  What  are  Franchises. — A  franchise  is  a  right 
or  privilege  granted  by  law.  The  ordinary  franchise 
granted  to  a  corporation  is  the  right  or  privilege  of  acting 


'  Fertilizing  Co.  v.  Hyde  Park,  97 
U.  S.  666;  Stbte  r.  Commissioners,  23 
N.  J.  L.  510;  67  Am.  Deo.  409;  Chesa- 
peake Canal  Co.  v.  Key,  3  Cranch 
0.  C.  599;  Mohawk  Bridge  Co.  v. 
K.  R.  Co.,  6  Paige,  554;  Cayuga 
Bridge  Co.  v.  Magee,  2  Paige,  116; 
Auburn  Plank  Ro»i  Oo.  v.  Douglaa8, 
0  N.  Y.  444. 

Vol.  L-41 


*  Mcintosh  V.  Merchants'  Co.,  9  La. 
Ann.  4U3. 

•  Perrine  r.  Canal  Co.,  9  How. 
182 

♦  State  V.  Krebs,  64  N.  C.  604. 

'  Spring  Valley  Water  Works  v. 
San  Francisco,  52  Cal.  11). 

'  University  Trustees  v.  Moody,  62 
Ala.  389. 


§§  377,  378 


CORPORATIONS. 


642 


in  a  corporate  capacity  within  the  limits  of  the  charter. 
Extraordinary  franchises  are  such  as  are  not  essential  to 
the  corporate  existence,  but  give  additional  privileges,  — 
as  the  right  to  take  property  to  build  a  railroad,  or  to  use 
the  public  highway,  or  to  take  tolls,  or  the  like.  The 
term  "franchise"  has  several  significations,  and  there  is 
some  confusion  in  its  use.  The  better  opinion,  deduced 
from  the  authorities,  seems  to  be  that  it  consists  of  the 
entire  privileges  embraced  in  the  grant.  It  does  not, 
then,  embrace  the  property  acquired  by  the  exercise  of 
the  franchise.'  The  franchise  of  a  corporation  cannot  be 
levied  on  for  a  debt,  in  the  absence  of  power  given  either 
by  the  charter  of  the  corporation  or  by  the  general  law.'* 

§  377.  Franchises  cannot  be  Transferred. —The  fran- 
chises granted  by  the  state  to  a  corporr  ion  cannot  be 
transferred  without  the  state's  consent.'  Without  legis- 
lative authority,  a  corporation  cannot  alien  its  franchises, 
either  absolutely  or  temporarily,  by  way  of  lease.*  Neither 
can  franchises  bo  mortgaged  without  the  state's  consent.^ 
An  act  which  empowers  the  leasing  of  completed  rail- 
roads only  will  not  authorize  the  transfer  of  a  franchise 
for  building  a  railroad.* 

§  378.  Consolidation  of  Corporations.  —  Corporations 
cannot  consolidate  without  authority  from  the  state,  and 
such  authority  must  be  clearly  shown.^    But  where  the  law 


»  Bridgeport  v.  R.  R.  Co.,  36  Conn. 
255,  266;  4  Am.  Rep,  63. 

*  New  Orleans  etc.  R.  R.  Co.  v. 
Delamore,  34  La.  Ann.  1225. 

'  Morawetz  on  Corporations,  sec. 
537;  Coe  v.  R.  R.  Co.,  10  Ohio  St.  372; 
75  Am.  Dec.  518. 

*  Philadelphia  v.  Western  Union 
Tel.  Co.,  11  Phila.  327. 

*  Richardson  v.  Sibley,  11  Allen,  67; 
87  Am.  Dec.  700;  Com.  v.  Smith,  10 
Allen,  448;  87  Am.  Dec.  672;  Car- 
penter V.  Mining  Co.,  65  N.  Y.  43; 
Atkinson  v.  R.  R.  Co.,  15  Ohio  St.  21; 
Coe  V.  R.  R.  Co.,  10  Ohio  St.  372;  75 


Mi.."j?an,  28 


.  ucriian,  '22 
.   51.  R.  Co. 
■  i-Jt>:  81  Am. 

«^o,,   8    Phila. 


Am.  Dec.  518;  fvM'. 
La.  Ann.  482;  St»L. 
Ohio  St.  428;  Barrl:;;..  .. 
V.  Metcalfe,  4  Mi?i:.  (K 
Dec.  541. 

6  Wood    V.    R.    R. 
94. 

^Pearce  v.  R.  R.  Co.,  21  How. 
442;  Clearwater  v.  Meredith,  1  Wall. 
25;  State  v.  Bailey,  16  Ind.  51;  79 
Am.  Dec.  405;  Aspinwall  v.  R.  R.  Co., 
20  Ind.  492;  83  Am.  Dec.  329;  Lauman 
V.  R.  R.  Co.,  30  Pa.  St.  42;  72  Am. 
Dec.  685;  McMahan  v.  Morrison,  16 
Ind.  172;  79  Am.  Dec.  418. 


642 


643 


POWERS. 


§373 


arter. 
ial  to 

res,— 
to  use 
The 
lerc  is 
(duced 
of  the 
'S  not, 
sise  of 
not  be 
either 
il  law.^ 

e  fran- 
inot  be 
t  legis- 
ichises, 
Neither 
)nsent.* 
3d  rail- 
anchise 


rations 
te,  and 
the  law 

;i.'i?an.,  28 
.rJian,  '22 
11.  R.  Co. 
l»;.  8).  Am. 

8   Phila. 

21    How. 

,  1  Wall. 

I.  51;  79 

I.  R.  Co., 
Lauman 
T;  72  Am. 
Trrison,  16 


permits  the  consolidation  of  corporations,  it  is  not  against 
public  policy  for  a  corporation  to  be  organized  with  the 
ulterior  purpose  of  consolidation  with  another.*   To  merge 
or  consolidate  one  company  with  another  is  generally  a 
measure  beyond  the  authority  of  an  executive  committee 
and  directors.     It  requires  the  consent  of  stockholders, 
and  is  inoperative  as  against  those  who  do  not  agree,^  and 
releases  non-consenting  stockholders  from  subscriptions.' 
The  dissenting  stockholders  are  entitled  to  withdraw  their 
shares  of  the  capital  stock,  and  may  enjoin  the  consolida- 
tion till  they  are  secured.*    While  a  corporation  cannot 
relieve  itself  from  responsibility  to  those  to  whom  it  may 
be  indebted,  by  becoming  merged  into  a  new  organiza- 
tion, it  may,  by  the  act  of  merger,  become  so  situated  as 
to  be  estopped  from  claiming  that  it  remains  undissolved.' 
Where  a  new  corporatic      is  established  in  the  place  of 
an  old  one,  whose  property  it  purchases,  neither  this  prop- 
erty, excepting  so  far  as  it  is  subject  to  a  prior  lien,  nor 
the  future  earnings  of  the  new  company,  can  be  taken  to 
pay  the  debts  of  the  old  one."    A  consolidated  corporation 
has  no  power  to  declare  a  dividend,  as  such,  of  the  earnings 
made  prior  to  the  consolidation  by  one  of  the  companies 
which  was  merged  in  the  consolidation,  or  dividends  on 
the  stock  of  that  company  out  of  the  earnings  of  the 
consolidated  one.'    Where  a  new  corporation  is  formed 
by  amalgamation,  under  the  authority  of  the  state,  of 
two  or  more  distinct  corporations  into  one,  it  succeeds 
to  all  the  rights  and  faculties  of  the  several  components, 
and  is  subject  to  all  the  conditions  and  duties  imposed  by 
the  law  of  their  creation,  except  so  far  as  it  may  be  other- 
wise provided  by  the  act  under  which  such  consolidation 
is  effected.®  Where  several  corporations  are  united  in  one, 

*  Carey  v.  R.  R.Co.,  5  Iowa,  357. 
•Bruffett  V.  R.  R.  Co.,  25  111.  353. 


'  Hill  V.  Nisbet,  100  Ind.  341. 

'  Blatchford  v.  Ross,  54  Barb.  42; 
Tuttle  V.  R.  R.  Co.,  35  Mich.  247. 

'  Booe  V.  R.  R.  Co.,  10  Ind.  93. 

*  State  V.  Bailey,  16  Ind.  46;  79  Am. 
Dec.  406. 


T  Chase  v.  VandeibUt,  37  N.  Y. 
Sop.  Ct.  344. 

*  Chicago  etc.  R.  R.  Co.  v.  Moffitt,  75 
HI.  524;  State  v.  R.  R.  Co.,  66  Me.  48. 


§378 


CORPORATIONS. 


644 


and  the  property  of  the  old  companies  vested  in  the  new, 
the  latter  is  liabl"  in  equity  for  the  debts  of  the  former, 
at  least  to  the  extent  of  the  property  received  from  them; 
and  if  it  is  also  liable  at  law,  the  latter  remedy  is  not  ex- 
clusive.^ Equity  cannot  dissolve  a  corporation  consoli- 
dated from  several  other  corporations  on  the  ground 
alleged  by  a  stockholder  in  one  of  the  original  corpora- 
tions, that  the  consolidation  was  for  a  fraudulent  purpose, 
and  not  legally  effected.^  An  action  by  a  railroad  com- 
pany to  enforce  payment  of  a  subscription  to  its  stock  is 
not  defeated  by  the  fact  that  pending  it  the  plaintiff  has 
consolidated  with  another  company,  and  thereby  ceased 
to  exist.^  If  corporations  of  diflferent  states,  by  permis- 
sion of  the  legislatures,  consolidate  into  one  corporation, 
aixd  as  such  mortgage  the  property  belonging  to  one  of 
the  consolidated  companies,  such  mortgage  is  the  sole 
mortgage  of  said  company,  and  not  of  all  the  consoli- 
dated companies,  and  is  legal  and  valid.* 

The  consolidation  of  corporations  chartered  by  the 
same  state  creates  a  new  and  distinct  corporation.®  A 
corporation  created  by  the  laws  of  Iowa,  although  consol- 
idated with  anothtr  of  the  same  name  in  Missouri,  under 
the  authority  of  a  statute  of  each  state,  is,  nevertheless,  in 
Iowa,  a  corporation  existing  there  under  the  laws  of  that 
state  alone." 

Illustrations. — Two  boom  companies  having  booms  on  the 
same  river  were  consolidated.  Both  were  required  by  their 
separate  charters  to  maintain  booms  sufficiently  strong  to  retain 
all  the  lumber  contained  in  them,  and  by  the  act  of  consolida- 
tion the  company  was  entitled  to  all  the  rights  and  privileges, 


*  Harriaon  v.  B.  K  Co.,  4  MoCrary, 
264. 

*  Terhune  v.  R.  B.  Co.,  38  N.  J.  Eq. 
423. 

*Swartwoat  v.  B.  B  Co.,  24  Mich. 
389. 

*  Baciae  etc.  B.  B.  Co.  v.  Loan  and 
Trust  Co.,  49111.  331;  95  Am.  Dec.  595. 

'Clearwater  v.  Meredith,  1  Wall. 


25;  Shields  v.  Ohio,  95  U.  S.  319;  At- 
lanta etc.  B.  R.  Co.  V.  State,  63  Ga. 
483;  State  v.  Bailey,  16  Ind.  46;  79 
Am.  Dec.  405;  McMahan  v.  Morrison, 
18  Ind.  172;  79  Am.  Dec.  418;  Ind. 
etc.  B.  B.  Co.  V.  Jones,  29  Ind.  465; 
95  Am.  Dec  654;  Miller  v.  Lancaster, 
6  Cold.  514. 
•  Muller  V.  Dows,  94  U.  S.  444. 


644 


645 


POWERS. 


§370 


he  new, 
former, 
n  them; 
not  ex- 
consoli- 
ground 
corpora- 
5urpose, 
ad  com- 
stock  is 
itifF  has 
Y  ceased 
permia- 
oration, 
5  one  of 
the  sole 
consoli- 

by  the 
ion.^    A 

consol- 
i,  under 
eless, in 

of  that 


IS  on  the 
by  their 
to  retain 
ansolida- 
rivileges, 

3.  319;  At- 
ite,  63  Ga. 
nd.  46;  79 
.  Morrison, 
418;  Ind. 
)  lad.  465; 
Lancaster, 

S.  444. 


and  subject  to  all  the  restrictions,  of  the  former  charters.  Ildil, 
that  the  company  was  liable  for  loss  by  insufficiency  of  the 
boom:  Brown  v.  Boom  Co.,  109  Pa.  St.  57;  58  Am.  Rep.  708.  A 
corporation  acting  under  a  contract  of  consolidation  made  mort- 
tages  and  sold  bonds  to  bona  fide  purchasers  for  several  years. 
Held,  that  both  it  and  its  stockholders  were  estoppe  1  to  assert 
that  the  contract  was  ultra  vires:  Dimpfel  v.  R.  R.  Co.,  0  B"  es.  1 27. 
A  railroad  company  was  consolidated  with  another,  under  an 
act  of  the  legislature,  which  vested  in  the  new  corporation  all 
the  powers,  rights,  franchises,  etc.,  of  the  old  corporations. 
Held,  that  the  new  corporation  might  lawfully  use  a  patented 
axle-box  which  both  the  old  corporations  had  been  licensed  to 
use:  Lightner  v.  Boston  etc.  R.  R.  Co.,  1  Low.  338.  Two  corpo- 
rations were  empowered  by  their  charters  respectively  to  do  all 
that  was  necessary  to  construct  and  put  in  operation  a  railroad 
between  certain  places  named  in  the  acts  of  incorporation. 
Held,  that  the  two  corporations  had  no  right  to  unite  and  placo 
both  under  the  same  management,  nor  to  establish  a  steamboat 
lino  to  run  in  connection  with  the  railroads:  Pcarce  v.  R.  R.  Co., 
21  IIow.  441.  Two  corporations  created  by  the  acts  of  two 
states  for  the  purpose  of  constructing  a  canal  were  united  by 
new  acts,  and  the  stockholders  of  each  were  made  stockholders 
of  the  other.  Held,  that  they  did  not  cease  to  exist  as  distinct 
corporations:  Farnum  v.  Canal  Corp.,  1  Sum.  46.  A  corpora- 
tion was  chartered  to  make  and  sell  gas  until  a  certain  date. 
Some  time  before  the  charter  expired,  another  corporation  was 
chartered  with  similar  privileges  after  the  said  date.  It  was 
contemplated  that  the  latter  corporation  should  make  prepara- 
tions before  that  date.  Held,  that  a  consolidation  of  the  two 
corporations  on  the  day  preceding  that  date  could  be  had:  New 
Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  G50.  While 
negotiations  were  pending  between  two  gas  companies  for  their 
consolidation,  upon  a  certain  basis  of  indebtedness,  one  of  the 
companies  passed  a  resolution,  without  the  knowledge  of  the 
other,  declaring  a  scrip  dividend  of  ten  per  cent  on  the  amount 
of  their  capital  stock,  with  interest,  payable  at  the  option  of  the 
company,  thus  increasing  their  indebtedness  to  that  amount. 
Certificates  of  indebtedness  were  issued  in  accordance  with  the 
resolution.  Consolidation  was  effected  between  the  companies 
without  any  knowledge  of  the  other  company  as  to  such  resolu- 
tion and  such  increased  indebtedness.  Held,  that  the  scrip  was 
void:  Bailey  v.  Citizens'  Gas  Light  Co.,  27  N.  J.  Eq.  196. 

§  379.  Implied  Powers  of  Corporations — To  Purchase 
and  Hold  Property. — A  corporation  has  an  implied  right 
to  acquire  and  hold  property  necessary  to  the  carrying 


§379 


CORPORATIONS. 


646 


on  of  its  business.*  A  corporation  may  hold  land  by  ten- 
ancy in  common,  as  may  a  natural  person;^  or  take  a 
mortgage,  although  unable  to  take  the  oath  required  by 
statute;'  or  purchase  and  hold  any  patent  the  ownership 
of  which  is  appropriate  to  enable  it  to  execute  the  corpo- 
rate purpose;*  or  become  the  assignee  of  a  bond;"  or  hav- 
ing power  to  hire  buildings,  may  enter  into  the  usual 
covenants,  as  to  repair,  etc.;"  or  acquire  by  transfer  title 
to  a  note  taken  in  the  course  of  its  business,  and  sue  upon 
the  note.^  Power  to  purchase  "property  deemed  desir- 
able in  the  transaction  of  its  business"  gives  the  cor- 
poration power  to  purchase  its  own  stock.®  Land  which 
a  corporation  cannot  hold  in  its  own  name  it  cannot  hold 
in  the  name  of  another;  and  when  a  corporation  cannot 
hold  the  legal  title  to  land,  it  cannot  take  a  beneficial 
interest  in  it.-* 

Illustrations. — An  agricultural  society  was  authorized  "to 
do  all  acts  necessary  for  the  prosperity  of  the  society  in  the  in- 
tervals of  the  meetings  of  the  board."  Held,  not  to  give  power 
to  purchase  real  estate:  Tracy  v.  Outhrie  Co.  Agric.  Soc,  47 
Iowa,  27.  The  charter  of  a  railroad  gave  it  power  to  acquire  a 
strip  of  land  not  exceeding  one  hundred  feet  wide  for  a  right  of 
way,  and  to  hold  sufficient  ground  for  the  erection  and  main- 
tenance of  depots,  landing-places,  etc.  Held,  that  the  corpora- 
tion had  no  power  to  acquire  land  for  purposes  of  speculation : 
Pacific  R.  K  Co.  v.  Seely,  45  Mo.  212;  100  Am.  Dec.  369.  A 
charter  gave  a  corporation  power  to  "acquire  and  hold  estate, 


'  Thompson  v.  Waters,  25  Mich. 
222;  12  Am.  Rep.  243;  Blanchard's 
etc.  Co.  V.  Warner,  1  Blatchf.  258; 
Page  V.  Heineberg,  40  Vt.  81 ;  94  Am. 
Dec.  378;  Mo88  v.  Averill,  10  N.  Y. 
449;  Spear  v.  Crawford,  14  Wend.  23; 
28  Am.  Dec.  513;  The  Banks  v.  Poi- 
tiaux,  3  Rand.  136;  15  Am.  Dec.  706; 
MeCartee  v.  Orphan  Asylum,  9  Cow. 
437;  18  Am.  Dec.  517;  Lathrop  v. 
Bank,  8  Dana,  114;  33  Am.  Dec.  481; 
Rivanna  Nav.  Co.  v.  Dawsons,  3  Gratt. 
19;  40  Am.  Dec.  183;  Callaway  Co.  v. 
Clark,  32  Mo.  .S05.  A  corporation  in 
taking  a  mortgage  to  secure  a  debt  is 
not  dealing  in  lauds:  Blunt  w.  Walker, 
11  Wis.  334;  78  Am.  Dec.  709. 


'  Estell  V.  University  of  the  South, 
12  Lea,  476. 

'  Lincoln  Savings  Bank  v.  Ewing, 
12  Lea,  598. 

*  Dorsey  Harvester  Rake  Co.  v. 
Marsh,  6  Fish.  Pat.  Cas.  387. 

^  Bennington  Iron  Co.  v.  Ruther- 
ford, 18  N.  J.  L.  467. 

«  Abby  V.  Billups,  35  Miss.  618;  72 
Am.  Dec.  143. 

T  V''3.yland  University  v.  Boorman, 
56  Wis.  657. 

*  Iowa  Lumber  Co.  v.  Foster,  49 
Iowa,  25;  31  Am.  Rep.  140. 

*  Coleman  v.  S.  R.  T.  R.  Co.,  49  CaL 
517. 


646 


647 


POWERS. 


380 


d  by  ten- 
•r  take  a 
uired  by 
svnership 
le  corpo- 
"  or  liav- 
he  usual 
sfer  title 
sue  upon 
ed  desir- 
the  cor- 
id  which 
,not  hold 
I  cannot 
>ene€lcial 

Drized  "to 
in  the  in- 
ive  power 

Soc,  47 
acquire  a 
a  right  of 
Qd  main- 
5  corpora- 
jculation : 

369.  A 
Id  estate, 

the  South, 

V.  Ewing, 

ke    Co.    V. 

J7. 

V.    Ruther- 

IBS.  618;  72 

Boorman, 

Foster,   49 

I. 

:;o.,  49  Cal. 


real,  personal,  or  mixed,  and  the  same  to  buy,  exchange,  sell, 
and  mortgage,  transfer,  pledge,  or  otherwise  encumber  or  aUen, 
ate,  as  the  board  of  directors  of  said  association  may  deem 
expedient."  Held,  to  give  it  power  to  loan  its  surplus  funds: 
Western  Boatmen's  Benevolent  Ass'n  v.  Kribben,  48  Mo.  37.  A 
corporation  was  authorized  by  its  articles  to  "purchase  and 
hold,  sell  or  exchange,  any  real  estate  or  other  property  deemed 
desirable  in  the  transaction  of  its  business."  Held,  to  havo 
power  to  buy  shares  of  its  cwn  stock:  Iowa  Lumber  Co.  v.  Fos- 
ter, 49  Iowa,  25;  31  Am.  Rop.  140.  A  statute  gave  a  corporation 
power  to  discount  non-negotiable  notes,  and  to  take,  bold,  and 
convey  any  property,  real,  personal,  or  mixed.  Held,  tliat  it 
might  take  and  hold  city  warrants:  Aull  Savings  Bank  v.  Lex' 
ington,  74  Mo.  104. 

§  380.  Implied  Powers  of  Corporations — To  Transfer 
or  Dispose  of  Property. — A  corporation  has  implied  au- 
thority to  transfer  or  dispose  of  its  property  whenever 
necessary  for  the  purposes  of  its  business.'  The  right  of 
corporations  to  sell  their  property  is  absolute  at  common 
law,  where  they  act  by  a  majority  of  their  stockholders; 
and  this  right  is  not  limited  as  to  objects,  circumstances, 
or  quantity.^  A  corporation  may  sell  its  property  to  an- 
other corporation.'  It  may  sell  its  assets  to  a  new  corpo- 
ration, and  take  the  stock  of  the  latter  in  payment,  with 
the  assent  of  the  majority  of  the  stockholders  of  the  old 
corporation.*  A  corporation  organized  for  the  purpose  of 
owning  ditches  for  the  conveyance  and  sale  of  water  has 
power  to  sell  and  convey  all  its  corporate  property,  pro- 
vided the  sale  is  made  for  corporate  or  lawful  purposes.^ 


»  White  Water  Canal  Co.  v.  Vallette, 
21  How.  424;  Barry  v.  Merchants' 
Ex.  Co.,  1  Sand.  Ch.  280;  Reynolds 
r.  Commissioners,  5  Ohio,  204;  Town 
Council  V.  Elliott,  5  Ohio  St.  113;  Buell 
V.  Buckingham,  16  Iowa,  284;  85  Am. 
Dec.  516;  Aurora  Agric.  Soc.  v.  Pad- 
dock, 80  111.  263;  Miners'  Ditch  Co.  v. 
Zellerbach,  37  Cal.  543;  99  Am.  Dec. 
300;  Burton's  Appeal,  57  Pa.  St.  213; 
Dupee  V.  Boston  Water  Power  Co., 
114  Mass.  37;  Partridge  v.  Badger,  25 
Barb.  146;  Beers  v.  Phoenix  Glass  Co., 
14  Barb.  358;  Dana  v.  Bank,  5  Watts  & 
S.  223;  U.  S.  Bank  v.  Hutb,  4  B.  Mod. 


423;  Pierce  v.  Emery,  32  N.  H.  486; 
Story  V.  Plank  Road  Co.,  16  N.  J.  Eq. 
13;  84  Am.  Dec.  134.  A  power  to 
"sell"  does  not  authorize  a  barter  or 
exchange:  City  of  Cleveland  v.  State 
Bank,  10  Ohio  St.  236;  88  Am.  Dec. 
445. 

'  Tread  well  v.  Manufacturing  Co.,  7 
Gray,  393;  66  Am.  Dec.  490. 

*  VVartield  v.  Canning  Co.,  72  Iowa, 
666;  2  Am.  St.  Rep.  263. 

*  Treadwell  v.  Manufacturing  Co. ,  7 
Gray,  393;  66  Am.  Dec.  492. 

'  Miners'  Ditch  Co.  v.  Zellerbach,  37 
Cal.  543;  99  Am.  Dec.  300. 


381 


CORPORATIONS. 


C48 


A  railroad  company,  in  carrying  out  an  enterprise  author- 
ized by  its  charter,  has  power  to  assign  its  stock  subscrip- 
lions.*  Where  an  insolvent  corporation  has  no  means  to 
contest  attachment  suits,  it  is  not  a  breach  of  trust  for 
the  directors,  on  advice  of  counsel  and  in  good  faith,  to 
make  an  advantageous  sale  of  the  corporate  assets  to  an 
attaching  creditor,  on  condition  that  ho  cancel  liis  own 
debt  and  discharge  the  debts  of  the  other  attaching  crcd- 
itors."^  Where  the  charter  of  a  corporation  only  empowers 
it  to  sell  the  real  estate  necessary  for  the  transaction  of  its 
business,  when  not  required  for  the  uses  of  the  corpora- 
tion, it  cannot  lease  such  real  estate,  nor  maintain  an  ac- 
tion for  rent  under  its  lease.'  The  stockholders  arc  not 
in  their  individual  capacities  owners  of  the  property  as  ton- 
ants  in  common,  joint  tenants,  copartners,  or  otherwise, 
and  a  joint  deed  executed  by  all  tho  stockholders  would 
convey  no  title.*  A  corporation  has  no  right  to  transfer 
its  franchise,  or  any  property  essential  to  its  exercise  which 
it  has  acquired  by  right  of  eminent  domain.* 

§  381.  Implied  Powers  of  Corporations  —  To  Hold 
Property  in  Trust.  —  Formerly,  it  was  held  that  a  cor- 
poration could  not  hold  property  in  trust."  But  the  rule 
is  now  different,^  and  authority  in  a  corporation  to  hold 
in  trust  will  be  implied  whenever  the  trust  is  in  further- 
ance of  the  general  objects  of  the  corporation.*     But  a 

create  a  good  trustee,  viz.,  tho  want 
of  confidence  in  the  person,  yet  that 
doctrine  has  long  since  hcen  explodud 
as  unsound  and  too  artificial;  and  it  is 
now  held  that  where  a  corporation  has 
a  legal  capacity  to  take  real  and  per- 
sonal estate,  there  it  may  take  and 
hold  it  upon  trust  in  the  same  manner 
and  to  the  same  exeent  as  a  private  in- 
dividual may  do":  Story,  J,,  in  ViJal 
V.  Girard,  2  How.  187. 

^  In  re  Howe,  1  Paige,  214;  Chapin 
V.  School  District,  35  N.  H.  445;  Rob- 
ertson  v.  Bullions,  11  N.  Y.  243;  Bell 
Co.  V.  Alexander,  22  Tex.  350;  73 
Am.  Dec  268;  Deringer  v.  Deringer,  5 
Houat.  416;  1  Am.  St.  Bep.  150. 


'  Downie  v.  Hoover,  12  Wis.  174;  78 
Am.  Doc.  730. 

"White,  Potter,  etc.,  Mfg.  Co,  v. 
Importing  Co.,  30  Fed.  Rep.  864. 

*  Metropolitan  Concert  Co.  v.  Ab- 
bey, 52  N.  Y.  Sup.  Ct.  97. 

*  Gashwiler  v.  Wdlis,  33  Cal.  11;  91 
Am.  Dec.  608. 

*»  Fietaamw.  Hay,  122  111.  293;  3  Am. 
St.  Rep.  492. 

0  Greene  v.  Dennis,  6  Conn.  293;  16 
Am.  Dec.  58. 

'  "Although  it  was  in  early  times 
held  that  a  corporation  could  not  take 
and  hold  real  and  personal  estate  in 
trust,  upon  the  ground  that  there  was 
a  dtfect  of  one  of  the  requisitea  to 


648 


649 


POWERS. 


§§  382,  383 


corporation  cannot  bo  a  trustoo  for  purposes  forci^'n  to  its 
institution.*  A  corporation  authorized  by  its  charter  "  to 
receive  deposits  on  trust"  may  receive  money  on  deposit, 
and  give  certificates  therefor,  and  this  power  is  not  aflcctcd 
by  a  proviso  prohibiting  the  corporation  from  issuing  bills, 
bonds,  notes,  or  other  securities,  to  circuhito  in  the  com- 
munity as  money.''  Power  vested  in  a  corporation  "to 
acquire  property  by  gift,  purchase,  or  otherwise,"  as  fully 
authorizes  it  to  acquire  a  leasehold  interest  in  lands  and 
houses  for  a  term  or  for  life  as  to  become  the  owner 
thereof  in  fee.' 

§  382.  Implied  Powers  of  Corporations— To  Take  by 
Devise. — At  common  law,  a  devise  of  realty  to  a  corpora- 
tion was  not  legal.  The  power  of  corporations  to  take 
property  by  devise  is  now  generally  regulated  by  statute 
in  the  different  states.* 


Hold 

a  cor- 
he  rule 
Ito  hold 
urthcr- 
But  a 


§  383.  Implied  Powers  of  Corporations  —  To  Borrow 
Money  and  Make  Debts.  —  A  corporation  has  an  implied 
power  to  borrow  money  and  make  debts  for  the  purposes 
of  its  business.^  The  power  to  create  debts  is  treated  as 
an  incident  to  the  express  jDOwers,  and  not  as  in  itself  one 


*  Trustees  v,  Peaalee,  15  N.  H. 
317. 

'  Talladega  lus.  Co.  v.  Landers,  43 
Ala.  115. 

»  Abby  V.  Billups,  35  Miss.  C18;  72 
Am.  Dec.  143. 

*  Morawctz  on  Corporations,  sees. 
Ifil,  1G2;  McCartee  v.  Orphan  Soc,  9 
Cow.  437;  18  Am.  Dec.  516;  Pago  v. 
Heineberg,  40  Vt.  81;  94  Am.  Doc. 
378.  A  private  corporation  may  take 
a  bequest  in  trust  for  religious  uses: 
Protestant  Episcopal  Education  .So- 
ciety V.  Churchman,  80  Va.  718.  A 
charter  of  a  corporation  empowering  it 
"to  hold,  purchase,  and  convey"  real 
estate,  authorizes  it  to  receive  a  de- 
vise: American  Bible  Society  v.  Mar- 
Bhall,  1.5  Ohio  St.  537.  So  authority 
to  take  "by  direct  purchase  or  other- 
wise" is  an  "express  authority  to 
take  by  devise":  Dowsing  v.  Mar< 


shall,   23  N.    Y.   36G;    80  Am.  Dec. 
290. 

'■Rockwell  V.  Elkhom  Bank,  13 
Wis.  C5.'};  Tucker  r.  City  of  Rak-igh, 
75  N.  C.  207;  Commissioners  r.  R.  R. 
Co.,  77  N.  C.  281);  Barry  v.  Mer- 
chants' Ex.  Co.,  1  Siv.nl.  Cli.  280; 
Partridge  v.  Badger,  25  Barb.  140; 
Clark  V.  Titcomb,  42  Barb.  l-J'2;  Cur- 
tis V.  Lcavitt,  15  N.  Y.  0;  Bariie.s  i\ 
Ontario  Bank,  19  N.  Y.  ir)'2;  Smith  v. 
Law,  21  N.  Y.  290;  Nel.s.):i  i:  Eaton, 
20  N.  Y.  410;  Mageo  v.  Canal  Co.,  5 
Cal.  258;  Hamilton  v.  R.  R.  Co., 
9  Ind.  359;  Fay  v.  Noblo,  U  Cush. 
1;  Oxford  Iron  Co.  v.  Spradlcy,  46 
Ala.  9S;  Alabama  etc.  I;i3.  Co.  v. 
Central  Ass.  Co.,  54  Ala.  73;  ^loss  v. 
Hespetch  Academy,  7  Iloisk.  2S5; 
Union  Mining  Co.  v.  Bank,  2  Col. 
248;  Mahoney  Mining  Co.  v.  Bank, 
104  U.  S.  192. 


§384 


COBPOBATIONS. 


650 


of  the  express  powers.*    Authority  to  borrow  includes 
authority  to  give  evidences  of  indebtedness.^ 

§  384.  Implied  Powers  of  Oorporations — To  Mortgage 
Property. — The  right  to  mortgage  its  property  is  always 
implied  where  the  right  to  borrow  or  to  incur  a  debt  is 
given  to  the  corporation.'  The  power  to  mortgage  is  in- 
cluded in  a  power  to  "sell and  dispose  of"  property;*  the 
right  to  "use,  rent,  or  sell"  hydraulic  powers  and  privi- 
leges gives  power  to  mortgage  them.*  Any  corporation, 
public  or  private,  has  capacity,  if  not  prohibited,  to  make 
a  mortgage  as  security  for  a  debt  contracted  in  further- 
ance of  the  objects  of  its  creation.*  Authority  to  a  plank 
road  company  to  "  mortgage  the  road  or  other  property  " 
permits  a  mortgage  of  the  franchise  of  receiving  tolls; 
but  not  the  mortgage  of  any  franchise  essentially  corpo- 
rate in  its  nature,  and  not  enjoyable  by  a  natural  person.^ 
A  corporation  authorized  to  raise  money  by  mortgage 
may  mortgage  to  a  trustee  for  creditors.*  Goods  bought 
by  a  corporation  ultra  vires  become  their  property,  and 
they  can  sell  or  mortgage  them."  The  pledging  by  a  turn- 
pike company  of  their  income  and  tolls  is  not  a  mort- 
gage of  the  road.'"  A  corporation,  having  authority  to 
mortgage  its  property  for  the  purpose  of  carrying  on  its 
business,  is  not  prohibited  by  the  laws  of  the  state  from 
executing   such   a  mortgage,  to  secure  the  payment   of 


»  Smith  V.  Eureka  Flonr  Mills,  6  Cal. 
1;  BuiTj;.  McDonald,  3  Gratt.  215. 

'^  Id. ;  Booth  v.  Robiason,  55  Md. 
419. 

*  Morawetz  on  Corporations,  sec. 
175;  Aurora  Agricultural  Society  v. 
Paddock,  80  111.  203;  Thompson  v. 
Lambert,  44  Iowa,  239;  Watt's  Ap- 
peal, 78  Pa.  St.  370;  Richards  v.  R.  R. 
Co.,  44  N.  H.  135;  Bardstown  R.  R. 
Co.  V.  Metcalfe,  4  Met.  (Ky.)  199;  81 
Am.  Dec.  541;  Burt  v.  Rattle,  31 
Ohio  St.  116;  Barry  v.  Merchants'  Ex- 
change, 1  Sand.  Ch.  280;  Johnston  r 
Crawley,  25  Ga.  316;  71  Am.  Pec. 
173. 


♦  Gordon  v.  Preston,  1  Watts,  385; 
26  Am.  Dec.  75.  Tlie  power  to  "dis- 
pose "  of  a  seat  in  a  stock  exchange 
includes  the  power  to  mortgage  it: 
Clute  V.  Loveland,  08  Cal.  254. 

*  Willamette  Mfg.  Co.  v.  British 
Columbia  Bank,  119  U.  S.  191. 

6  State  V.  Rice,  05  Ala.  83;  Taylor 
V.  Agricultural  and  Mechanicn!  Assoc, 
68  Ala.  229. 

^  Joy  V.  Jackson  etc.  Co.,  11  Mich. 
155. 

8  Wright  V.  Bundy,  11  Ind.  398. 

»  Parish  v.  Wheeler,  22  N.  Y.  •i04. 

'•  Farmers'  Turnpike  Co.  v.  Coven- 
try, 10  Johns.  389. 


650 
includes 


Mortgage 

is  always 

a  debt  is 
age  is  in- 
•erty;''  the 
md  privi- 
rporation, 
J,  to  make 
a  further. 
to  a  plank 
property  " 
ring  tolls; 
illy  eorpo- 
il  person.^ 

mortgage 
is  bought 
)erty,  and 
by  a  turn- 
a  mort- 

ihority  to 
ng  ou  its 

tate  from 
yment   of 

Watts,  385; 
iwor  to  "dis- 
>ok  exchange 
mortgage  it: 
254. 

?'.   British 
191. 

83;  Taylor 
inic.'il  Assoc, 

o.,  11  Mich, 

Ind.  398. 
N.  Y.  'M. 
■0,  V.  CoveU' 


651 


POWERS. 


§385 


money  to  be  thereafter  advanced.'  Authority  to  mortgage 
its  "road,  income,  and  other  property"  does  not  author- 
ize a  mortgage  of  its  franchises,  though  such  authority 
includes  the  power  to  make  a  deed  of  trust  in  the  nature 
of  a  mortgage.''  The  power  of  a  corporation  to  pledge 
securities  owned  by  it  for  the  payment  of  its  debts  is 
included  in  the  power  to  sell  such  securities  for  that 
purpose.^  Power  to  pledge  franchises  and  rights  of  a 
corporation  implies,  as  incident  thereto,  the  power  to 
pledge  everything  that  may  be  necessary  to  the  enjoy- 
ment of  the  franchise,  and  upon  which  its  real  value 
depends.*  One  who  becomes  the  sole  owner  of  all  the 
corporate  stock  of  a  private  business  corporation  may 
individually  make  a  valid  mortgage  of  its  property.*  The 
bonds  of  a  railroad  company  are  not  made  void  by 
being  secured  by  a  mortgage  which  the  company  had  no 
power  to  execute.  Nor  is  the  holder's  right  to  recover 
on  such  bonds  at  all  affected  by  a  memorandum  thereon 
that  they  were  issued  by  the  company  in  accordance  with 
its  charter,  and  that  the  mortgage  therein  recited  had 
been  duly  executed."  A  mortgage  by  a  corporation  to 
secure  a  debt  in  excess  of  the  limit  allowed  by  its  articles 
of  incorporation  is  not  for  that  reason  invalid,  although 
given  to  the  dir'^'^lors  and  share-liolders  as  preferred  cred- 
itors.' 

§  385.  Implied  Powers  of  Corporations  —  To  Issue 
Negotiable  Paper.  — A  corporation  has  an  implied  power 
to  issue  negotiable  paper  for  the  purposes  of  its  busi- 
ness, or  to  take  and  negotiate  the  notes  of  others.*    It 

'  Warfield  v.  Canning  Co.,  72  Iowa, 
6C6;  2  Am.  St.  Rep.  2G3. 

8  Morawetz  on  Corporations,  sec. 
177;  Munn  v.  Commission  Co.,  15 
Johns.  44;  8  Am.  Dec.  219;  Moss  v. 
Oakley,  2  Hill,  2G7;  Safford  v.  Wyck- 
oflf,  4  Hill,  446;  Curtis  v.  Leavitt,  15 
N.  Y.  173;  Mclutire  v.  Preston,  5 
Gilm.  48;  48  Am.  Dec.  321;  Kelley  v. 
Mayor,  4  Hill,  2C3;  Clark  r.  School 


*  Jones  V.  New  York  Guaranty  etc. 
Co.,  101  U.  S.  622. 

»  Pullan  V.  R.  Co.,  4  Biss.  35. 

»  Leo  V.  R.  R.  Co.,  17  Fed.  Rep.  273. 

♦Phillips  V.  Winslow,  18  B.  Mon. 
431;  68  Am.  Dec.  729. 

"  Swift  V.  Smith,  65  Md.  428;  57 
Am.  Rep.  336. 

•Philadelphia  etc.  R.  R.  Co.  v. 
Lewi^  33  Pa.  St.  33;  75  Am.  Deo.  674. 


§385 


CORPORATIONS. 


652 


may  guarantee  the  bonds  of  another  corporation.*  A  cor- 
poration authorized  to  employ  its  stock  solely  in  advancing 
money  upon  goods  and  selling  them  upon  commission 
may  lawfully  accept  bills  drawn  on  account  of  future  con- 
signments or  deposits  of  goods,  and  is  bound  by  its  agent's 
acceptance  of  such  bills.^  Authority  to  "borrow  money 
and  issue  its  bonds  therefor"  imports  power  to  make 
negotiable  or  non-negotiable  notes,  and  give  such  eocu- 
rities  as  may  be  deemed  most  advantageous.^  A  provision 
prohibiting  the  corporation  from  dealing  in  commercial 
paper  will  not  extend  to  the  receiving  and  selling  of 
notes  given  for  the  sale  of  its  lands.*  Authority  "in 
the  prosecution  of  its  business  to  accept  and  indorse  bills 
and  notes"  does  not  empower  it  to  accept  accommodation 
paper.®  The  officers  of  a  corporation  have  no  power  to 
authorize  the  execution  of  a  note  for  a  debt  of  a  third 
party  to  the  payee,  having  no  relation  to  the  corporate 
business,  and  in  which  the  corporation  has  no  interest." 
A  corporation  has  power  to  transfer  notes  of  third  parties 
held  by  it  to  secure  the  payment  of  its  debts.'    A  corpo- 


District,  3  R.  I.  199;  Smith  v.  Eupeka 
Mills,  G  Cal.  1;  Rockwell  v.  Bank, 
13  Wis.  65IJ;  Goodrich  v.  Reynolds, 
31  111.  490;  83  Am.  Dec.  240;  Lucas 
V.  Pitney,  27  N.  J.  L.  221;  aliter  in 
England:  Morawetz  on  Corporations, 
Bee.  ITS;  Mosa  w.  Averill,  10  N.  Y. 
457,  the  court  saying:  "If  the  corpo- 
ration could  make  the  purchase,  as  it 
has  heon  shown  they  could,  they  might 
lawfully  make  promissory  notes  on 
time  for  the  price;  an  ability  to  make 
a  contract  implies  an  ability  to  make 
a  promissory  note.  Indeed,  the  stat- 
ute 'of  promissory  notes  and  bills 
of  exchange '  expressly  includes  cor- 
porations having  a  capacity  to  make 
contracts  among  the  persons  who  may 
make  notes  in  writing:  1  R.  S.,  708, 
eecs.  1-3.  No  question  is  better  set- 
tled upon  authority  than  that  a  corpo- 
ration, not  prohibited  by  law  from  do- 
ing so,  and  without  any  express  power 
in  its  charter  for  that  purpose,  may 
make  a  negotiable  promissory  note, 
payable  either  at  a  future  date  or  upon 


demand,  when  such  note  is  given  for 
any  of  the  legitimate  purposes  for 
which  the  company  was  incoiporatLih 
Attorney-General  v.  Life  and  Fire  In- 
surance Co.,  9  Paige,  470;  Mott  /'. 
Hicks,  1  Cow.  513;  13  Am.  Dec.  dJO; 
Barber  v.  Mechanics'  Insuranoo  Co.,  IJ 
Wend.  94;  Moss  v.  Oakley,  2  Hill,  2(J.J; 
SafiFord  v.  WyckoflF,  4  Hdl,  442;  Kul- 
ley  V.  Mayor  of  Brooklyn,  4  Hill, 
2C3;  Moss  w.  Rossie  Lead  Mining  Co  , 
5  Hill,  137;  Conro  v.  Port  Henry 
Iron  Co.,  12  Barb.  27." 

1  Low  V.  R.  Co.,  52  Cal.  53;  28  Am. 
Rep.  629. 

'*  Munn  V.  Commission  Co.,  15  Johns 
44;  8  Am.  Dec.  219. 

'  Talladega  Ins.  Co.  v.  Peacock,  G7 
Ala.  253. 

*  JBuckley  v.  Briggs,  30  Mo.  452. 

'  Farmers'  etc.  Bank  v.  Empire  etc. 
Co.,  5  Bosw.  275. 

*  Hall  V.  Auburn  Turnpike  Co.,  27 
Cal.  255;  87  Am.  Dec.  75. 

'  Clark  V.  Titcomb,  42  Barb.  122. 


652 


653 


POWERS. 


§386 


}  A  cor- 
dvancing 
iiimission 
iture  con- 
ts  agent's 
i\v  money 

to  make 
ucli  £OCU- 
provision 
mmercial 
selling  of 
ority  "in 
lorse  bills 
raodation 

power  to 
)f  a  third 
corporate 

interest.^ 
rd  parties 

A  corpo- 

is  given  for 
nirposes  for 
ccoi'poratcil: 
and  Fire  In- 
70;  Mott  V. 
in.  Dec.  ojO; 

ran^^e  Co.,  'i 

2  Hill,  'ilw; 

11,  442;  KlI- 

yn,   4   Hill, 

Mining  Co., 
ort   Henry 

53;  28  Am. 

o.,  15  Johns 

Peacock,  07 

Mo.  452. 
Empire  etc. 

)ike  Co.,  27 

arb.  122. 


ration  which  has  indorsed  negotiable  paper  for  the  ac- 
commodation of  the  maker  is  liable  to  a  bona  fide  holder 
who  has  discounted  it  before  maturity  in  good  faith  and 
in  the  usual  course  of  business.'  A  draft  by  the  secre- 
tary on  the  treasurer  of  the  corporation  is  but  an  order 
of  the  corporation  upon  itself,  and  need  not  be  presented 
for  acceptance,  nor  need  any  notice  of  non-payment  be 
given.'^  A  corporation  note  given  for  an  individual  obli- 
gation is  presumptively  ultra  vires} 

§  386.  Implied  Powers  of  Corporations — To  Sue  and 
be  Sued. — A  corporation  may  sue  in  its  corporate  capa- 
city. "  It  may  avail  itself  of  any  legal  or  equitable  remedy 
which  would  be  available  to  an  individual  under  similar 
circumstances."*  It  may  maintain  an  action  for  libel 
upon  averment  and  proof  of  special  damages.^  The  words 
"to  sue  and  be  sued"  in  a  charter  or  act  give  the  corpo- 
ration no  greater  powers  and  subject  it  to  no  greater  lia- 
bility than  if  it  was  a  natural  person.'  Two  corporations 
may  unit©  in  an  action  to  recover  money  deposited  in  a 
bank  in  their  joint  names.'  The  managing  agents  of  a 
corporation  have  a  right  to  employ  counsel  to  give  legal 
advice,  or  to  institute  legal  proceedings.'  It  may  defend 
legal  proceedings  taken  against  its  agents  in  acting  for  it.* 
A  corporation  is  such  a  legal  entity  that  a  stockholder 
may  maintain  an  action  against  it,  either  at  law  or  in 
chancery.*"    The  trustees  of  a  stock  corporation  have  not 


*  Mechanics'  etc.  Ass'n  v.  New  York 
etc.  Co.,  35  N.  Y.  505. 

•i  Dennis  v.  Table  etc.  Co.,  10  CoL 
369. 

*  Merchants'  Nat.  Bank  v.  Detroit 
Knitting  and  Corset  Works,  Mich., 
1888. 

*  Morawetz  on  Corporations,  soo. 
184.  A  railroad  company  may  sue  in 
its  own  name  on  a  written  order  to 
deliver  stock  to  "  D.  A.  N.,  president 
of  the  Eastern  Railroad  Company": 
Eastern  R.  R.  Co.  v.  Benedict,  5  Gray, 
561;  66  Am.  Deo.  384. 


*  Knickerbocker  etc.  Ins.  Co.  v, 
Ecclesine,  11  Abb.  Pr.,  N.  S.,  385;  42 
How.  Pr.  201. 

*  Freeholders  v.  Strader,  18  N.  J.  L. 
IDS;  35  Am.  Dec.  530. 

''  Sharon  Canal  Co.  v.  Fulton  Bank, 
7  Wend.  412;  Gathwright  v.  Callaway 
County,  10  Mo.  663. 

*  Western  Bank  v.  Gihtrap,  45  Mo. 
419;  Pixley  v.  R.  R.  Co.,  33  Cal,  183; 
91  Am.  Dec.  623. 

*  Morawetz  on  Corporations,  sec.  235. 
w  Wilson  V.  Cheyenne  Bank,  1  Wy, 
Ter.  108. 


§387 


CORPORATIONS. 


654 


power  to  direct  the  filing  of  a  petition  to  have  the  cor- 
poration adjudged  a  bankrupt.*  A  person  about  to  be 
damaged  by  the  act  of  a  company  assuming  to  act  as  a 
corporation,  but  not  legally  organized,  may  bring  his 
action  against  such  company  in  the  corporate  name.**  In 
a  suit  to  enjoin  the  use  of  a  corporate  name,  the  corpora- 
tion whose  name  is  alleged  to  be  wrongfully  used  must  be 
a  party  plaintiff  or  defendant.  If  the  corporation  refuses 
to  bring  such  suit  upon  request,  its  bond-holder  or  credi- 
tor may  do  so,  and  make  such  corporation  a  party  defend- 
ant.' A  railroad  corporation  having  no  residence  in  a 
certain  county  cannot  there  maintain  3uits  against  resi- 
dents of  other  counties.* 


§  387.  Other  Acts. — A  corporation,  unless  restricted 
by  its  charter,  or  prevented  by  the  operation  of  some 
bankrupt  or  insolvent  law,  may  make  an  assignment  of 
its  effects,  entire  or  partial,  if  made  bona  fide  for  the  pay- 
ment of  its  debts,  the  same  as  any  natural  person  may 
do.*  It  may  become  a  joint  owner  of  a  ferry.*  It  has,  as 
incidental  to  its  common-law  power  to  make  contracts, 
a  right  to  make  an  agreement  with  an  agent  to  compen- 
sate him  for  obtaining  subscriptions  to  the  stock.^  A 
company  incorporated  to  make  spermaceti  candles  may 
purchase  state  bonds,  and  engage  to  pay  for  them  at  a 
future  day.*  A  statute  authorizing  a  city  to  subscribe  its 
bonds  for  certain  railroad  stock  authorizes  that  railroad 
to  receive  the  subscription.*  A  railroad  corporation,  au- 
thorized to  buy  land  for  the  purpose  of  procuring  stone 
and  other  material  necessary  for  the  construction  of  the 


'  Matter  of  Lady  Bryan  Mining  Co., 
2  Abb.  527. 

''  Newton  County  Draining  Co.  v. 
Hofsiuger,  43  Ind.  566. 

»  Newby  v.  R.  R.  Co.,  Deady,  609. 

*  Connecticut  etc.  R.  R.  Co.  t>. 
Cooper,  30  Vt.  476;  73  Am.  Dec.  319. 

^Kingo  V.  Real  Estate  Bank,  13 
Ark.  663;  Pope  v.  Brandon,  2  Stew. 


401;   20  Am.   Dec.  49;    Hopkins  v. 
Gallatin  Turnpike  Co.,  4  Humph.  403. 

•  Hackett  v.  R.  R.  Co.,  12  Or.  124; 
53  Am.  Rep.  327. 

^  Cincinnati  etc.  R.  R.  Co.  v.  Clark- 
son,  7  Ind.  695. 
8  Indiana  v.  Woram,  6  HUl,  33. 

*  Clark  V.  Janesville,  10  Wis.  136; 
Bnshnell  v.  Beloit,  10  Wis.  195. 


654 


655 


POWERS. 


388 


the  cor- 
>ut  to  be 
act  as  a 
ring  his 
me.''    In 
corpora- 
must  be 
n  refuses 
or  credi- 
'f  defend- 
nce  in  a 
nst  resi- 


estricted 
of  some 
iment  of 
the  pay- 
;on  may 
t  has,  as 
Dn  tracts, 
compen- 
3ck/    A 
les  may 
em  at  a 
cribe  its 
railroad 
iion,  au- 
ig  stone 
1  of  the 


[opkins  V. 
imph.  403. 
2  Or.  124; 

>.  V.  Clark- 

11,  33. 
Wis.  136j 
195. 


road,  has  power  to  buy  land  for  the  purpose  of  getting 
cross-ties  and  fire-wood.*  A  corporation  may  make  a 
valid  bond  in  a  judicial  proceeding  as  an  appeal  bond, 
reciting  that  S.,  "as  superintendent  of"  a  certain  "rail- 
road company,"  and  the  other  persons  whose  names  were 
signed  thereto,  "  are  held  and  firmly  bound,"  etc.^ 

A  corporation  has  not  the  legal  capacity  to  take  an  oath.' 
It  has  no  authority  to  change  its  domicile  to  another 
state  because  of  authority  granted  to  it  to  own  and 
manage  property  in  that  state."  It  has  power  to  waive 
its  legal  rights,  and  is  bound  by  estoppels  in  pais  like 
natural  persons.^  Corporate  acts  performed  by  the  body 
of  the  corporation  sitting  out  of  the  state  creating  it  are 
void.^  A  corporation  may  prefer  one  creditor  to  another, 
even  though  he  is  a  stockholder.'  A  railroad  has  no 
power  to  guarantee  payment  of  dividends  to  the  sub- 
scribers of  stock  in  an  elevator  company.*  A  corpora- 
tion cannot  take  out  letters  of  administration.® 

§  388.  Power  of  Expulsion  of  Members.— The  power 
of  expulsion  of  members  is  an  incident  of  every  corpora- 
tion, being  considered  in  proper  cases  a  power  necessary 
to  their  proper  government.*"  But  under  a  power  to  admit 
members,  the  directors  of  a  corporation  cannot  disfran- 


'  Mallett  V.  Simpson,  94  N.  C.  37; 
65  Am.  Rep.  595. 

^  Collins  V.  Hammock,  59  Ala.  448. 

'  Alabama  etc.  R.  R.  Co.  v.  Oaks,  37 
Ala.  094. 

♦  Aspinwall  v.  R.  R.  Co.,  20  Ind. 
492;  83  Am.  Dec.  329. 

"  Halo  v.  Ins.  Co.,  32  N.  H.  295;  €4 
Am.  Dec.  370. 

«  Aspinwall  i'.  R.  R.  Co.,  20 Ind.  492; 
83  Am.  Deo.  329. 

'  War  field  v.  Canning  Co.,  72  Iowa, 
603;  2  Am.  St.  Rep.  263;  Foster  v. 
Mullanphy  Co.,  92  Mo.  79. 

8  Elevator  Co.  v.  R.  R.  Co.,  85  Tenn. 
703;  4  Am.  St.  Rep.  798. 

*But  it  may  act  as  administrator 
where  administrator  is  not  required 
to  take  oath  or  do  any  act  which  a 


corporation  cannot  do:  Deringer  v, 
Deringer,  5  Houst.  416;  1  Am.  St. 
Rep.  150. 

"♦  Pilcherr.  Board  of  Trade.  12!  111. 
412;  Smith  v.  Smith,  3  Desau.  557; 
King  V.  Richardson,  1  Burr.  517;  2 
Kent's  Com.  297;  Gregg  v.  Massachu- 
setts Soc,  111  Mass.  185;  15  Am. 
Rep.  24;  Society  v.  Com.,  62  Pa.  St. 
125;  91  Am.  Dec.  139.  An  injunction 
indefinitely  suspending  an  officer  of  a 
corporation  is  an  indirect  mode  of 
effecting  his  removal,  and  a  court  of 
equity  has  no  power  to  grant  it.  The 
power  of  a  motion  belongs  to  the  corpo- 
ration: Griffin  v.  St.  Louis  Vine  etc. 
Assoc,  4  Mo.  App.  596.  The  right  to 
remove  a  member  for  improper  con- 
duct is  incident  to  every  corporation. 


388 


CORPORATIONS. 


656 


chise  members.*  The  power  of  expulsion  belongs  only  to 
the  society  at  large,  unless  the  charter  or  some  by-law 
founded  on  it  transfers  this  power  to  a  select  few.^  But 
this  power  cannot  be  exercised  in  the  case  of  companies 
organized  for  profit, — the  member  cannot  be  deprived  of 
his  pecuniary  interest  without  his  consent.'  But  if  the 
charter  provides  that  shares  may  be  forfeited  for  non- 
payment, this  may  be  done.*  Where  the  charter  docs  not 
specify  any  distinct  grounds  for  removal,  the  corporation 
has  an  implied  power  to  expel,  where  the  member  has 
been  guilty  of  a  crime  indictable  by  the  laws  of  the  land,' 
and  infamous,  and  where  he  has  been  guilty  of  an  offense 
against  the  corporation  itself."  A  member  of  a  corpora- 
tion, a  by-law  of  which  provides  for  the  expulsion  of  a 
member  "  who  feigns  himself  sick  without  being  so,  or 
who  continues  to  draw  relief  after  his  recovery,"  may  be 
expelled  for  those  causes.'  Regulations  of  an  asylum  for 
aged  seamen,  which  forbid  inmates  to  leave  the  premises 
without  permission  from  the  governor  or  an  assistant, 
and  enjoin  quiet  demeanor  at  the  table,  on  pain  of  expul- 
sion, are  reasonable  regulations,  and  an  expulsion  for  a 
breach  of  them  is  lawful.®    "Vilifying  "  a  fellow-member 


^Case  of  Phila.  Savings  Inst.,  1 
Whart.  4G1;  30  Am.  Dec.  226. 

'  Uassler  v.  Philadelphia  Musical 
Assoc,  14  Phila.  233. 

8  Peoplo  V.  Board  of  Trade,  80  111. 
134;  Leech  v.  Harris,  2  Brewst.  571; 
Evans  v.  Philadelphia  Club,  50  Pa.  St. 
107. 

«  Evans  v.  Philadelphia  Club,  50  Pa. 
St.  107;  Society  v.  Commonwealth,  52 
Pa.  St.  125;  91  Am.  Dec.  139;  Leech 
V.  Harris,  2  Brewst.  571;  Hopkinson 
V.  Exeter,  L.  R.  5  Eq.  63;  Rochler  v. 
Mechanics'  Aid  Soc,  22  Mich.  80; 
Davis  V.  Bank  of  England,  2  Bing. 
393;  State  v.  Tudor,  5  Day,  329;  5 
Am.  Dec.  1G2;  Delacy  v.  Neuse  River 
Nav.  Co.,  1  Hawks,  274;  9  Am.  Dec. 
636;  Ebaugh  v.  Hendel,  5  Watts,  43; 
30  Am.  Dec.  291 ;  Waterbury  v.  Express 
Co.,  3  Abb.  Pr.,  N.  S.,  163;  State  r. 


Lusitanian  Soc.,  15  La.  Ann.  73;  An- 
gell  and  Ames  on  Corporations, .  238; 
Hope  V.  International  Financial  Soc,, 
W.  N.  C.  (1876)  257. 

*  Com.  V.  St.  Patrick's  Soc,  2  Binn. 
448;  4  Am.  Dec.  453;  People  t\  Med. 
Soc,  24  Barb.  570;  32  N.  Y.  187; 
Fawcet  v.  Charles,  13  Wend.  47C; 
People  V.  Fire  Underwriters,  7  Hun, 
248;  Society  v.  Com.,  52  Pa.  St,  125; 
91  Am.  Dec.  139, 

6  Com.  V.  St.  Patrick's  Soc,  2  Binn. 
448;  4  Am.  Dec.  453;  People  v.  Fire 
Underwriters,  7  Hun,  248;  Page  v. 
Board  of  Trade,  45111.  112;  People  v. 
N.  Y.  Com.  Ass'n,  18  Abb.  Pr.  271. 

'  Soc.  for  Visitation  of  the  Sick  v. 
Commonwealth,  52  Pa.  St.  125;  91 
Am.  Dec  139. 

B  People  V,  Sailor's  Snug  Harbor,  5 
Abb.  Pr.,  N.  S.,  119. 


656 


657 


POWERS. 


388 


s  only  to 
3  by-law 
W.2  But 
impanies 
jrived  of 
it  if  tho 
for  non- 
docs  not 
poration 
ibcr  has 
he  land,' 
n  offense 
corpora- 
ion  of  a 
3g  so,  or 
'  may  bo 
ylum  for 
premises 
issistant, 
of  expul- 
3n  for  a 
•member 


nn.  73;  An- 
j,tions, .  238; 
ancial  Soc., 

DC,  2  Binn. 

Aq  ?'.  Med. 
■  Y.  187; 
Vend.  470; 
rs,  7  Hun, 
"a.  St.  125; 

)c. ,  2  Binn. 
plo  V.  Fire 
J;  Page  V. 
;  People  v. 
Pr.  271. 
;he  Sick  v. 
t.   123;  91 

Harbor,  6 


is  not  a  good  ground  of  expulsion.*  Charges  that  the 
member  of  "  a  society  for  mutual  support  and  assistance" 
"  assisted,  as  president  of  the  society,  in  defrauding  tho 
society  out  of  the  sum  of  fifty  cents,"  and  "  of  defaming 
and  injuring  the  same  in  public  taverns,"  are  not  sutK- 
cient  cause  of  disfranchisement.^ 

« 

But  a  member  can  in  no  case  be  expelled  without  no- 
tice of  the  inteation  and  the  reason  for  such  act,  and  an 
opportunity  to  be  heard  in  his  defense.^  A  reasonable 
time  must  be  given  in  which  to  answer  the  charges  and 
produce  the  testimony;  and  he  is  also  entitled  to  be  repre- 
sented by  counsel,  to  cross-examine  the  witnesses,  and  to 
except  to  the  proofs  against  him.*  But  when  a  member 
has  been  convicted  by  a  jury  of  an  infamous  crime,  a 
vote  of  expulsion  would  be  legal  without  any  notice  or 
preferment  of  charges,  however  necessary  those  cere- 
monies might  be  when  the  ofifense  concerned  the  corpo- 
rate interests." 

Illustrations.  —  A  private  corporation  or  club  owning  prop- 
erty, and  at  liberty  to  accumulate  more,  expelled  one  of  its 
members  for  quarreling  with  and  striking  another  member 
within  the  walls  of  the  club-house.  Held,  that  the  club  had  no 
authority  for  such  expulsion,  in  the  absence  of  any  provision 
therefor  in  the  charter;  Evans  v.  Philadelphia  Club,  50  Pa.  St. 
107.  The  articles  of  a  corporation  authorized  the  expulsion  ov 
a  member  for  scandalous  or  improper  proceedings,  which  might 


>  Com.  V.  St.  Patrick's  Soc,  2  Binn. 
448;  4  Am.  Doc.  453. 

^  Commonwealth  v.  German  Soc,  15 
Pa  St.  251. 

=•  Black  and  Wlute  Smiths'  Soc  v. 
Vandyke,  '2  Whart:  309;  30  Am.  Dec 
2l)l3;  (ireeu  v.  Afr.  Meth.  Epia.  Soc, 
1  Stirg.  &  R.  254;  Com.  v.  Penn.  Ben. 
lust.,  2  Sarg.  &  R.  141;  Com.  v.  Guar- 
dians, G  Serg.  &  R.  469;  Com.  i\  Pike 
Ben,  Soc,  8  Watts  &  S.  247;  Wash- 
ington Soc  V.  Bacher,  20  Pa.  St.  425; 
Fuller  V.  Plaintield  Acad.,  6  Conn.  52,3; 
Barrows  v.  Med.  Soc,  12  Cush.  40-'; 
People  V.  St.  Franciscus  Ben.  Soc,  24 
How.  Pr.  216;  People  v.  N.  Y.  Com. 
Ass'n,  18  Abb.  Pr.  271;  People  v. 
Sailor's  Snug  Harbor,  54  Barb.  532; 
\0L.  L  -42 


Delacy  r.  Neuse  Riv.  Co.,  1  Hawks, 
274;  y  Am.  Dec  636;  South  Plank 
Road  Co.  V.  Hixon,  5  lad.  165;  Leech 
V.  Harris,  2  Brewst.  571;  White  r. 
Browuell,  2  Daly,  3-29;  Sibley  v.  Car- 
teret Club,  40  N.  J.  L.  295;  State  r. 
Chamber  of  Commerce,  47  Wis.  (i» J; 
contra:  Manning  v.  San  Antonio  Club, 
C3  Tex.  166;  51  Am.  Rep.  iJ.iJ. 

*  State  V.  Bryce,  7  Ohio,  414;  Rex 
V.  Rujhardson,  1  Burr.  540;  Rex  r. 
Liverpool,  2  Burr.  734;  Murdouk  r. 
Academy,  12  Pick.  244;  Rex  r. 
Chalke,  1  Ld.  Raym.  226;  Rex  v. 
Derby,  Cas.  temp.  Hardw.  154. 

^  Angell  and  Ames  on  Corporations, . 
246. 


389 


CORPORATIONS. 


658 


injure  the  reputation  of  the  society.  Held,  to  be  a  good  cause 
of  expulsion,  that  a  member  claiming  relief  from  the  society 
had  altered  the  amount  of  a  physician's  bill  from  four  dollars 
to  forty  dollars,  and  had  presented  the  bill  to  the  president  as 
the  basis  of  his  claim:  Commonwealth  v.  Philanthropic  Soc,  5 
Binn.  486.  The  charter  of  an  incorporated  company  stated  that 
the  rompany  was  formed,  among  other  things,  "to  inculcate 
just  and  equitable  principles  in  trade."  Held,  that  they  might 
expel  a  member  for  obtaining  goods  under  false  pretenses, 
though  the  offense  was  not  committed  within  the  local  juris- 
diction of  the  corporation,  nor  against  a  member  thereof:  People 
V.  N.  Y.  Commercial  Ass^n,  18  Abb.  Pr.  271.  A  corporation  was 
empowered  by  its  charter  to  expel  members  in  the  manner  to 
be  prescribed  by  its  rules  and  by-laws.  A  by-law  provided  for 
the  expulsion  of  a  member  for  non-fulfillment  of  any  contract, 
whether  written  or  verbal.  Held,  that  the  by-law  was  reason- 
able, and  authorized  the  expulsion  of  a  member  refusing  to  per- 
form a  contract  void  by  the  statute  of  frauds:  Dickenson  v. 
Chamber  of  Commerce  of  MilwauJcee,  29  Wis.  45;  9  Am.  Rep. 
544.  A  medical  society  under  power  to  make  by-laws  con- 
tained in  its  charter  adopted  a  law  providing  for  the  expulsion 
of  a  member  who  shall  be  guilty  of  ungentlemanly  conduct 
during  a  session  of  the  society,  or  shall  conduct  himself  out  of 
the  society  in  such  a  manner  as  would  render  him  ineligible  to 
membership.  Held,  valid;  but  the  society  has  not  an  uncon- 
trollable discretion  in  its  construction  and  enforcement;  State 
v.  Georgia  Med.  Soc,  38  Ga.  608;  95  Am.  Dec.  408. 

§  389.  Remedies  for  Wrongful  Expulsion — Restora- 
tion.— When  a  member  of  a  corporation  is  illegally  re- 
moved, he  may  be  restored  by  application  to  the  court. 
The  remedy  is  by  mandamus}  Equity  will  not  enjoin  a 
private  corporation  from  expelling  a  member  for  violating 
the  by-laws;   his  remedy,  if  any,  is  at  law.''    A  person 


*  Burrows  v.  Mass.  Med.  Soc.,  12 
€ush.  402;  Crocker  v.  Old  South  Soc., 
106  Mass.  -1^9:  Sleeper  v.  Franklin 
Lvceum,  7  R.  I.  523;  People  v.  St. 
Franciscus  Soc.,  24  How.  Pr.  216; 
People  V.  Med.  Soc,  24  Barb.  570; 
Peoples.  St.  Stephen's  Church,  6Laus. 
172;"  People  v.  Ben.  Soc,  3  Hun,  301; 
Delacy  v.  Neuse  Riv.  Co.,  1  Hawks, 
274;  9  Am.  Dec.  6.36;  State  v.  Georgia 
Med.  Soc,  38  Ga.  608;  95  Am.  Dec. 
408;  State  v.  Lusitanian  Soc,  15  La. 


Ann.  73;  People  v.  Mich.  Aid  Soc,  22    86  111.  441 


Mich.  86;  State  v.  Chamber  of  Com., 
20  Wis.  68;  Society  v.  Com.,  52  Pa.  St. 
125;  91  Am.  Dec.  139;  Com.  v.  Soc,  2 
Binn.  441;  Franklin  Ben.  Soc.  v.  Com., 
10  Pa.  St.  357;  Com.  v.  German  Soc, 
15  Pa.  St.  251;  Evans  v.  Phila.  Club, 
50  Pa.  St.  107;  Cook  v.  College  of 
Physicians,  9  Bush,  541;  Black  and 
White  Smiths'  Soc.  r.  Vandyke,  2 
Whart.  309;  30  Am.  Dec.  263;  Sibley 
V.  Carteret  Club,  40  N.  J.  L.  295. 
>  Sturges  V.  Chicago  Board  of  Trade, 


658 


659 


POWERS. 


§§  390,  391 


id  cause 

Bociety 

•  dollars 

lident  as 

Ic  SOC.y  5 

ited  that 
nculcate 
jy  might 
iretenses, 
;al  juris- 
f:  People 
ition  was 
anner  to 
vided  for 
contract, 
i8  reason- 
Dg  to  per- 
kemon  v. 
km.  Rep. 
aws  con- 
3xpulsioa 
'  conduct 
elf  out  of 
jligible  to 
m  uncon- 
3nt;  State 


Restora- 

>gally  re- 
le  court, 
enjoin  a 
violating 
person 

r  of  Com., 
,52  Pa.  St. 
.  V.  Soc,  2 

oc.  V.  Com., 

3rman  Soc, 
hila.  Club, 
College  of 
Black  and 
andyke,  2 

263;  Sibley 

L.  295. 

■d  of  Trade, 


having  been  suspended  as  a  member  of  the  stock  exchange, 
on  his  confession  of  insolvency,  cannot  be  reinstated,  or 
maintain  any  claim  against  the  association,  except  in 
accordance  with  its  rules;  and  where  they  provide  an 
ample  remedy,  equity  will  not  relieve.'  One  who  for  nine- 
teen years  has  acquiesced  in  his  expulsion  from  the  mem- 
bership of  a  corporation  for  non-payment  of  corporate 
dues  will  not  be  reinstated  by  the  court.' 

§  390.  lUskY  do  Business  in  Foreign  State. — In  the 
absence  of  any  limitation  in  its  charter,  a  corporation 
may  do  business  outside  the  state  which  chartered  it;* 
provided,  of  course,  that  it  has  the  consent  of  the  foreign 
state.  But  it  should  have  its  central  office,  or  place  of 
management,  within  the  state  which  gave  it  its  charter.* 
A  corporation  cannot  enact  or  pass  a  by-law,  or  any  rule 
or  resolution  for  its  government,  except  within  the  state 
under  whose  laws  it  is  organized,  and  where  it  has  a  cor- 
porate existence.' 

§  391.  may  Employ  Surplus  of  Money  or  Property  to 
Best  Advantage. — A  corporation  which  has  a  surplus  of 
money  or  property  is  not  obliged  to  let  it  remain  idle 
because  it  is  unable  to  use  it  for  the  purposes  for  which 
the  company  was  formed.  It  may  employ  such  surplus 
in  the  most  profitable  manner  it  can.* 


*  Moxey  v.  Philadelphia  Stock  Ex- 
change, 14  Phila.  185. 

^  Bostwick  V.  Detroit  Fire  Depart- 
ment, 49  Mich.  513. 

'  Bank  of  Augusta  v.  Earle,  13  Pet. 
558 

*  State  V.  R.  R.  Co.,  45  Wis.  579. 

*  Mitchell  V.  Vermont  Copper  Min. 
Co.,  40  N.  Y.  Sup.  Ct.  406. 

"  Simpson  v.  Hotel  Co.,  8  IL  L.  Cas. 
712;  Forrest  v.  R.  R.  Co.,  30  Beav. 
40.  In  Brown  r.  WinnisimmetCo.,  11 
Allen,  326,  a  ferry  company  was  held 
to  have  power  to  lease  its  surplus 
l)oats  to  other  parties.  **  We  know  of 
no  rule,"  said  the  court,  "  or  principle. 


by  which  an  act  creating  a  corporatioa 
for  certain  specific  objects,  or  to  carry 
on  a  particular  trade  or  business,  is  to 
be  strictly  construed  as  prohibitory  of 
all  other  dealings  or  transactions  not 
coming  within  the  exact  scope  of  those 
designated.  Undoubtedly,  the  main 
business  of  a  corporation  is  to  be  con- 
fined to  that  class  of  operations  which 
properly  appertain  to  the  general  pur- 
poses for  which  its  charter  was  granted. 
But  it  may  also  enter  into  contracts 
and  engage  in  transactions  which  are 
incidental  or  auxiliary  to  its  main 
business,  or  which  may  become  neces- 
sary, expedient,  or  profitable  in  the 


392 


CORPORATIONS. 


C60 


§  392.  lilay  Alter  its  Business  to  Suit  Changes  of  Time 
or  Circumstances. — "It  is  implied  in  the  formation  of 
every  corporation  that  it  shall  adapt  itself  to  changes  of 
time  and  circumstances,  and  that  it  may  avail  itself  of  any 
new  appliances  or  inventions  which  arc  deemed  necessary 
or  convenient  to  a  successful  proseeutirn  of  its  husiness. 
.  .  ,  .  This  is  no  departure  from  the  original  agreement 
<.f  the  corporators,  although  the  latter  could  not  possihly 
have  contemplated  the  alterations  which  time  and  events 
have  brought  about."*  Thus  it  has  been  held  that  a  cor- 
poration, chartered  to  jourchase  lands  and  create  water 
power  by  the  erection  of  dams,  might,  after  changes  in 
the  country  had  made  water  privileges  of  little  account, 
raise  the  grade  of  its  lands,  and  then  sell  them;''  that  a 


care  and  management  of  the  property 
■w'lUcli  it  is  authorized  to  hold  under 
the  act  by  which  it  was  created.  For 
example,  it  might  pcriiaps  be  lield 
that  a  corporation  established  for  the 
purpojc  of  manufacturing  cotton  and 
woolen  cloth  could  not  properly  invest 
all  its  capital  in  mill  powers  and  priv- 
ileges, and  engage  exclusively  in  the 
business  of  leasing  them  to  others  to 
be  used  for  manufacturing  purposes, 
or  that  it  could  not  lawfully  confine 
its  operations  to  the  making  of  steam- 
engines  and  machines  for  sale.  But 
no  one  could  doubt  that  it  would  be 
within  the  scope  of  its  powers  to  allow 
another  person  or  corporation,  for  a 
reasonable  compensation,  to  draw  sur- 
plus water  from  its  mill-pon  1,  or  to 
employ  that  portion  of  its  steam  power 
which  was  not  required  for  its  ow  n  use. 
So  a  stage-coach  company  or  a  street- 
railway  corporation  would  exceed  its 
corporate  powers  if  it  engaged  exten- 
sively in  the  transportation  of  passen- 
gers and  merchandise  on  land  or  sea 
by  steam;  but  it  would  be  acting 
strictly  within  the  limits  of  its  capa- 
city if  it  should  occasionally  let  a  horse, 
or  a  coach,  or  a  car,  not  required  for 
its  own  immediate  purposes,  to  another 
person  or  corporation,  or  should  enter 
into  a  contract  for  the  employment  of 
its  horses  in  another  occupation  during 
a  portion  of  the  year,  when  the  business 
of  the  corporatioadid  not  require  their 


use.  Wo  can  bco  no  substantial  differ- 
ence between  transactions  of  this  char- 
acter and  that  which  the  deiendants 
entered  into  when  they  made  the  con- 
tracts with  the  ijlaintiffs." 

*  Morawetz  on  Corporations,  sec. 
192. 

*  Dupec  V.  Boston  Water  Power  Co., 
114  Mass.  37,  the  court  saying:  "It 
is  contended  that  a  sale  of  the  lands  of 
the  corporation  in  the  mode  proposed 
would  bo  a  breach  of  trust.  This  de- 
pends upon  tho  question  whether  a 
sale  on  such  terms  is  by  reasonable 
implication  within  tho  chartered  pow- 
ers of  such  a  corporation.  It  is  not 
enough  that  the  proposed  action  may 
be  shown  to  bo  prejudicial  to  the  gen- 
eral corporate  intiireits,  if  it  is  not 
illegal,  and  if  it  equally  affects  all  the 
corporators.  Regard  must  be  hatl  to 
the  peculiar  situation  of  the  property. 
The  increase  of  population  since  the 
origiiial  .act  of  incorporation  has  given 
greatly  increased  value  to  the  lands 
acquired  by  the  company.  Tho  busi- 
ness of  the  company  can  uo  longer  bo 
profitably'  confined  to  the  develop- 
ment and  use  of  its  water  privileges. 
It  has,  by  contract  with  the  common- 
wealth, tiio  city,  and  other  owners  of 
land,  extinguished  its  water  power, 
and  now  owns  instead  thereof  exten- 
sive and  valuable  tracts  of  land,  over 
which  it  had  originally  only  the  right 
to  flow.    This  change  ia  its  business 


660 


661 


POWERS. 


393 


canal  company  may  widen  and  deepen  its  canal  to  meet 
the  requirements  of  greater  traffic;*  that  a  manufacturing 
company  may  buy  new  machinery  and  patents;*  that 
a  land  improvement  company  may  build  a  saw-mill  and 
a  hotel;'  that  a  manufacturing  company  may  open  a  shop 
to  supply  its  employees  with  necessaries;*  that  a  railroad 
company  may  agree  to  carry  beyond  its  line.'  A  com- 
pany incorporated  "for  the  purpose  of  manufacturing  and 
selling  glass"  may  purchase  glassware  to  supply  their 
customers,  while  repairing  their  works.** 

§  393.  Power  to  Issue  Preferred  Stock.  —  Preferred 
shares  are  those  the  owners  of  which  are  entitled  to 
profits  to  a  certain  extent  in  preference  to  other  share- 
holders. The  holders  of  such  shares  are  not  creditors  of, 
but  stockholders  in,  the  company.  They  differ  from  other 
share-holders  only  in  being  entitled,  as  against  them, 
to  payment  of  dividends  in  priority  to  them.  Preferred, 
preference,  preferential,  or  guaranteed  shares,  as  they  are 
indilFcrently  called,'  are  usually  issued  by  companies  who 
have  expended  their  original  capital  for  the  purpose  of 
obtaining  further  capital,  and  therefore  where  the  author- 
ity to  issue  preference  stock  is  given,  it  is  necessary  that 
it  shall  be  employed  for  that  purpose  alone,  and  the  corn- 
has  inado  it  necessary  to  fill  in  and 
improve  the  land,  that  it  might  bo 
made  available  as  assets  of  the  com- 
pany, and  this  necessity  has  been  rec- 
ognized by  a  resolve  of  the  legislature 
authorizing  an  increase  of  capital  for 
that  purpose;  Res.  185(5,  c.  76.  There  is 
nothi:ig  in  the  general  laws  of  the  com- 
niouwealth,  or  in  tlie  company's  char- 
ter, which  forbids  the  sale  proposed. 
The  power  to  purchase  and  hokl  implies 
the  i)ower  to  sell,  and  to  sell  upon  such 
term^i  as  to  secure  the  highest  price. 
The  whole  capital  is  now  represented 
by  these  landji  from  the  sale,  and  not 
from  the  income  or  use,  of  which  the 
share-holders  must  derive  their  return. 
In  the  absence  of  legislative  provision 
to  the  contniry,  a  corporation  may 
}iold  and  sell  its  own  stock,  and  may 


receive  it  in  pledge  or  in  payment  in 
the  lawful  exercise  of  its  corporate 
powers:  Leland  v.  Hayden,  102  Mass. 
542;  American  Railway-Frog  Co.  v. 
Haven,  101  Mass.  398;  3  Am.  Rep. 
377;  Nesmith  v.  Washington  Bank,  6 
Pick.  .324,  329;  Coleman  v.  Columbia 
Oil  Co.,  51  Pa.  St.  74;  City  Bank  of 
Columbus  V.  Bruce,  17  N.  Y.  507;  Ex 
parte  Holmes,  5  Cow.  426. " 

^  Selden  v.  Delaware  Canal  Co.,  29 
N.  Y.  634. 

»  In  re  British  etc.  Cork  Co.,  L.  R. 
1  Eq.  231. 

»  Watt's  Appeal,  78  Pa.  St.  370. 

*  Dauchy  v.  Brown,  24  Vt.  197. 

*  See  post,  title  Bailments;  Carriers. 

*  Lyndeborough  Glass  Co.  v.  Mass. 
Glass  Co.,  Ill  Mass.  315. 

^  Henry  r.  R.  R.  Co.,  4  Kay  &  J.  1. 


393 


CORPORATIONS. 


662 


pany  cannot,  for  example,  pay  dividends  with  such  stock.* 
The  issue  of  preferred  stock  cannot  bo  justified  except  for 
the  purpose  of  strengthening  the  company's  standing  or 
enlarging  its  business.  The  corporation  has  reached  a 
crisis  in  its  affairs;  the  stockholders  are  unublo  or  un- 
willing to  sink  more  money  in  the  enterprise,  but  yet  are 
ready  to  give  to  those  who  will  do  so  a  preference  in  any 
profits  which  the  increased  moans  may  enable  the  concern 
to  make.  These  considerations  render  the  transaction 
fair  and  equitable.*  A  distinction  is  made  by  the  courts 
between  dividends  or  interest  upon  preferred  stock,  and 
upon  common  stock,  and  it  is  this:  that  as  to  the  latter, 
their  declaration  is  discretionary  with  the  directors;  while 
as  to  the  former,  the  question  of  ability  to  pay  will  be  de- 
cided by  the  court,  and  the  decision  of  the  directors  is  not 
conclusive.*  Equity  will  compel  directors  of  a  corporation 
to  declare  dividends  in  favor  of  holders  of  preferred  stock 
who  are  shown  to  be  entitled  thereto.*  Preferred  stock 
cannot  be  issued  without  express  or  implied  authority  in 
the  charter,  unless  with  the  assent  of  all  the  stockholders. 
The  effect  of  it  would  of  course  be  to  impair  the  contract  of 
the  original  stockholders,  which  could  not  be  done  against 
their  wishes.*    A  power  to  borrow  money  does  not  give 


»  Hoole  V.  R.  R.  Co.,  L.  R.  3  Ch. 
App.  262. 

'^Loekhardt  v.  Van  Alstyne,  31 
Mich.  70;  18  Am.  Rep.  15G. 

3  Barnard  v.  R.  R.  Co.,  7  Allen.  512: 
Bryant  v.  Ohio  College,  1  Cin.  67; 
Dickinson  v.  K.  R.  Co.,  7  W.  Va.  ".90: 
King  V.  R.  R.  Co.,  9  Rep.  431:  Fu  - 
ness  V.  R.  R.  Co.,  25  Boav.  614;  Chase 
V.  Van.lerbilt,  37  N.  Y.  334. 

*  Hazeltine  v.  R.  R.  Co.,  79  Me.  414; 
1  Am.  St.  Rep.  331. 

^  Kent  V.  Quicksilver  Mining  Co., 
78  N.  Y.  159.  In  Hutton  v.  Scarbor- 
ough Cliff  Hotel  Co.,  2  Drew.  &  S. 
51 1,  4  Dc  Gcx,  J.  &  S.  672,  the  court 
said:  "I  think  it  is  clear  that  this  is 
a  case  for  an  injunction.  There  is 
a  memorandum  of  association  which 
prescribes  that  the  capital  of  the  com- 
pany shall  be  one  hundred  and  twenty 


thousand  pounds,  to  be  divided  into 
twelve  thousand  shares,  of  ten  pounds 
each.  In  the  articles  of  association, 
there  are  provisions  iik  regard  to  the 
payment  of  the  dividends,  that  they 
ahall  not  be  paid  out  of  capital,  and 
that  when  dividends  ai  paid  to  the 
share-holders  thoy  are  to  be  in  propor- 
tion to  the  shares  which  they  hold. 
So  that  when  any  person  takes  a  num- 
ber of  shares  in  this  company  a  con- 
tract is  entered  into  between  him  and 
the  general  body  of  share-holders,  to 
the  effect  that  all  those  who  have 
taken  or  shall  take  any  of  the  twelve 
thousand  shares  shall  have  a  ratable 
dividend,  whenever  there  is  a  divi- 
dend, in  proportion  to  their  respective 
shares.  This  is  the  contract  between 
the  parties.  The  question  then  really 
comes  to  this:  Can  the  majority  of  the 


, 


662 


663 


POWERS. 


303 


authority  to  issue  proforrcd  stock.'  But  where  such  stock 
was  secured  by  ])ond  and  mortgage,  the  holders  being 
expressly  prohibited  by  statute  from  being  members  of 
the  corporation,"  where  the  preferred  stock  was  surren- 
dered, and  a  bond  and  mortgage  taken  in  its  stead,  the 
preferential  share-holders  thereafter  not  being  entered  as 
members  of  the  corporation,"  where  there  was  a  provision 
for  the  redemption  of  the  stock,'  and  where  there  was  a  con- 
dition for  payment  of  interest  until  the  company  should 
go  into  operation,® —  in  all  these  cases  the  proceedings 
wore  adjudged  not  ultra  vires,  being  looked  upon  as 
in  the  nature  of  loans. 

But  where  the  charter  authorizes  the  issue  of  preferred 
stock,  no  question  as  to  the  power  to  issue  it  can  bo 
raised  by  a  dissenting  stockholder.*  And  where  its  is- 
sue is  agreed  to  by  all  the  stockholders,  it  is,  of  course, 
legal.'  Tho  legislative  authority  may  bo  given  subse- 
quent to  the  organization  of  the  corporation.*  The  issue 
of  preferred  stock  may  be  acquiesced  in,  so  as  to  bar  the 
oihqr  stockholders  from  objecting,  from  their  recognizing 


share-holders,  in  order  to  induce  per- 
sons to  take  aoinc  of  theao  twelve 
thousand  sliares,  which  are  nT)t  yet 
issued,  autliorize  the  directors  to  make 
an  arrangunicut  for  giving  to  them, 
not  that  which  all  the  existing  share- 
holders contracted  should  be  given, 
viz.,  a  dividend  in  proportion  to  their 
shares,  but  a  preferential  dividend,  so 
that  every  one  who  has  contracted 
that  he  shall  have  a  proportionate 
dividend  with  all  those  who  take  any 
of  the  twelve  thousand  sliares  will  no 
longer  have  a  proportionate  dividend, 
bu;  his  dividend  will  not  be  paid  at 
all  or  at  least  suspended,  until  other 
persons  who  shall  have  ba«m  induced 
to  take  some  of  these  twelve  thousand 
shares  shall  have  been  paid  their  divi- 
dend in  full?  That  is  a  clear  breach 
and  violation  of  the  contract  which 
the  parties  entered  into.  It  is  not 
necessary  that  there  should  be  a  case 
of  fraud  in  the  moral  sense  of  the 
term.     It  is  a  breach  of  contract,  and 


that  the  directors  have  no  right  to 
commit." 

'  Kent  »'.  Quicksilver  Mining  Co., 
78  N.  Y.  15!). 

•^  Burt?'.  Rattle,  .31  Ohio  St.  116. 

'  Totten  V.  Tisoii,  54  (la.  139. 

*  Westchester  etc.  R.  11.  Co.  ?\  Jack- 
son, 77  Pa.  .St.  321. 

'■>  Richardson  v.  R.  11.  Co.,  44  Vt. 
613. 

«  Matthews  r.  R.  R.  Co.,  48  L.  J. 
J.  Ch.  375;  Henry  e.  R.  R.  Co.,  1  De 
Gex  &  J.  G06;  Taft  v.  R.  R.  Co.,  8  R. 
I.  310;  5  Am.  Rep.  575;  St.  John  v.  R. 
R.  Co.,  lOBlatchf.  271;  22  Wall.  130; 
Davis  V.  Proprietors,  8  Met.  321;  In 
re  Anglo-Daiiubian  Steam  Nav.  Co., 
L.  R.  20  Eq.  339. 

'  Prouty  V.  R.  R.  Co.,  1  Hun, 
655. 

8  Rutland  etc.  R.  R.  Co.  v.  Thrall, 
35  Vt.  530;  City  of  Covington  v.  Cov- 
ifigton  etc.  Bridge  Co.,  10  Dush,  69; 
Midland  R.  R.  Co.  v.  Gordon,  16  Mees. 
&  W.  804. 


§304 


CORPORATIONS. 


664 


it  at  corporate  meetings;*  and  especially  where  it  has 
passed  into  the  hands  of  innocent  holders.^ 

§  394.  Rights  of  Preferred  Stockholders. — Interest  or 
dividends  to  preferred  stockholders  can  be  paid  only  out 
of  the  profits  actually  earned.'  Therefore,  an  express 
guaranty  to  pay  a  certain  dividend  on  preferred  stock  en- 
titles the  holders  only  to  such  dividends  when  there  are 
profits  out  of  which  they  can  be  paid.*  But  arrears  in 
one  year  may  be  made  up,  it  seems,  from  profits  earned  in 
subsequent  jears.*  In  declaring  dividends  on  preferred 
stock,  the  arrearages  of  one  year  cannot  be  paid  out  of 
the  earnings  of  a  subsequent  year,  when  the  by-law  of  the 
corporation  upon  the  subject  implies  that  the  entire  net 
earnings  of  each  year  shall  be  paid  out  in  dividends.^ 
But  preferred  stockholders  are  entitled  to  dividends  from 
earnings  on  hand  without  first  making  provision  for  the 
payment  of  the  principal  of  the  bonded  debt,  where  the 
corporation  is  in  good  circumstances  and  credit,  and 
could  doubtless  provide  for  an  extension  of  the  time  for 
paying  such  debt,  or  make  payment  by  the  issue  of  other 
bonds.^  Preferred  stockholders  have  no  control  over  the 
corporation  which  is  not  enjoyed  by  common  stockholders; 
the  difference  between  them  is  simply  this:  that  the  one 
class  is  to  be  first  paid  out  of  a  certain  fund,  to  the  exclu- 
sion of  the  other,  if  that  fund  be  inadequate  to  pay  both. 


'  Lockhartt'.  Van  Alstyne,  31  Mich. 
7G;  IS  Am.  Rep.  I5G. 

-  Keut  i\  Quicksilver  Min.  Co.,  12 
Hun,  53;  78  N.  Y.  159;  Hoytv.  Quick- 
silver Min.  Co.,  17  Hun,  1G9. 

^  McDougall  V.  Jersey  Imperial  Hotel 
Co.,  2  Hem.  &  M.  528;  Pitts,  etc. 
R.  Co.  V.  Allegheny  Co.,  63  Pa.  St. 
120;  Curran  v.  Arkansas,  15  How. 
304;  Bates  v.  R.  R.  Co.,  49  Me.  491; 
Taft  V.  R.  R.  Co.,  8  R.  I.  310;  5  Am. 
Rep.  575.  In  Lockliart  v.  Van  Al- 
atyne,  31  Mich.  70,  18  Am.  Rep.  15G, 
it  was  held  that  an  agreement  by  a 
corporation  to  pay  annual  tlividenda 
to  preferred  stockholders,  without  ref- 


erence to  its  ability  to  pay  them  from 
earnings,  was  void. 

*  Lockhart  v.  Van  Alstvne,  31  Mich. 
76;  18  Am.  Rep.  15b;  Tatt  v.  R.  R. 
Ca,  8  R.  I.  310;  5  Am.  Rep.  575. 

»  Henry  v.  R.  R.  Co.,  1  Do  Gex  &  J. 
606;  Matthews  v.  R.  R.  Co.,  28  L.  J. 
Ch.  375;  Lockhart  v.  Van  Alstj'ne, 
31  Mich.  76;  18  Am.  Rep.  150;  Taft 
V.  R.  R.  Co.,  8  R.  I.  310;  5  Am.  Rep. 
575;  Prouty  v.  R.  R.  Co.,  1  Hun, 
655. 

«  Hazeltinev.  R.  R.  Co.,  79  Me.  411; 
1  Am.  St.  Rep.  330. 

'  Hazeltino  V.  R.  R.  Co.,  79  Me.  411; 
1  Am.  &i.  Rep.  331. 


664 

B  it  has 


terest  or 
)nly  out 
express 
took  en- 
lere  are 
:ears  in 
irned  in 
referred 
[  out  of 
V  of  the 
tire  net 
idends.® 
ds  from 
for  the 
lere  the 
lit,  and 
ime  for 
»f  other 
ver  the 
lolders; 
the  one 
i  exclu- 
y  both. 

lem  from 

31  Mich. 
V.  R.  R. 
575. 

Gexft  J, 

28  L.  J. 

Alstj'ne, 

15G;  Tafb 

S.m.  Rep. 

1    Hun, 

Me.  411; 

Me.  411; 


665 


POWERS. 


§394 


The  corporation  is  no  more  a  trustee  for  the  holders  of 
preferred  stock  than  for  the  holders  of  common  stock, 
and  consequently  the  former  have  no  right  to  complain  of 
acts  of  the  directors,  which  simply  make  it  less  likely  that 
the  particular  fund  from  which  they  expect  to  be  paid  will 
piove  sufficient  to  satisfy  their  claims.  Therefore,  the  exe- 
cution  of  a  mortgage  upon  the  whole  line  of  a  railroad,  for 
the  purpose  of  raising  funds  for  the  company,  and  subse- 
quent to  the  issuance  by  the  corporation  of  preferred 
stock,  is  not  in  derogation  of  the  rights  of  the  preference 
share-holders,  and  an  injunction  will  not  issue  to  restrain 
the  execution  of  such  mortgage;^  and  so  preferred  stock- 
holders who  are  entitled  to  receive  interest  in  preference 
to  iiie  payment  of  dividends  on  the  common  stock,  and 
after  payment  of  the  mortgage  interest,  are  not  to  be  con- 
sidered prejudiced  by  the  corporation  issuing  mortgage 
bonds  consolidating  prior  and  subsequent  indebtedness.- 
Owners  of  preferred  railroad  stock  entitled  to  an  annual 
non-accumulating  dividend,  dependent  on  a  declaration 
of  profits  by  a  board  of  directors,  which  has  reported 
more  than  sufficient  net  profits  for  the  payment  of  the 
dividend,  but  which  has  determined  to  use  it  all  for  the 
improvement  of  the  road,  can  compel  payment  to  them- 
selves.' Where  an  option  was  given  to  common  stock- 
holders to  become  preferred  ones  by  surrendering  their 
stock  before  a  given  day,  a  stockholder  who  receives  no 
notice  in  time  to  make  the  exchange,  on  account  of  his 
living  abroad,  is  not  entitled  to  relief.^  So  where  an  op- 
tion was  given  to  convert  loan  notes  into  shares  within  a 
given  time,^  and  where  by  the  terms  of  a  railroad  bond 
a  time  was  fixed  within  which  it  might  be  converted  into 
stock  if  the  holder  so  desired,  an  extension  of  the  time  of 
payment  of  the  bond  was  held  not  to  extend  the  time  of 

'  Garrect  v.  May,  19  Md.  177.  »  Nickals  v.  R.  R.  Co.,  15  Fed.  Rep. 

riiompaou  V.  R.  R.  Co.,  42  How.  575. 

Fr.  68;    11   Abb.  Pr.  188;   45  N.  Y.  *  Pearsons  R.  R.  Co.,  14  Sim.  541. 

**»•  *  Campbell  v.  R.  R.  Co. ,  5  Horo,  61S>. 


394 


CORPORATIONS. 


666 


the  right  of  conversion.*  Preferred  stock  was  entitled  to 
preferred  dividends  "out  of  the  net  earnings  of  the  road, 
....  after  payment  of  mortgage  interest  and  delayed 
coupons  in  full."  Subsequent  to  the  issue  of  this  stock, 
the  company  leased  new  roads,  and  borrowed  money  for 
the  repair  and  equipment  of  the  road,  as  it  had  power  to 
do.  The  rent  of  the  new  road  and  the  interest  on  this 
borrowed  money,  it  was  held  in  the  supreme  court  of  the 
United  States,  had  priority  over  the  preferred  stock.'^ 
Where  the  certificate  of  preferred  stock  provides  that 
after  the  payment  of  the  guaranteed  per  cent  the  pre- 
ferred stockholders  shall  share  in  any  surplus  beyond  a 
certain  per  cent  which  may  be  divided  upon  the  common 
stock,  such  preference  share-holders  are,  after  receiving 
their  guaranteed  per  cent,  to  be  deferred  until  the  com- 
mon share-holders  have  received  their  specified  per  cent, 
and  then  all  stockholders  are  to  be  on  the  same  footing  as 
to  any  remaining  surplus.* 

The  right  of  the  holders  of  preferred  stock  extends  only 
to  a  priority  as  to  dividends;  as  to  assets  or  capital,  they 
stand  in  the  same  position  as  ordinary  share-holders.* 

profits  than  is  the  proportion  borne  by 
his  siiaro  of  the  capital  to  the  capital 
of  the  others,  whether  on  aecoi'jit  of 
his  services  (wliich  is  the  more  fre- 
quent ground  in  cases  of  partnerahip 
for  giving  the  larger  share),  or  on  ac- 
count of  the  services  of  others  formerly 
given  to  the  partnership,  which  is 
sometimes  done,  especially  in  the  case 
of  a  second  or  tliird  generation,  that 
privilege  ceases  wlieu  the  pirtnership 
IS  dissolved.  If  you  give  an  annuity 
out  of  profits  to  a  widow  during  tlie 
continuance  of  the  partnership,  slie 
having  no  share  of  the  capital,  of 
course  that  ex  vi  termini  will  come  to 
an  cud  at  the  dissolution  of  the  part- 
nership. If  you  give  a  managing  part- 
ner a  salary,  or  a  larger  share  of  profits 
than  his  proportion  of  the  capital,  of 
course,  at  the  dissolution,  the  manage- 
ment comes  to  an  end  and  his  larger 
share  of  profits.  But  in  the  ordinary 
case,  when  the  profits  are  unequally 


»  Muhlenberg  v.  R.  R.  Co.,  47  Pa. 
St.  IG. 

^  St.  John  V.  R.  R.  Co.,  10  Blatchf. 
271;  22  Wall.  137. 

»  Bailey  v.  R.  R.  Co.,  1  Dill.  174;  17 
Wall.  9G. 

^  In  re  London  Rubber  Co.,  L.  R.  5 
Eq.  519.  Where  the  power  was  express, 
preference  capital  was  issued  by  an 
Entjliah  corporation,  and  its  validity 
sustained:  In  re  Bangor  etc.  ^lab  Co., 
L.  R.  20Eq.  ;VJ.  So  in  an  American  case, 
where  it  was  allowed  by  statute:  Mc- 
Gregor V.  Home  Ins.  Co.,  33  N.  J.  Eq. 
181.  The  rule  was  clearly  laid  down 
in  an  English  case,  Griffitli  v.  Paget, 
L.  R.  6  Cli.  Div.  511,  in  the.se  words: 
"  These  companies  are  commercial 
partnerships,  and  are,  in  the  absence 
of  express  provisions,  statutory  or 
otherwise,  subject  to  the  same  consid- 
erations. If  in  an  ordinary  commer- 
cial partnershij)  one  or  more  of  the 
partners  has  a  larger  share  of    the 


666 


667 


POWERS. 


§395 


Illustrations.  —  A  corporation  authorized  to  issue  preferred 
stock  after  it  had  received  a  certain  sum  for  each  share,  which 
should  be  payable  on  dissolution  in  full  next  after  the  pay- 
ment of  debts,  guaranteed  that  it  "shall  receive  semi-annual 
dividends  of  four  dollars  on  each  share."  Held,  that  the  guar- 
anty was  absolute,  and  independent  of  the  profits  earned: 
Williavis  v.  Parker,  136  Mass.  204.  A  supplement  to  the  char- 
ter of  a  corporation  authorized  issuance  of  preferred  stock, 
and  provided  "that  when  so  issued,  the  holders  thereof,  respect- 
ively, shall  be  entitled  to  receive  dividends  on  the  same,  not  to 
exceed  seven  per  centum  per  annum,  before  any  dividend  shall 
be  set  apart  or  paid  on  the  other  and  ordinary  stock  of  said 
company."  Held,  that  holders  of  preferred  stock  were  entitled 
to  such  dividends,  up  to  seven  per  cent,  as  the  profits  of  a  par- 
ticular year  would  yield,  before  any  dividends  were  paid  to  the 
common  stockholders,  although  the  deficiency  of  profits  in  one 
year  was  not  to  be  made  up  in  another  year;  and  when  a  holder 
of  preferred  stock  failed  to  claim  his  rights  in  certain  years,  a 
subsequent  owner  thereof  could  claim  reimbursement:  Elkins 
v.  R.  R.  Co.,  3G  N.  J.  Eq.  233. 


§  396.     No  Implied  Power  to  Alter  Charter.  —  The 

charter  of  the  corporation  cannot  be  altered  without  the 
consent  of  the  legislature,'  and  the  consent  of  every  mem- 
ber of  the  corporation.^     A  legislature,  under  an  express 


divided,  that  is,  unequally  as  regards 
the  share  of  the  capital,  the  same  rule 
prevails,  and  that  is  quite  indepen- 
dent of  the  circumstance  whether  the 
excess  of  profits  is  given  for  services, 
or  given  to  a  sleeping  partner  for  the 
use  of  his  name  or  otherwise.  When 
tiie  partnership  comes  to  an  end,  the 
right  to  the  share  of  the  profits  comes 
to  an  end  also;  and  you  distribute  the 
assets,  after  providing  for  the  profits 
earned  up  to  the  time  of  the  dissolu- 
tion in  proportion  to  the  partners' 
shares  of  the  partnership  capital. 
That  is  the  general  rule  of  law  in  a 
commercial  partnership.  Therefore, 
you  would  distribute  the  assets  simply 
ni  proportion  to  the  capital.  This  is 
a  commercial  partnership  subject  to 
certain  statutory  provisions.  There- 
fore, if  there  were  no  provision  to  be 
found  anywhere,  you  would  distribute 
the  assets  in  proportion  to  the  capital, 
and  the  mere  arrangement  for  the 
division  of  profits  inter  ee  during  the 


continuance  of  the  partnership  would 
have  no  direct  bearing  on  the  division 
of  the  capital,  \3  distinguished  from 
profits  earned  up  to  the  time  of  the 
dissolution,  after  the  dissolution  of 
the  company." 

'  Morawetz  on  Corporations,  &ec. 
196. 

-  Mor.awetz  on  Corporations,  sec. 
19G;  Union  Locks  Co.  v.  Towne,  1 
N.  H.  44;  8  Am.  Doc.  33;  Com.  v. 
Cullen,  13  Pa.  St.  133;  53  Am.  Dec. 
450;  Brown  v.  Fairmount  Mining  Co., 
10  PhiUi.  32;  contra  in  New  Yorii  and 
Massachusetts:  See  Morawetz  on  Cor- 
porations, sec.  202.  Ill  Z:ibriskie  v. 
R.  R.  Co.,  18  N.  J.  Eq.  191,  90  Am. 
Dec.  627,  the  court  say:  "'The  de- 
cisions in  the  cases  of  Baiiet  v.  R. 
R.  Co.,  13  111.  504,  Pacilic  R.  R. 
r.  Renshaw,  18  Mo.  210,  and  Pacific 
R.  R.  V.  Hughes,  22  Mo.  291,  64  Am. 
Dec.  265,  hold  that  the  majority  of 
the  stockholders,  by  authority  of  the 
legislature,  may  make  a  change,  pro- 


396 


CORPORATIONS. 


668 


reservation  of  power  to  "repeal,  alter,  or  modify*'  the 
charter  of  a  private  corporation,  cannot  modify  it  without 
the  consent  of  the  corporation.  But  if  the  corporation 
refuses  to  accept  a  statutory  modification,  it  must  cease  to 
transact  business  in  a  corporate  capacity.*  Whenever  a 
corporation  accepts  a  material  alteration  of  its  charter 
from  the  legislature,  by  regular  action  of  the  stockholders 
in  general  meeting  duly  organized,  the  act  is  binding  upon 
each  individual  member,  unless  he  shall  expressly  dissent 
therefrom  before  any  debts  are  contracted  or  rights  inure 
to  third  parties  in  carrying  out  the  new  designs  or  enter- 
prise.'' If  a  statute,  in  force  at  the  time  a  subscription  to 
the  capital  stock  of  a  railroad  company  is  made,  author- 
izes an  extension  of  the  line  of  the  road,  the  subsequent 
exercise  of  such  power  by  the  company  will  not  affect  the 
subscription.' 

§  396.    What  not  "  Alterations  "  —  Grant  of  Additional 
Franchises — Discharge  of  Obligations  to  State. — But  the 

viiled  it  is  not  great  or  a  radical  one. 
Tiiey,  in  express  terms,  say  that  a 
chango  lilce  tliis  would  not  bo  war- 
ranted, and  so  far  as  of  authority  are 
on  the  side  of  the  complainant.  But 
the  principle  on  which  they  are  de- 
cided is  wrong;  and  if  it  is  once 
conceded  that  a  majority  of  the  cor- 
porators may,  by  authority  from  the 
legislature,  change  the  object  of  the 
enterprise  in  aniall  things,  there  is  no 
principle  of  law  by  which  they  can  be 
restrained  in  any  a  little  larger  or  in 
the  character  of  the  whole  work.  The 
same  principle  will  load  the  courts  of 
Illinois  and  Missouri,  as  it  did  those 
in  New  York,  to  allow  radical  changes, 
and  must,  if  consistently  applied,  allow 
a  charter  for  a  railroad  to  be  used  for 
banking  or  insurance  business,  or  for 
a  canid,  theater,  brewery,  or  beer 
saloon.  Tliero  is  no  other  alternative 
to  the  proposition  that  while  the  power 
reserved  authorizes  the  legislature, 
within  certain  limits,  to  make  such 
alterations  as  they  choose  to  impose, 
it  gives  no  authority,  when  the  legis- 
lature does  not  impose  them,  for  the 
majority  to  adopt  such  alterations  or 


enter  upon  such  enterprises  as  are 
allowed  by  the  legislature.  Again, 
the  power  of  the  legislature  has  its 
limits.  It  can  repeal  or  suspend  the 
charter;  it  can  alter  or  modify  it;  it 
can  take  away  the  charter;  but  it  can- 
not impose  a  new  one,  and  oblige  the 
stockholders  to  accept  it.  It  can  alter 
or  modify  the  old  one;  but  power  to 
alter  or  modify  anything  can  never  bo 
held  to  imply  a  power  to  substitute  a 
thing  entirely  different.  It  is  not  the 
meaning  of  the  words  in  their  usually 
received  sense.  Power  to  alter  a 
mansion-house  would  never  be  con- 
strued to  mean  a  power  to  tear  tlown 
all  but  the  back   kitchen  and   front 

f>iazza,  and  build  one  three  times  as 
arge  in  its  place.  In  anything  altered, 
80!"'  ^  must  be  prescrveil  to  keep 
\x^  its  identity;  and  a  matter  of  the 
same  kind,  wholly  or  chiefly  new, 
substituted  for  another,  is  not  an  al- 
teration; it  is  a  change." 

'  Yeaton  v.  Bank  of  the  Old  Domii.- 
ioa,  21  Gratt.  593. 

*  Martin  v.  R.  R.  Co.,  8  Fla.  370;  73 
Am.  Dec.  713. 

» Jewett  V.  R.  R.  Co.,  34  Ohio  St.  601. 


668 


6G9 


POWERS. 


§  397 


fy"  the 
without 
)oration 
cease  to 
Jiiever  a 

charter 
^holders 
ng  upon 
r  dissent 
is  inure 
)r  enter- 
ption  to 

author- 
(sequent 
ffect  the 

iditional 

But  the 

363  as  are 
c.     Again, 
ire  has  its 
ispend  the 
idify  it;  it 
but  it  can- 
oblige  the 
t  can  alter 
power  to 
n  never  bo 
ibstitute  a 
is  not  the 
ir  usually 
alter  a 
be   con- 
tear  down 
ami   front 
times  as 
g  altered, 
I  to  keep 
tcr  of  the 
oily   new, 
not  an  sl- 
id Domiu- 
[a.  370;  73 
lioSt.  COl. 


grant  of  additional  franchises  hy  the  legislature  to  the 
corporation  is  not  an  alteration,  and  may  be  accepted  by 
a  majority  of  the  corporators.*  So,  also,  the  discharge 
of  obligations  due  the  state  by  the  corporation  is  not  an 
alteration  of  the  charter  within  the  last  section.'^  An  act 
extending  the  charter  is  valid  as  to  creditors  without 
acceptance.'  An  alteration  in  the  charter  increasing  the 
number  of  directors  may  be  accepted  by  a  majority  of  the 
stockholders.*  Amendments  which  are  necessary  to  carry 
into  effect  its  main  design  may  be  made  without  the  con- 
sent of  a  share-holder;  but  not  an  amendment  which 
fundamentally  changes  the  object  and  purposes  of  the  act 
of  incorporation.®  A  subscriber  to  the  capital  stock  of  a 
company,  who  agrees  to  be  subject  to  the  rules  and  regula- 
tions which  may  from  time  to  time  be  adopted  by  the 
directors,  cannot  avoid  payment  because  the  charter  has 
been  amended,  reducing  the  number  of  days  of  notice  to 
bo  given,  if  the  amendment  of  the  charter  has  been  ac- 
cepted.® 

Illustrations.  —  An  agricultural  society's  object  was  "  to 
improve  the  condition  of  agriculture,  horticulture,  and  the  me- 
chanic and  household  arts."  It  was  reorganized  into  a  joint- 
stock  company,  "  to  improve  the  condition  of  agriculture,  horti- 
culture, floriculture,  mechanic  and  household  arts,"  the  name 
being  changed  only  by  substituting  the  word  "  board "  for 
"society."  The  old  society  provided  for  holding  annual  fairs, 
and  the  new  for  annual  fairs  and  exhibitions.  i/eW,  that  there 
was  no  substantial  change  in  the  objects  of  the  society:  Living- 
ston County  Agricultural  Society  v.  Hunter,  110  111.  155. 

§  397.  Effect  of  Alteration  on  Stockholder's  Liability. 
— A  subscriber  to  the  capital  stock  of  a  corporation  is 

*  Fryn  R.  R.  Co.,  2  Met.  (Ky.)322;  470;  Milford  v.  Brush,  10  Ohio,  111; 

Irwii'B  V.  Turnpike  Co.,  2  Penr.  &  \V.  3lj  Am.  Dec.  78. 

46G;  i:3  Am.  Dec.  53;  Gray  v.  Monon-  "  Vose  v.  Handy,  2  Me.  322;  11  Am, 

gahela  Nav.  Co.,  2  Watts  &  S.  156;  37  Dec.   101. 

Am.  Dec.    500;   Pacific  R.  R.  Co.  v.  *  Mower  v.  Staples,  32  Minn.  284. 

Hughes,  22  Mo.  291;  04  Am.  Dec.  265;  *  Fry   v.   R.  R.  Co.,  2  Met.  (Ky.) 

Cross r.  R.  R.  Co.,  90  Pa.  St.' 392.  314. 

=*  Joy  V.  Jackson  Plank  Road  Co.,  1 1  "  Illinoia  River  R.  R.  Co.  v.  Beers, 

Mich.  155;  Wilsoa  v.  R.  R.  Co.,  33  Ga.  27  111.  185. 


398 


CORPORATIONS. 


670 


discharged  from  his  liability  on  his  subscription  by  the 
alteration  of  the  charter  by  the  legislature,  even  though 
the  alteration  is  adopted  by  a  majority  of  the  stockhold- 
ers.* Bat  the  rule  is  different  where  the  legislature  has 
reserved  the  right  at  the  beginning  to  amend  or  alter  the 
charter.'* 

Illustrations. — The  defendant  subscribed  for  stock  in  the 
B.  &  C.  Railroad  Company;  the  legislature  changed  the  terminus 
from  B.to  M.,and  authorized  the  company  to  run  a  line  of  steamers 
beyond  their  terminus.  Held,  that  the  defendant  was  released 
from  his  subscription:  Marietta  etc.  R.  R.  Co.  v.  Elliott,  10  Ohio  St. 
57;  Thompson  v.  Guion,  5  Jones  Eq.  113.  A  had  contracted  to 
tfiVo  1  share  in  a  corporation  created  for  the  purpose  of  making 
8  ,  iiavigable,  and  empowered  to  hold  real  estate  not  exceed- 
i.  «  (^res,  and  to  collect  a  toll  for  forty  years,  not  exceeding 
twelve  per  cent  per  annum  on  the  amount  of  money  expended ; 
«ind  afterwords  the  legislature,  on  the  petition  of  the  corporation, 
butw'  bou;  consent  of  A,  authorized  them  to  hold  real  es- 
tate to  thf-  amcnnt  of  one  hundred  acres,  and  to  collect  a  toll 
unlimited  as  to  its  amount  and  duration.  Held,  that  A  was  dis- 
charged from  his  contract,  and  not  liable  for  any  subsequen- 
assessment  on  the  share:  Union  Locks  and  Canals  v.  Towne,  1 
N.  H.  44;  8  Am.  Dec.  32. 

§  398.  No  Implied  Power  to  Engage  in  Business  out- 
side of  That  Which  It  was  Chartered  to  Carry  on. — There 
is  no  implied  authority  in  a  corporation  to  engage  in  a 
business  outside  of  the  particular  business  it  was  chartered 
to  carry  on.'  Thus  it  has  been  held  that  a  railroad  com- 
pany has  no  implied  power  to  purchase  and  hold  land  for 
speculation  and  sale,*  nor  a  coal-mining  company  to  buy 
coals  in  the  market  as  a  speculation,*  nor  a  toll-bridge 
company  to  build  a  wharf  and  rent  it,*  nor  a  railroad  to 
trade  in  coals,'  or  become  a  steamboat  company,  or  carry 


'  Hartford  etc.  R.  R.  Co.  v.  Croswell, 
15  Hill,  383;  40  Am.  Dec.  354;  Troy 
etc.  R.  R.  Co.  V.  Kerr,  17  Barb.  606; 
McCuUough  V.  Moss,  5  Denio,  580; 
Bank  v.  Charlotte,  85  K  C.  433. 

*  Northern  R.  R.  Co.  v.  Miller,  10 
Barb.  260. 

>  Clark  V.  Farrington,  11  Wis.  306; 
Waldo  V.  R.  R.  Co.,  14  Wis.  575. 


*  Rensselaer  R.  R.  Co.  v.  Davis,  43 
N.  Y.  137;  Pacific  R.  R.  Co  v.  Seeley, 
46  Mo.  212;  100  Am.  Dec.  369. 

»  Alexander  v.  Cauldwell,  83  N.  Y. 
480. 

8ToU.l?ridge  Ca  v.  Oabom,  35 
Conn.  7. 

^  Attorney-General  v.  R.  R.  Co.,  1 
Drew.  &  S.  154. 


670 


671 


POWERS. 


§398 


n  by  the 
n  though 
tockhold- 
iture  has 
alter  the 


ck  in  the 
(terminus 
f  steamers 
s  released 
0  Ohio  St. 
tracted  to 
)f  making 
)t  exceed- 
jxceeding 
xpended; 
rporation, 
d  real  es- 
ect  a  toll 
.  was  dis- 
ibsequen- 
Towne,  1 


Less  out- 

— There 
age  in  a 
bartered 
ad  com- 
laud  for 
y  to  buy 
1-bridge 
Iroad  to 
or  carry 

.  Davis,  43 

)  V.  Seeley, 

,  83  N.  Y. 

sborn,     35 

R.  Co.,  1 


on  a  brewery/  nor  a  fire  or  life  insurance  company  to  do 
a  marine  business,'^  nor  a  toll-road  to  establish  a  stage  line 
and  carry  the  mails,^  nor  a  company  for  manufacturing 
and  selling  railroad  carriages  to  obtain  a  charter  and 
build  a  railroad  in  a  foreign  country/  nor  a  railroad  to 
do  a  banking  business.''  A  corporation  chartered  to  dock 
and  repair  vessels  cannot  engage  in  the  owning  and  navi- 
gating of  ships."  A  corporation  chartered  to  do  an  insur- 
ance  business  cannot  engage  in  banking.'  A  contract  by 
a  railroad  company  to  guarantee  the  expenses  of  a  musi- 
cal festival  is  ultra  vires.  So  is  the  same  contract  by  a 
corporation  chartered  to  manufacture  and  sell  musical 
instruments.*  A  corporation  organized  for  the  purpose 
of  engaging  in  the  "general  freight  and  transfer  busi- 
ness" is  not  bound  by  its  contract  of  suretyship  in  a 
matter  outside  of  its  regular  business."  A  corporation 
chartered  for  the  purpose  of  manufacturing  machinery 
cannot  act  as  selling  agent  of  another  manufacturer's 
machinery.*" 

Illustrations.  —  A  corporation  was  chartered  to  construct 
and  operate  a  railroad  between  Savannah  and  Macon,  and  to 
organize  and  carry  on  a  banking  business.  Held,  to  have  no 
authority  to  enter  into  a  partnership  with  a  private  individual 
to  purchase  and  run  a  steamboat  on  the  Chattahoochie  River, 
forming  no  part  of  its  route:  Central  R.  R.  &  Banking  Co.  v. 
Smith,  76  Ala.  572;  52  Am.  Rep.  353.  A  company  was  incor- 
porated "for  the  purpose  of  estabhshing  and  conducting  a  line 
or  lines  of  steamboats,  vessels,  and  stages,  or  other  carriages 
between  P.  and  B.,  for  the  conveyance  of  passengers  and  trans- 
portation of  merchandise  and  other  articles."  Held,  that  a  con- 
tract of  such  company  for  the  breaking  of  ice  and   towing 


'  Lyde  v.  R.  R.  Co.,  36  Beav.  14. 
'  In   re    PhtEriix   Life   Ins.    Co.,  2 
Johns.  &  H.  441. 
»  Downing  V.  R.  R.  Co.,  40 N.  H.  230. 

*  Riche  V.  R.  R.  Co.,  L.  R.  9  Ex.  224. 

*  People  V.  R.  R.  Co.,  12  Mich.  389: 
8C  Am.  Dec.  64. 

*  New  Orleans  Steam  Co.  v.  Ocean 
Dry  Dock  Co.,  28  La.  Ann.  173;  2a 
Am.  Rep.  90. 


^  Blair  i\  Perpetual  Ins.  Co.,  10  Mo. 
559;  47  Am.  Doc.  129;  Ohio  etc.  Ins. 
Co.  V.  Merchants' Ins.  Co.,  11  Humph. 
1;  53  Am.  Dec.  742. 

*  Davis  V.  R.  R.  Co.,  131  Mass.  221; 
41  Am.  Rep.  23G. 

'  Lucas  V.  White  Line  Transfer  Co., 
70  Iowa,  541;  59  Am.  Rep.  449. 

*"  Westinghouse  Machine  Co.  D.Wil- 
kinaon,  79  Ala.  312. 


399 


CORPORATIONS. 


672 


vessels  through  the  track  thus  broken,  such  vessels  being  bound 
for  v.,  is  invalid:  Steam  Naj'.  Co.  v.  Dandridge,  8  Gill  &  J.  248. 
A  private  corporation  was  chartered  by  the  name  of  the  "State 
Grange  of  tlie  Patrons  of  Husbandry  of  Alabama."  Held,  that 
it  had  no  power  to  lend  money;  such  power  is  excluded  by  the 
declaration  that  the  corporation  is  not  created  for  pecuniary 
profit:  Chambers  v.  Falkncr,  65  Ala.  448. 

§  399.  Authority  to  Wind  up  Business.  —  A  corporation 
cannot,  except  with  the  consent  of  the  legislature,  alienate 
its  property,  and  relinquish  the  control  and  management 
of  its  affairs,  so  as  to  divest  itself  of  all  further  responsibil- 
ity.' Trading  or  manufacturing  corporations  have  an 
implied  authority,  with  the  consent  of  a  majority  of  the 
stockholders,  to  wind  up  the  business,  distribute  the  assets, 
and  surrender  the  charter.^ 


^  York  etc.  R.  R.  Co.  v.  Winans,  17 
How.  30;  see  j)Ofit,  Dissolution  of  Cor- 
porations. 

■^  Wilson  7\  Central  Bridge  Co.,  9 
R.  I.  690;  Wood  v.  R.  R.  Co.,  8  Phila. 
94;  Black  v.  R.  R.  Co.,  22  N.  J.  Eq. 
404;  Lauinan  v.  R.  R.  Co.,  .30  Pa.  St. 
42;  72  Am.  ]>cc.  C85.  In  TrcadwcU 
r.  Salisbury  Mfg.  Co.,  7  Gray,  39.3,  GO 
Am.  Dec.  400,  ib  is  said:  "Wo  enter- 
tain nodonl)t  of  the  right  of  a  corpora- 
tion estaWishcd  solely  for  trading  and 
rianufactnriiig  purposes,  by  a  vote  of 
tiie  majority  t»f  their  stockholders,  to 
wind  up  their  aflfairs  and  close  their 
bnsiness,  if  in  the  exercise  of  a  sound 
discretion  they  deem  it  expedient  so  to 
do.  At  common  law,  the  right  of  cor- 
porations acting  by  a  majority  of  their 
stockholders  to  sell  their  property  is 
absolute,  and  is  not  limited  as  to 
objects,  circumstances,  or  quantity: 
AngcU  and  Ames  on  Corporations,  sees. 
127  ct  seq.;  2  Kent's  Com.,  6th  ed., 
280;  Mayor  etc.  of  Colchester  v.  Low- 
ton,  1  Vcs.  it  B.  226,  240,  244;  Binnev's 
Case,  2  Bland,  142.  To  this  general 
rule  (here  arc  many  exceptions  arising 
from  the  nature  of  particular  corpora- 
tions, the  purposes  forM'hich  they  were 
created,  and  the  duties  and  liabilities 
imposed  on  them  by  their  charters. 
Corporations  established  for  objects 
qwisi  public,  such  as  railway,  canal, 
and  turnpike  corporations,  to  which 


the  right  of  eminent  domain,  and  other 
largo  privileges  are  granted  in  order  to 
enable  them  to  accommodate  the  pub- 
lic, may  fall  within  the  exception;  as 
also  charitable  and  religious  bodies,  in 
tho  administration  of  whose  aflFair?  the 
community,  or  some  portion  of  it,  has 
an  interest  to  sco  that  their  corporate 
duties  are  properly  discharged.  Such 
corporations  may  perhaps  bo  restrained 
from  alienating  their  property,  and 
compelled  to  appropriate  it  to  specific 
uses  by  mandamus  or  other  proper 
process.  But  it  is  not  so  with  corpora- 
tions of  a  private  character,  established 
solely  for  trading  and  manufacturing 

{mrposes.  Neither  the  public  nor  tlie 
egislature  have  any  direct  interest  in 
their  business  or  its  management. 
These  are  committed  solely  to  tho 
stockholders,  who  have  a  pecuniary 
stake  in  the  proper  conduct  of  their 
aflfairs.  By  accepting  a  charter  they 
do  not  undertake  to  carry  on  the  busi- 
ness for  which  they  arc  incorporated, 
indefinitely,  and  without  any  regard 
to  the  condition  of  their  corporate 
property.  Public  policy  does  not  re- 
quire them  to  go  on  at  a  loss.  On  tho 
contrary,  it  would  seem  very  clearly 
for  the  public  welfare,  as  well  as  for 
the  interest  of  tho  stockholders,  tliat 
they  should  cease  to  transact  business 
as  soon  as,  in  the  exercise  of  a  sound 
judgment,  it  ia  found  that  it  cannot  be 


672 


C73 


POWERS. 


g§  400,  401 


'State 


§  400.    No  Implied  Power  to  Enter  into  Partnership. — 

Nor  has  a  corporation  any  implied  aiitliority  to  enter  into 
a  partnership.'  But  it  may  make  joint  contracts  by  which 
Loth  parties  may  become  liable.''  A  corporation  may  bo 
a  joint  owner  of  a  ferry,  and  be  entitled  to  an  accounting.' 
A  corporation  established  to  manufacture  iron  may  be  a 
partner  with  an  individual  in  carrying  on  that  business.'* 

§  401.    Nor  to  Deal  in  Shares  of  Other  Corporations. — 

Nor  has  a  corporation  any  implied  authority  to  deal  in 
shares  in  another  company.''  Though  a  railroad  corpo- 
ration may  take  the  stock  of  another  railroad  corporation 
by  way  of  security  for  a  debt,  it  has  no  right  to  ijivest  its 


prudently  continued.  If  this  bo  not  so, 
we  do  not  see  that  any  limit  could  bo 
put  to  the  businuss  of  a  trading  cor- 
poration short  of  the  entire  los.i  or  de- 
struction of  the  corporate  projierty. 
The  stockholders  could  bo  compelled 
to  carry  it  on  until  it  came  to  actual 
insolvency.  Such  a  doctrine  i.j  with- 
out any  support  in  reason  or  author- 
ity." 

'  Marine  Bank  v.  Ogden,  29  111.  248; 
New  York  etc.  Canal  Co.  v.  Fulton 
Bank,  7  Wend.  412;  Whittentou  Wills 
V.  Upton,  10  Gray,  582;  71  A:n.  Dec. 
681 ;  Morris  etc.  Coal  Co.  v.  Barclay, 
68  Pa.  St.  17.3. 

^  Marino  Bank  v.  Ogden,  29  111.  248. 

3  Hackett  r.  R.  R.  Co.,  12  Or.  124; 
53  Am.  Rep.  327. 

*  Catskill  Bank  v.  Gray,  14  Barb. 
471. 

*  Sumner  v.  Marcy,  3  Wood.  &  M. 
105;  Mechanics'  B:ink  v.  Mcriden 
Agency,  24  Conn.  159;  Central  R.  R. 
Co.  ?'.  Collins,  40  Ga.  582;  flazlehurst 
V.  R.  R.  Co.,  43  Ga.  13;  Berry  v. 
Yates,  24  Barb.  199;  Franklin  Co.  v. 
Lewiston  Inst.,  08  Me.  43;  28  Am. 
Rop.  9;  Coppin  v.  Greenlesa  Co.,  38 
Ohio  St.  275;  43  Am.  Rep.  425.  In 
Franklin  Bank  v.  Commercial  Bank, 
3G  Ohio  St.  350,  38  Am.  Rep.  594,  the 
court  say:  "There  would  seem  to  bo 
little  doubt,  either  upon  principle  or 
authority,  and  independently  of  ex- 
press statutory  prohibition  of  the 
Bame,  that  one  corporation  cannot  be- 
come the  owner  of  any  portion  of  tho 

Vol.  I. -43 


capital  stock  of  another  corporation, 
ualcaa  autliority  to  become  such  is 
clearly  conferred  by  statute:  Mutual 
SiviiigsBank  etc.  v.  Meriden  Agency, 
24  Conn.  159;  Franklin  Co.  v.  Lewis- 
ton  lust.,  03  Mo.  43;  28  Am.  Rep.  9; 
Central  R.  R.  Co.  v.  Collins,  40  Ga. 
582;  Suiiner  v.  Marcy,  3  Wood.  &  M. 
105.  Wore  this  not  so,  one  cor))ora- 
tion,  by  buying  up  the  majority  of 
tho  shares  of  tho  stock  of  another, 
could  take  the  entire  management  of 
it3  business,  however  foreign  such 
business  might  bo  to  that  which  the 
corporation  so  purchasing  said  shares 
was  created  to  carry  on.  A  banking 
corporation  could  become  the  opera- 
tor of  a  railroad,  or  carry  on  tlie  liusi- 
noss  of  manufacturing,  and  any  other 
corporation  could  engage  in  ))ankiiig 
by  obtaining  the  control  of  tho  bank's 
stock.  Nor  would  tliis  result  follow 
any  tho  loss  certainly  if  tiio  shai'cs  of 
stock  were  received  in  pledge  only  to 
secure  tho  payment  of  a  debt,  provided 
the  shares  were  transferred  on  tlie 
bookj  of  tho  company  to  tho  name  of 
the  pledgee.  A  person  in  whose  namo 
the  stock  of  the  corporation  stands 
on  the  books  of  the  corporation  is  ay  to 
tho  corporation  a  stockholder,  and  has 
tho  right  to  vote  upon  tho  stock :  State 
ex  rel.  White  v.  Ferris,  42  Cona.  5GD; 
Ex  parte  Willcock.^,  7  Cow.  402;  17 
Am.  Dec.  525;  In  re  Barker,  G  Wend. 
509;  Hoppin  v.  Buffum,  9  R.  I.  513; 
11  Am.  Rep.  291;  Field  on  Corpora- 
tions, sec.  69." 


§402 


CORPORATICNS. 


674 


corporate  funds  in  the  purchase  of  such  stoclc. 
investment  is  ultra  vires} 


Such  an 


§  402.  Nor  to  Alter  Amount  of  Capital  Stock  or  Pur- 
chase its  Own  Shares. — A  corporation  has  no  implied 
authority  to  increase  or  diminish  the  number  or  vakio  of 
its  shares.''  The  power  to  increase  its  capital  stock  cannot 
be  exercised  by  the  directors,  unless  they  are  specially 
authorized  so  to  do,  either  by  the  charter  or  by  the  stock- 
holders.* Where  a  corporation  has  power  to  increase  its 
stock,  those  holding  stock  in  the  first  instance  are  entitled 
to  subscribe  for  the  new  stock  according  to  their  respective 
shares,  and  may  sue  the  corporation  for  refusing  them 
this  right.*  A  majority  of  the  stockholders  of  a  corpora- 
tion cannot,  without  the  con&ent  of  the  minority,  dispose 
of  new  stock  without  regard  to  its  actual  value.^  A  cor- 
poration cannot,  by  by-laws  or  otherwise,  deprive  an 
unconsenting  stockholder  of  a  right  secured  to  him  by  the 
corporate  articles.  Thus  a  building  association  cannot 
retire  and  cancel  shares  of  stock  against  the  will  of  the 
holder  thereof."  Therefore  it  cannot,  without  express 
authority,  buy  shares  of  its  own  stock,  as  this  would  in- 
crease  the  value  of  each  remaining  share;^  but  it  may 
acquire  its  own  shares  by  bequest,*  or  in  satisfaction  of 
debts  due  it.®  A  corporation  may  purchase  its  own  stock, 
there  being  no  element  of  fraud  in  the  transaction,  and 
the  corporation  neither  being  insolvent  nor  contemplat- 
ing dissolution.*" 


1  Milbank  v.  R.  R.  Co.,  64  How.  Pr. 
20. 

» R.  R.  Co.  V.  Allerton,  18  W^all. 
235;  Knowlton  v.  Congress  etc.  Co.,  14 
Blatchf.  364;  Yew  York  etc.  R.  R.  Co. 
V.  Schuyler,  34  N.  Y.  30;  Sutherland 
V.  Olcott,  95  N.  Y.  93. 

3  Eidman  v.  Bowman,  53  111.  444;  11 
Am.  Rep.  90. 

^Gray  v.  Portland  Bank,  3  Mass. 
364;  3  Ain.  Dec.  156. 

*  Jones  V.  Morrison,  31  Minn.  140. 

•  Bergman  v.  St.  Paul  Mutual  Build- 
ing Ass  n,  29  Minn.  275. 


'  German  Savings  Bank  v.  Wulfe- 
knhler,  19  Kan.  60;  Currier  v.  Leb- 
anon Slate  Co.,  56  N.  H.  202; 
contra,  Iowa  Lumber  Co.  v.  Foster,  49 
Iowa,  25;  31  Am.  Rep.  140. 

*  Rivanna  Nav.  Co.  v.  Dawsons,  3 
Gratt.  19. 

•Taylor  v.  Ex.  Co.,  6  Ohio,  177; 
State  Bank  v.  Fox,  3  Blatchf.  431; 
Barton  v.  Plank  Road  Co.,  17  Barb. 
397;  Cooper  r.  Frederick,  9  Ala. 
738. 

"Praaer  v.  Ritchie,  8  IlL  App. 
664. 


! 


f 


674 
Such  an 

ik  or  Pur- 

)  implied 
r  vuluo  of 
ck  cannot 
specially 
the  stock- 
icrease  its 
'0  entitled 
respective 
ing  them 
I  corpora- 
y,  dispose 
.^  A  cor- 
jprive  an 
im  by  the 
►u  cannot 
ill  of  the 
t  express 
ivould  in- 
it  it  may 
'action  of 
•wn  stock, 
!tion,  and 
ntemplat- 


k  V.  Wulfe- 
rrier  v.  Leb- 
f.  H.  202; 
V.  Foster,  49 

Dawsons,  3 

Ohio,  177; 
Jlatchf.  431; 
!o..  17  Barb, 
ick,    9   Ala. 

8    111.    App. 


675 


POWERS. 


403 


Tllustrations.  —  The  constitution  and  laws  of  Louisiana  pro- 
vide for  the  increase  of  corporate  stock,  but  not  for  its  decruaso. 
Held,  that  a  corporation  is  without  power  to  make  a  docrcasu: 
Seignourct  v.  Home  Ins.  Co.,  24  Fed.  llop.  332.  Unissued  stock 
of  a  corporation  was,  by  agreement  of  all  the  stockholders  (there 
being  no  creditors),  paid  for  with  corporate  fuiuls,  and  issued  to 
one  stockholder  to  bo  held  in  trust  for  all.  //(■/(/,  that  the  issue 
was  valid,  and  that  the  directors  had  no  authority  afterwards  to 
direct  the  stock  to  bo  sold:  Jones  v.  Morrison,  31  Minn.  IIU. 
The  charter  of  a  corporation  provided  for  sixty  days'  notice  of 
authorization  of  any  increase  of  the  capital  stock,  within  which 
time  any  stockholder  ight  have  the  privilege  of  taking  addi- 
tional shares.  Held,  that  any  stockholder  not  applying  and 
tendering  payment  within  such  time  would  forfeit  the  jjrivilege: 
Hart  V.  St.  Charles  Street  R.  R.  Co.,  30  La.  Ann.,  pt.  1, 758.  In- 
creasing the  capital  stock  of  a  corporation,  and  issuing  new  shares 
to  be  sold  at  less  than  par  to  supply  a  fund  actually  needed  by 
the  corporation,  held,  not  a  "fictitious  increase  of  the  stock," 
within  the  California  constitution  avoiding  such  increases: 
Stein  V.  Howard,  o5  Cal.  616.  By  the  charter  of  an  insurance 
company,  its  capital  stock  was  fixed  at  a  certain  sum,  with  au- 
thority to  increase  it  at  the  discretion  of  the  stockholders.  Held, 
that  no  formal  vote  of  the  stockholders  was  necessary  to  make 
the  increase.  The  requisite  assent  of  the  stockholders  could  be 
shown  by  their  conduct  and  acquiescence:  Payson  v.  Stoever,  2 
Dill.  428.  The  A.  Life  Association  bought  the  greater  part  of 
the  capital  stock  in  the  L.  Life  Ins.  Co.,  paying  with  drafts. 
The  directors  of  the  A.  were  then  elected  directors  of  the  L.,  and 
the  larger  part  of  the  shares  purchased  were  presented  for  re- 
demption and  redeemed,  the  consideration  being  the  return  of 
the  largest  draft,  and  by  other  transactions  all  the  other  drafts 
given  by  the  A.  for  the  stock  were  returned  to  it.  Held,  that 
these  acts  which  resulted  in  the  cancellation  and  retirement  of 
the  capital  stock  of  the  L.  were  constructively  fraudulent:  Alex- 
ander V.  Relpe,  74  Mo.  495. 

§  403.  Nor  to  Give  Away  Property. — Thm  is  no 
implied  authority  in  a  corporation  or  any  of  its  agents 
to  transfer  or  give  away  any  of  its  funds  or  property 
gratuitously.'  Thus  it  has  no  authority  to  sign  accom- 
modation paper  for  others,  or  to  lend  its  credit,  or  givo 
a  guaranty  without  consideration.''    A  corporation   may 

^  Morawetz   on   Corporations,  sec.        '  Lafayette  Bank  v.  Sfc.  Louis  Stone- 
232.  ware  Co.,  2  Mo.  App.  299;  Morford  v. 


404 


CORPORATIONS. 


67C 


dispose  of  its  stock  for  less  than  its  face  value,  and  the 
transaction,  as  between  the  corporation  and  the  pur- 
chaser, will  bo  valid  unless  prohibited  by  statute.* 

§  404.  The  Oorporation  Name.  —  A  corporation  should 
use  the  name  which  its  charter  gives  it,''  though  i  ms 
it  may  acquire  a  different  name  by  usage."  A  change  in 
the  name  of  a  corporation  can  only  be  affected  by  chan- 
ging the  articles  of  incorporation,  and  the  best  evidence  of 
this  change  is  the  articles  themselves.*  A  court  of  equity 
may,  upon  objection  made  to  the  organization  of  a  cor- 
poration by  a  specific  name,  on  the  ground  that  another 
corporation  has  already  adopted  the  proposed  name,  or 
one  so  near  like  it  as  to  lead  to  confusion,  require  a  suffi- 
cient modification  of  the  name  to  obviate  objection.^  An 
injunction  may  be  granted  by  analogy  to  the  law  of  trade- 
marks  to  a  corporation,  to  restrain  persons  from  adopting 
and  using  the  same  corporate  name  with  that  prr  usly 
adopted  regularly,  and  in  good  faith  by  complain-  A 

contract  is  not  avoided  by  the  misnaming  therein  of  the 
corporation  with  which  it  is  made.'  A  misnomer  in  a 
grant  by  statute,  or  by  devise  to  a  corporation,  does  not 
avoid  the  grant,  though  the  right  name  of  the  corporation 
be  not  used,  provided  the  corporation  really  intended  be 
made  apparent.®  "The  Enterprise  Manufacturing  Co.," 
when  the  charter  name  was   "  Enterprise  Manufacturing 


Farmers'  Bank,  26  Barb.  568;  Savage 
Mfg.  Co.  V.  Wortliington,  1  Gill,  284; 
Monumont  Nat.  Bank  v.  Globe  Works, 
101  Mass.  57;  3  Am.  Rep.  322.  But 
see  Taunton  v.  Boyal  Ins.  Co.,  2  Hem. 
&  M.  135. 

*  Harrison  v.  R.  R.  Co.,  4  McCrary, 
264. 

*  Glass  V.  Turnpike  Co.,  32  Ala. 
376. 

'  Minofc  V.  Curtis,  7  Mass.  441;  Mel- 
ledge  V.  Boston  Iron  Co.,  5  Cush.  158; 
51  Am.  Dec.  59;  Smith  v.  Plank  Road 
Co.,  30  Ala.  630;  South  District  v. 
Blakeslee,  13  Conn.  227;  Brown  v. 
Parker,  7  Allen,  338;  Williams  v.  Bob- 


bins, 16  Gray,  77;  77  Am.  Dec.  390; 
Fuller  V.  Hooper,  .S  Gray,  341. 

*  Chicago  etc.  R.  R.  Co.  v.  Keisel, 
43  Iowa,  39. 

^  Ex  parte  Walker,  1  Tenn.  Ch.  97. 

•Newly  V.  R.  R.  Co.,  Deady,  009; 
Holmes  v.  Holmes  etc.  Mfg.  Co.,  37 
Conn.  278;  9  Am.  Rep.  324.  So  Ijy 
statute  in  some  states  a  certificate  of 
incorporation  will  not  be  granted  for  a 
name  the  same  as,  or  an  imitation  of, 
a  prior  one:  State  v.  McGrath,  92  Mo. 
355. 

^  Hoboken  etc.  Ass.  v.  Martin,  13 
N.  J.  Eq.  427. 

8  Vansaat  v.  Roberta,  3  Md.  119. 


C76 


C77 


POWERS. 


405 


,  nnd  tlio 
tho   pur- 

311  sliould 

I  i         ms 

dinnge  in 

by  chati- 

/idonco  of 

of  equity 

of  a  cor- 

t  anotlar 

name,  or 

re  a  suffi- 

ion."     An 

V  of  trado- 

t  adopting 

)rr       usly 

n-  A 

sin  of  tho 

mer  in  a 

does  not 

rporation 

ended  be 

ng  Co.," 

'acturing 

n.  Dec.  390; 
341. 

0.  V.  Keisel, 

enn.  Ch.  97. 
Deady,  009; 
Ifg.  Co.,  .37 
324.  So  l)y 
certificate  of 
rantcil  for  a 
mitatiou  of, 
■ath,  92  Mo. 

Martin,   13 

Md.  119. 


Co.,"  is  not  a  material  variance.'  Wboro  n  corporation 
has  been  sued  by  a  wrong  name,  tho  mistake  may  bo  cor- 
rected by  an  amendment  of  the  writ.'*  Mere  change  of  a 
corporation's  name  by  the  h'gishiture  does  not  uffeot  third 
persons,  as  long  as  its  identity  appears."  A  subscription  to 
tho  capital  stock  of  a  corporation  is  not  invnlidated  by  a 
legislative  change  in  tho  name,  and  may  bo  recovered  in 
a  suit  under  tho  now  name.'*  Altliough  tho  name  of  a  cor- 
poration has  been  chang.*:  by  an  act  of  the  legislature,  if 
the  corporation  continues  to  conduct  its  business  in  its 
original  name,  and  otherwise  exclusively  uses  that  name 
after  tho  passage  of  tho  act,  it  may  by  usage  regain  such 
original  name,  and  can  bo  lawfully  sued  and  proceeded 
against  in  bankruptcy  by  that  name.' 

Illustrations.  —  A  statute  forbade  a  corporation  to  take 
tho  name  of  a  person  or  firm  without  adding  tho  word  "  com- 
pany "  or  "  corporation,"  together  with  some  word  designating 
tlio  business.  Ileldy  that  "Mallinckrodt  Chemical  Works" 
was  not  objectionable,  although  "Mallinckrodt"  is  a  family 
name:  State  v.  McGrath,  75  Mo.  424.  Pending  a  suit  by  a  cor- 
poration, an  act  of  tho  legislature  was  passeil  changing  the  name 
of  tho  corporation,  if  the  corporators  should  consent,  and  tho 
suit  proceeded  to  judgment  in  the  original  name.  Held,  that  it 
was  too  lato  after  judgment  for  the  defendant  to  set  up  that 
there  was  no  such  corporation,  especially  if  he  fails  to  make  it 
appear  that  the  corporators  accepted  the  new  name:  Water  Lot 
Company  v.  Bank  of  Brunswick,  53  Ga.  30, 

§  405.    Corporation  Seal — Not  now  Always  Essential. 

— A  corporation  contracts  by  the  hands  of  its  agents. 
Formerly  the  assent  of  the  corporation  could  only  bo 
shown   by  the  use  of  its  corporate  seal,  but  it  is  now 


'  Jackson  v.  State,  76  Ga.  552. 

"  Buniham  v.  Savinga  Bank,  5  N.  H. 
573;  Sherman  v.  Connecticut  River 
Bridge  Co.,  11  Mass.  338;  BuUard  v. 
Niintucket  Bank,  5  Mass.  99;  George- 
town V.  Beatty,  1  Cranch  C.  C.  234; 
Lane  v.  R.  R.  Co.,  5  Jones,  25. 
Tho  statute  authorizing  suit  to  be 
brought  against  a  company  by  its 
name  is  in  derogation  of  the  commoa 


law,  and  will  be  strictly  construed.  A 
misnomer  is  fatal:  Kiug  v.  Randlett, 
33  Cal.  318. 

*  Rosenthal  v.  Madison  P.  R.  Co.,  10 
Ind.  359. 

*  Bucksport  ete.  R.  R.  Co,  r.  Buck, 
G8  Mc.  81. 

^  Alexander  v.  Berney,  28  N.  J.  Eq. 
90. 


§405 


CORPORATIONS. 


678 


well  settled,  in  this  country  at  least,  that  this  is  not 
essential,  and  that  a  corporation  may  make  a  valid  con- 
tract without  the  use  of  a  seal.*  A  certificate  of  stock 
is  valid  without  a  seal.^  The  corporate  seal  is  not  essen- 
tial to  the  validity  of  a  mortgage  purporting  to  have  been 
executed  by  a  private  business  corporation  through  its 
proper  officers.'  A  corporation  may  use  any  seal  it 
pleases,  but  the  seal  used  must  be  shown  to  have  been 
adopted  by  the  corporation,  and  to  have  been  affixed  by 
the  proper  officers.*  It  seems  that  a  corporation  may 
adopt  and  make  effectual  as  its  seal  the  individual  seals 
of  its  officers  affixed  to  its  deed,  when  it  has  no  seal  of  its 
own.^  The  seal  of  a  corporation  must  be  proved."  Proof 
of  the  corporation  seal  is  not  necessary,  where  it  is  affixed 
by  the  proper  officer  of  the  company.'  The  use  of  a  cor- 
porate seal  will  be  presumed  to  be  a  lawful  use.^  The 
corporate  seal  attached  to  a  contract  is  pr-ffia  facie  evi- 
dence that  it  was  duly  entered  into  by  the  corporation.' 
The  secretary  of  a  corporation  is  the  proper  custodian 
of  the  corporate  seal;  and  when  the  secretary  affixes  it  to 
a  mortgage  or  other  instrument,  the  presumption  is,  ho 
did  it  by  the  direction  of  the  corporation,  and  it  devolves 
upon  those  who  dispute  the  validity  of  the  deed  to  prove 
that  he  acted  without  authority.*"     The  usual  practice  is 


'  Morawetz  on  Corporations,  sees. 
167-170;  Mott  V.  Hicks,  1  Cow.  513; 
13  Am.  Dec.  551;  Angell  and  Ames  on 
Corporations,  sec.  257;  The  Banks  v. 
Poitiaux,  3  Rand.  136;  15  Am.  Dec. 
706;  Barker  v.  Ins.  Co.,  3  Wend.  94; 
20  Am.  Dec.  664;  Garrison  v.  Combs, 

7  J.J.  Marsh.  84;  22  Am.  Dec.  121; 
Am.  Ins.  Co.  v.  Oakley,  9  Paige.  496; 
38  Am.  Dec.  561 ;  Ross  v.  City,  1  Ind. 
281;  48  Am.  Dec.  .361;  Chestnut  Hill 
Turnpike  v.  Rutter,  4  Serg.  &  R.  6; 

8  Am.  Dec.  675;  School  District  in 
Rumfordv.  Wood,  13  Mass.  199;  Bank 
of  United  States  v.  Dandridge,  12 
Wheat.  64;  Bank  of  Columbia  i\  Pat- 
terson, 7  Cranch,  299;  Union  Bank  v. 
Ridgely,  1  Har.  &  G.  324;  Fleckner  v. 
BanK  of  United  States,  8  Wheat.  ciSS; 


Danforth  v.  Schoharie  Turnpike  Co., 
12  Johns.  227. 

'  Fitzhugh  V.  Bank,  3  T.  B.  Mon. 
12C;  16  Am.  Dec.  90. 

»  Leinkauf  ■><  Caiman,  N.  Y.,  1888. 

*  Perr^  v.  Price,  1  Mo.  664;  14  Am. 
Dec.  3i6. 

*  Taylor  v.  Heggie,  83  N.  C.  244. 

«  Den  V.  Vreelandt,  7  N.  J.  L.  352; 
11  Am.  Dec.  551. 

'  Susquehanna  Bridge  Co.  r.  Gen- 
eral Ins.  Co.,  3  Md.  305;  50  Am.  Dec. 
740. 

*  Indianapolis  etc.  R.  R.  Co.  v. 
Morganstern,  103  111.  149. 

*  Berks  Road  Co.  v.  Myers,  6  Serg. 
&  R.  12;  9  Am.  Dec.  403;  Musser  v. 
Johnson,  42  Mo.  74;  97  Am.  Dec.  310. 

"Evans  v.  Lee,  11  Nev.  194. 


678 


679 


POWERS. 


405 


his  is  not 
v^alid  con- 
J  of  stock 
not  ossen- 
have  been 
1  rough  its 
y   seal    it 
lave  been 
iffixed  by 
tion  may 
lual  seals 
seal  of  its 
L»    Proof 
is  affixed 
'  of  a  cor- 
se.«     The 
facie  evi- 
poration.' 
custodian 
fixes  it  to 
on  is,  ho 
devolves 
to  prove 
ractice  is 

irnpike  Co., 

T.  B.  Mon. 

r.  Y.,  188S. 
BG4;  14  Am. 

T.  C.  244. 
I.  J.  L.  352; 

Co.  V.  Gen- 
50  Am.  Dec. 

R.    Co.   V. 

'ers,  0  Serg. 
;  Musscr  v. 
n.  Dec.  31U. 
11)4. 


to  prove  the  identity  of  a  corporate  seal  by  a  witness 
acquainted  with  its  impression.'  The  use  of  the  seal 
gives  no  validity  to  a  contract  ultra  vires.^  A  court  of 
equity  will  not  declare  a  contract  between  two  corpora- 
tions void  merely  because  the  seals  of  the  corporation  are 
not  affixed  to  it;  but  if  necessary,  will  rather  compel  tho 
parties  to  affix  their  seals.*  A  corporate  seal  otherwise 
sufficient,  which  is  affixed  to  bonds  by  the  printer,  under 
direction  of  the  corporate  officers,  who  afterwards  sign  and 
issue  the  bonds,  renders  them  valid  as  obligations  under 
seal.*  The  name  of  a  corporation  need  not  be  signed  to  its 
sealed  instruments,  as  a  corporation  executes  its  convey- 
ances under  its  corporate  seal,  and  the  corporate  name 
being  subscribed  would  not  give  the  instrument  greater 
validity." 


'  City  Council  v.  Moorhead,  2  Rich. 
430. 

'^  Gibson  V.  Goldthwaite,  7  Ala.  281; 
42  Am.  Dec.  592. 

3  Missouri  River  etc.  R.  R.  «.  Com- 
miasioaers,  12  Kan.  482. 


*  Royal  Bank  of  Liveroool  «.  R.  R. 
Co.,  100  Alass.  444;  9t  Am.  Dec. 
115. 

*  Johnston  v.  Crawley,  25  Ga.  613: 
71  Am.  Dec.  174. 


406 


CORPORATIONS. 


680 


CHAPTER  XXVI. 

THE  POWERS  AND  LIABILITIES  OF  OFFICERS  AND  AGENTS  OP 

CORPORATIONS. 

r 

§  406.  Powers  of  agents  of  corporations  generally. 

§  407.  Liability  of  corporations  for  acts  of  promoters. 

§  408.  The  board  of  directors  have  all  powers  of  the  corporation. 

§  409.  The  board  of  directors  cannot  make  radical  changes. 

§  410.  The  ''oard  of  directors  cannot  wind  up  corporation. 

§  41 1.  Dir(  ctors  are  trustees  for  corporation. 

§  412.  The  board  of  directors  must  not  have  conflicting  interests. 

§  413.  Liability  of  directors  for  fraud. 

§  414.  Liability  of  directors  for  neglect. 

§  415.  Liability  of  directors  for  mistakes  made  in  good  faith. 

^  41G.  Directors  must  act  as  board — Majority  govern. 

§  417.  Directors'  meetings. 

§  418.  Implied  authority  to  appoint  inferior  agents  and  delegate  anthority. 

§  419.  Powers  of  secretary  and  treasurer. 

§  420.  President  of  corporation  —  Powers  of. 

§  421.  Removal  of  olBScers. 

§  422.  Corporation  bound  by  acts  of  agents  within  their  authority. 

§  423.  Aliter  when  outside  authority. 

§  424.  Acta  of  agent  not  in  form  required  by  statute  not  binding. 

§  425.  Agent  with  general  powers — Third  person  without  notice  of  limita- 
tions of  his  power  not  bound  —  Presumption. 

§  426.  Third  persons  presumed  to  know  limitations  in  charter. 

§  427.  But  third  persons  not  presumed  to  know  limitations  not  in  by-laws  or 
regulations  of  company. 

§  428.  Liability  of  corporations  for  fraudulent  representations  of  agent. 

§  429.  Unauthorized  act  of  agent  may  be  ratified  by  corporation. 

§  430.  Unauthorized  act  of  agent  may  be  ratified  by  superior  agent. 

§  431.  Ratification  inferred  from  conduct. 

§  432.  Act  beyond  authority  of  agent  cannot  be  ratified  by  majority  of  stock- 
holders. 

§  433.  Implied  ratification  by  stockholdors  from  conduct. 

§  434.  What  acts  cannot  be  ratified. 


§  406.    Powers  of  Agents  of  Corporations  Generally.—  So 

far  as  the  powers  and  liabilities  of  agents  of  corporations 
are  governed  by  the  general  principles  of  the  law  of  agency, 
see  the  title  "Principal  and  Agent,"  where  the  subject  is 
discussed  at  length.     In  this  and  the  succeeding  sections 


680 


681 


LIABILITIES. 


§407 


}ENTS  OF 


ithority. 


of  limita- 

by-laws  or 
;eat. 

Y  of  stock- 


ly.-So 

•rations 
agency, 
bject  is 
iections 


will  be  considered  only  the  powers  of  the  various  agents  of 
a  corporation,  as  given  or  as  limited  by  the  charter  or  by 
general  statutes  relating  to  corporations.  A  corporation, 
unless  expressly  restrained  by  its  charter,  may  contract 
through  the  agency  of  a  select  committee  of  its  members.* 
When  the  common  seal  of  a  corporation  is  affixed  to  an 
instrument,  and  the  signature  of  the  proper  officers  are 
proved,  courts  presume  that  the  officers  did  not  exceed 
their  authority.'' 

§  407.    Liability  of  Corporation  for  Acts  of  Promoters. 

— A  corporation  is  not  responsible  for  the  engagements 
of  its  promoters,'''  but  it  may  become  liable  by  adopting 
and  taking  the  benefit  of  their  acts,  and  this  adoption 
may  be  either  express  or  implied.*  To  make  a  corpora- 
tion liable  for  services  performed  under  a  contract  with 
the  promoter  of  the  corporation  before  its  organization, 
the  services  must  inure  to  its  benefit,  and  have  been  ren- 
dered on  its  credit,  not  on  that  of  individuals.^  Where, 
after  the  charter  and  before  the  organization  of  a  cor- 
poration, services  are  rendered  which  are  necessary  to 
complete  that  organization,  and  after  it  has  been  per- 
fected the  corporation  elects  to  take  the  benefit  o.**  such 
services,  knowing  that  they  were  rendered  with  the  un- 
derstanding that  compensation  was  to  be  made,  it  will  be 
held  liable  to  pay  for  them,  upon  the  ground  that  it  must 
take  the  burden  with  the  benefit.® 

Illustrations.  —  An  action  was  brought  against  a  railroad 
company  to  recover  the  value  of  services  performed  before  the 


'  Berka  and  Dauphin  Co.  v.  Myera, 
6  Sertr.  .%  1?    1  ;;  9  Am.  Dec.  402. 

^  .*  t.  Louis  Public  Schools  v.  Risley, 
28  M..  415;  75  Am.  Dec.  131. 

^  Rookford  etc.  R.  R.  Co.  v.  Sage, 
65  111.  328;  10  Am.  Rep.  587;  Safety 
Deposit  Life  Co.  v.  Smith,  65  III.  309; 
Wciterii  Screw  Co.  v.  Cousley,  72  111. 
531;  Franklin  Fire  Ins.  Co.  v.  Hart, 
31  M.l.  59;  New  York  etc.  R.  R.  Co. 
V.  Ketchum,  27  Conn.  170;  Marchaud 


V.  Loan  etc.  Co.,  26  La.  Ann.  389; 
Frost  V.  Belmont,  6  Allen,  152;  White 
V.  Mfg.  Co.,  1  Pick.  215;  11  Am.  Dec. 
168;  Munson  v.  R.  R.  Co.,  103  N.  Y. 
58. 

♦  Bells  Gap  R.  R.  Co.  v.  Christy,  79 
Pa.  St.  54;  21  Am.  Rep.  39;  Frankfort 
Co.  V.  Churchill,  6  T.  B.  Mon.  427;  17 
Am.  Dec.  159. 

»  Perry  v.  R.  R.  Co.,  44  Ark.  383. 

•  Low  1%  R.  R.  Co.,  45  N.  H.  370. 


408 


CORPORATIONS. 


682 


incorporation,  in  procuring  the  charter,  making  surveys,  etc. 
Held,  that  plaintiff  could  not  recover,  in  the  absence  of  proof 
that  a  majority  of  the  corporators  or  promoters  of  the  corpora- 
tion authorized  the  service:  Bells  Gap  R.  R.  Co.  v.  Christy,  79 
Pa,  St.  54;  21  Am.  Rep.  39.  An  agreement  among  parties 
owning  a  mine,  and  who  expected  to  incorporate  themselves,  but 
did  not  then  do  so,  that  a  person  was  entitled  to  two  thousand 
five  hundred  shares  of  the  stock  of  the  company,  held,  not  to  bo 
the  agreement  of  the  corporation:  Morrison  v.  Gold  Mountain  Co., 
52  Cal.  307.  Certain  persons  about  to  organize  a  corporation 
agreed  to  pay  B.  a  royalty  on  articles  to  be  manufactured  un- 
der a  patent  he  had  applied  for,  and  after  the  organization 
he  obtained  the  patent.  Held,  that  the  corporation's  payment 
of  the  royalty  for  a  while  was  a  ratification  of  the  contract, 
and  rendered  it  liable  to  account  to  B. :  Bommer  v.  American 
Spiral  et^.  Hinge  Mfg.  Co.,  81  N.  Y.  480.  By  an  agreement 
among  the  promoters,  before  organization,  of  a  hotel  corpora- 
tion, its  principal  subscriber  turned  over  to  it,  at  its  organiza- 
tion, furniture  equal  in  value  to  the  amount  of  his  subscription, 
and  to  release  it  from  prior  encumbrances  took  its  notes  there- 
for, secured  by  chattel  mortgage  thereof.  Held,  that  these  were 
valid  obligations:  Reichwald  v.  Commercial  Hotel  Co.,  106  111. 
439. 

§  408.  The  Board  of  Directors— Have  All  Powers  of 
Corporation. — The  board  of  directors  of  a  corporation 
have  implied  authority  to  do  every  thing  in  the  manage- 
ment of  the  business  of  the  company  that  the  corporation 
can  itself  do.  They  have,  in  short,  all  the  powers  of  the 
corporation  delegated  to  them.  This  arises  from  the  fact 
that  it  cannot  be  expected  that  the  whole  body  of  the 
corporators,  or  even  a  majority  of  them,  will  or  can  take 
an  active  part  at  all  times  in  the  management  of  the  busi- 
ness of  the  corporation,  and  therefore  the  corporation 
must  act  by  some  authorized  hand,  and  this  authorized 
hand  is  usually  denominated  the  board  of  directors.*  The 
power  to  have  a  board  of  directors  is  inherent  in  all  pri- 
vate corporations.  No  special  power  need  be  conferred 
by  statute.'' 


1  Burrill  v.  Nahant  Bank,  2  Met. 
163;  .35  Am.  Dec.  396;  Hoyle  v.  R.  R. 
Co.,  54  N.  Y.  314;  13  Am.  Rep.  595; 
Bank  V.  Rutland  etc.  K  R.  Co.,  30  Vt. 


159;  Salem  Bank  v.  Gloucester  Bauk, 
17  Mass.  29;  9  Am.  Dec.  HI. 
'  Uurlbut  V.  Marshall,  62  Wis.  590. 


682 


683 


LIABILITIES. 


408 


Unless  required  by  charter  or  statute,  a  director  need 
not  bo  a  stockholder.'  Where  the  charter  providcfd  that 
stockholders  only  should  bo  elected  directors,  persons 
having  no  interest  in  the  stock,  but  fraudulently  and 
coUusively  receiving  the  transfer  of  a  share  to  qualify 
them,  are  not  eligible;  and  such  fraud  on  the  charter  will 
prevent  those  participating  in  it  from  receiving  any  pro- 
tection under  its  provisions  to  escape  private  responsi- 
bility.* 

The  directors  havo  pov/er  to  authorize  the  president 
and  cashier  to  borrow  money .^  The  action  of  a  board  of 
directors  de  facto,  which  has  been  ratified  by  the  subse- 
quent action  of  the  corporation,  is  valid,  although  after 
their  election,  but  before  the  action  was  taken,  another 
board  of  directors  had  been  chosen,  no  evidence  being 
offered  that  the  second  board  ever  accepted  their  trust.* 
Directors  of  a  corporation  formed  under  a  general  law 
are  chargeable  with  knowledge  of  the  [)rovisions  of  the 
law  regulating  their  duties,  or  imposing  liabilities  upon 
thera.^ 

But  the  corporation  is  not  bound  unless  the  directors 
act  in  the  manner  required  by  the  charter.'*  The  pro- 
ceedings of  a  board  of  de  facto  directors  of  a  private  corpo- 
ration are  presumed  regular  until  irregularity  is  shown; 
therefore,  when  acting  under  a  by-law,  they  remove  an 
ofl&cer,  it  will  be  presumed  that  they  acted  on  suflicient 
grounds,  until  their  action  is  impeached  by  proof?  Au- 
thority given  to  a  board  of  directors  to  alter  or  amend 
the  by-laws  does  not  authorize  them  to  alter  or  annul  a 
by-law  imposing   a  limitation    on   their   powers.**     And 


'  Wight  V.  R.  R.  Co.,  117  Mass.  226; 
19  Am.  Rep.  412. 

^  Burtholomuw  v.  Bentloy,  1  Ohio 
St.  37. 

*  Ritlgway  v.  Bank,  12  Serg.  &  R. 
256;  14  Am.  Dec.  681. 

*  Penobscot  etc.  R  R.  Co.  v.  Dunn, 
39  Me.  587. 


*  Van  Etten  v.  Eaton,  19  Mich. 
187. 

«  Beatty  v.  Ins.  Co.,  2  Jolins.  109;  3 
Am.  Dec.  401. 

'  State  V.  Knpferle,  44  Mo.  154; 
100  Aim.  Dec.  265. 

"  StevenH  v.  Davison,  18  Gratt.  819; 
98  Aui.  Dec.  692. 


§  408 


CORPORATIONS. 


684 


when  the  directors  have  been  selected  by  the  stock- 
holders, the  powers  given  to  them  cannot  be  interfered 
with  by  a  majority  of  the  stockholders.^  The  by-laws  of 
a  corporation  giving  to  the  directors  "a  general  superin- 
tendence and  control  over  the  affairs  of  the  corporation," 
with  power  to  sell  lands  and  tenements  on  such  terms  as 
they  may  deem  advantageous,  gives  the  directors  no  au- 
thority to  delegate  to  an  attorney  power  to  lease  lands.* 
The  power  to  fill  vacancies  in  a  corporation  and  elect  offi- 
cers is  a  corporate  incident,  but  this  power  does  not 
attach  to  the  board  of  officers  to  fill  vacancies  iu  their 
own  board.' 

iLLusTRATTOTre. — A  Stockholder's  resolution  that  "it  is  not 
deemed  necessary  to  adopt  by-laws,  for  the  reason  that  the 
articles  of  incorporation  provide  that  the  control  and  manage- 
ment of  the  corporation  shall  be  in  the  hands  of  the  board  of 
directors."  Held,  to  leave  the  entire  control  of  the  corporate 
busincfis  with  the  directory:  Reichwald  v.  Commercial  Hotel  Co., 
lOG  111.  439.  A  statute  authorized  a  railroad  company  to  take 
for  a  passenger  station  land  occupied  by  another  railroad.  The 
by-laws  of  the  company  provided  that  the  directors  might  pur- 
chase all  real  estate  they  deemed  needful  for  the  railroad,  and 
exercise  all  powers  granted  to  the  company  by  their  charter  for 
the  purpose  of  locating,  constructing,  and  completing  the  rail- 
road, and  all  other  powers  necessary  and  proper  to  carry  out 
tlie  objects  of  the  company  and  the  purposes  of  their  charter. 
Held,  that  an  acceptance  of  the  statute  by  the  stockholders  was 
not  necessary  to  authorize  the  directors  to  take  the  land:  East- 
ern R.  R.  Co.  V.  R.  R.  Co.,  Ill  Mass.  125;  15  Am.  Rep.  13.  The 
by-laws  of  a  corporation  provided  that  the  directors  should  have, 
in  the  management  of  the  affairs  of  the  corporation,  all  the 
powers  which  the  corporation  itself  possessed,  not  incompati- 
ble with  the  provisions  of  the  by-laws  and  the  laws  of  the  com- 
monwealth. Held,  that  the  directors  might  mortgage  the  lands 
of  the  corporation  in  security  for  its  bonde,  where  the  by-laws 
permitted:  Hendee  v.  Pinkerton,  14  Allen,  381.  A  provision  in  a 
bank  charter  required  a  certain  portion  of  the  directors  to  bo 
practical  mechanics.  Held,  not  to  require  that  they  should  be 
in  actual  practice  at  the  time  of  election:  Gray  v.  Mechanics^ 
Bank  of  Alexandria,  2  Cranch  C.  C.  51. 


*  Conro  V.  Port  Henry  Iron  Co.,  12 
Barb.  27. 


» Gillis  V.  Bailey,  21  N.  H.  149. 

*  Kearaey  v.  Andrews,  10  N.  J.  Eq.  70. 


684 


685 


LIABILITIES. 


§409 


§  409.  Exceptions — Cannot  Make  Radical  Changes.— 
But  the  authority  of  directors  "extends  merely  to  the 
supervision  and  management  of  the  company's  ordinary 
or  regular  business.  A  board  of  directors  have  no  im- 
plied authority  to  make  a  material  and  permanent  altera- 
tion of  the  business  or  constitution  of  a  corporation,  even 
though  the  alteration  be  within  the  company's  chartered 
powers."^  No  fundamental  change  in  the  charter  of  a 
corporation,  which  vitally  and  radically  affects  fixed  and 
established  rights,  can  be  forced  by  the  acts  of  the  major- 
ity upon  an  unwilling  stockholder.^  The  directors  of  an 
incorporated  company,  to  whom  the  management  of  the 
concern  is  given  generally,  have  no  authority  to  apply  to 
the  legislature  to  increase  their  powers;  and  an  act  of 
the  legislature,  passed  on  such  application  without  author- 
ity from  the  company,  giving  power  to  the  company  to 
raise  an  additional  assessment  on  the  stockholders,  is 
void.^  Directors  of  a  corporation,  unless  specially  em- 
powered, have  no  authority  to  make  sale  of  any  portion 
of  its  estate  essentially  necessary  for  the  transaction  of 
its  customary  business.^  A  majority  of  the  board  of 
directors  of  a  passenger  railway  company,  though  con- 
trolling a  majority  of  the  stock,  have  no  power,  witliout 
special  authority  in  their  charter,  to  execute  a  lease  of  the 
road  and  property  without  first  submitting  the  question 
to  the  stockholders  at  a  meeting  called  in  accordance  with 
their  charter.®  Where  the  charter  of  a  corporation  says 
that  the  capital  stock  of  the  corporation  shall  be  a  sum 
named,  "and  may  be  increased  from  time  to  time  at  the 
pleasure  of  the  said  corporation,"  the  directors  alone,  and 
without  the  matter  being  submitted  to  and  approved  by 
the  stockholders,  have  no  power   to  increase  it,  unless 

'  Morawetz  on    Corporations,   sec.  *  Marlborough  Mfg.  Co.  v.  Smith,  2 

239;  Railway  Co.  v.  AUerton,  18  Wall.  Conn.  579. 

233;    Now  York  etc.    R.    R.    Co.   v.  ♦  Rollins  «.  Clay,  33  Me.  1 32. 

Schuyler,  3S  Barb.  534.  ^  Martin  v.  R.   R,  Co.,    14    Phila. 

^  Hoey  V.  Henderson,  32  La.  Ana.  10. 
1069. 


^ 


§410 


CORPORATIONS. 


686 


expressly  authorized  thereto.  The  fact  that  the  charter 
declares  that  "all  the  corporate  powers  of  the  said  cor- 
poration shall  be  vested  in  and  exercised  bj'  a  board  of 
directors,  and  such  officers  and  agents  as  said  board  shall 
appoint,"  does  not  alter  tho  case.  The  powers  thus  granted 
to  the  directors  refer  to  the  ordinary  business  transac- 
tions of  the  corporation.* 

Illustrations. — The  charter  of  a  coi'poration  provided  that 
its  capital  stock  should  be  one  hundred  thousand  dollars,  with 
the  power  to  increase  it  to  five  hundred  thousand  dollars,  but 
did  not  provide  by  whom  this  power  should  be  exercised.  Held, 
that  the  board  of  directors  could  not  increase  :ie  capital  stock 
without  the  assent  of  the  stockholders:  Eidman  v.  Bowman,  58 
111.  444;  11  Am.  Rep.  90.  A  board  of  directors  of  a  mining 
corporation  makes  a  nominal  lease  of  the  mine  owned  by  the 
corporation,  to  a  party  really  acting  in  the  interests  of  a  mi- 
nority of  the  stockholders,  not  in  tho  ordinary  course  of  the  busi- 
ness of  the  corporation,  but  for  the  purpose  of  withdrawing  the 
mine  from  the  control  of  a  board  of  directors  about  to  be  elected 
at  an  approaching  meeting  of  the  stockholders,  and  thereby 
perpetuating  tho  control  of  the  minority.  Held,  that  a  court  of 
equity  will  cancel  the  lease  on  a  bill  filed  by  the  corporation 
for  that  purpose:  Mahoney  Mining  Co.  v.  Bennett,  5  Saw.  141. 
The  powers  and  privileges  of  the  Norfolk  Manufacturing  Com- 
pany were,  by  its  charter,  made  subject  to  the  provisions  of  an 
act  vesting  the  levying  of  assessments  exclusively  in  the  corpo- 
ration. A  by-law  was  passed,  authorizing  the  directors  "to  take 
care  of  the  interests  and  manage  the  concerns  of  the  corpora- 
tion." Held,  that  the  corporation  had  no  power  to  delegate  aa 
authority  to  the  directors  to  lay  assessments,  and  that  the  by- 
law did  not,  in  fact,  import  an  intention  to  delegate  it:  Ex  parte 
Henry  Winsor,  3  Story,  411. 

§  410.  Cannot  Wind  up  Corporation. — Nor  have  the 
directors  implied  authority  to  wind  up  tho  company,  or  to 
sell  property  necessary  to  carry  on  its  business,^  or  to  give 
away  its  funds,  or  deprive  it  of  any  of  the  means  to  ac- 
complish the  purpose  for  which  it  was  chartered.'    A 

^  Railway  Co.  v.  AUerton,  18  Wall.  Rubber  Co.,  33  Barb.  578;  Rollins  v, 

233.  Clay,  33  Me.  J32. 

^  Bank  Commissioners  v.   Brest,   1  '  Bedford  11.  R.  Co.  v.  Bowser,  48 

Harr.   Ch.   106;   Abbot  v.  American  Fa.  St.  29. 


686 


687 


LIABILITIES. 


§411 


e  charter 
said  cor- 

board  of 
»ard  shall 
s  granted 

transac- 


rided  that 
liars,  with 
ollars,  but 
3d.  Held, 
pital  stock 
owmnn,  58 
a  mining 
ed  by  the 
3  of  a  mi- 
if  the  busi- 
•awing  the 
be  elected 
d  thereby 
a  court  of 
orporation 
Saw.  141. 
ring  Corn- 
ions  of  an 
the  corpo- 
8  "to  take 
e  corpora- 
elegate  aa 
it  the  by- 
Ex  parte 


have  the 
iny,  or  to 
)r  to  give 
ns  to  ac- 
red.'   A 

;  Rollins  v. 
Bowser,  48 


corporation's  assignment  for  benefit  of  creditors,  made  by 
the  board  of  directors,  without  consent  of  the  stockhold- 
ers, is  void  as  against  the  stockholders,  but  not  as  against 
a  mere  creditor.* 

§  411.  Directors  Trustees  for  Corporation.— Tho  di- 
rectors of  a  corporation  stand  in  a  fiduciary  relation  to 
the  stockholders,  and  are  generally  recognized  as  trustees. 
Hence,  they  are  held  to  the  utmost  good  faith  in  their 
dealings  for  and  with  tho  corporation.^  A  director  of  a 
corporation  occupies  a  trust  relation  towards  tho  stock- 
holders, which  disables  him  from  taking  any  personal 
benefit  under  a  contract  entered  into  by  the  board,  on 
behalf  of  the  corporation.  Thus  a  railroad  director  can- 
not be  individually  interested  in  a  contract  for  tho  con- 
struction of  the  road.'  So  where  a  director,  by  means  of 
his  power  as  such,  secures  to  himself  any  advantage  over 
other  stockholders  or  creditors,  equity  will  treat  the  trans- 
action as  void,  or  charge  him,  as  trustee,  for  tho  benefit 
of  the  injured  parties;  nor  can  such  director,  as  to  such 


^  Eppright  V.  Nickerson,  78  Mo. 
482. 

'  Keohler  v.  Black  River  Iron  Co., 
2  Black,  715;  European  etc.  R.  R.  Co. 
V.  Poor,  59  Me.  277;  Butts  v.  Wood, 
38  Barb.  188;  Cumberland  Coal  Co.  v. 
Sherman,  30  Barb.  653;  Port  v.  Rus- 
eel,  36  lud.  60;  10  Am.  Rep.  5;  Kim- 
mell  V.  Geetiug,  2  Grant  Cas.  125; 
Redmund  v.  Dickerson,  9  N.  J.  £q. 
607;  59  Am.  Dec.  418;  Blair  Town 
Lot  Co.  V.  Walker,  60  Iowa,  376;  Lit- 
tle Rock  R.  R.  Co.  V.  Page,  35  Ark. 
304;  Chouteau  v.  Allen,  70  Mo.  290; 
Hoffman  etc.  Coal  Co.  v.  Cumberland 
Coal  Co.,  16  Md.  456;  77  Am.  Dec. 
311;  Simons  v.  Vulcan  Oil  Co.,  CI  Pa. 
St.  202;  100  Am.  Dec.  628;  Hoyle  v. 
R.  R.  Co.,  64  N.  Y.  314,  13  Am.  Rep. 
695,  the  court  saying:  "Vilas  was  a 
director  of  the  railroad  company  dur- 
ing the  whole  period  of  the  transac- 
tions in  question.  He  and  his  co- 
directors  were  together  clothed  with 
the  power  of  managing  the  corporate 
property  and  conducting  the  affairs  of 


the  corporation.  From  this  position 
arose  the  duty  of  managing  and  con- 
ducting its  affairs  to  the  best  advan- 
tage, and  the  obligation  not  to  let  tho 
private  interests  of  any  individual  di- 
rector compete  with  his  duty  toward 
the  corporation.  Whether  a  director 
of  a  corporation  is  to  be  called  a 
trustee  or  not,  in  a  strict  sense,  there 
can  be  no  doubt  that  his  character  is 
fiduciary,  being  intrusted  by  others 
with  powers  which  are  to  bo  exercised 
for  the  common  and  general  interests 
of  the  corporation,  and  not  for  his  own 
private  interests.  He  falls,  therefore, 
within  the  great  rule  by  which  equity 
requires  that  confidence  shall  not  be 
abused  by  the  party  in  whom  it  is  re- 
posed, and  which  it  enforces  by  im- 
posing a  disability,  either  partial  or 
complete,  upon  tho  party  intrusted  to 
deal,  on  his  own  behalf,  in  respect  to 
any  matter  involved  in  Buch  confi- 
dence." 

'  European  etc.  R.  R.  Co.  v.  Poor, 
69  Me.  277. 


§411 


CORPdRATIONS. 


688 


parties,  claim  to  have  acted  in  ignorance  of  what  it  was 
his  duty  to  know  concerning  the  conduct  and  condition 
of  the  affairs  of  the  corporation.*  Equity  will  not  permit 
a  director  in  the  exercise  of  his  official  duties  to  make  a 
profit  for  himself,  to  the  exclusion  of  the  other  stockhold- 
oiM.'^  A  resolution  of  the  board  of  trustees,  carried  by  the 
casting  vote  of  the  president,  ratifying  an  unautliorizcd 
act  of  the  president,  in  a  matter  in  which  ho  was  per- 
sonally interested,  is  void.'  When  a  director  assents  to 
a  contract  from  which  ho  is  to  derive  a  secret  profit, 
equity  will  compel  him  to  surrender  it  to  the  company.* 
A  director  cannot  enforce  a  contract  made  with  his  co- 
directors,  under  which  he  is  to  have  one  third  of  a  profit 
of  one  hundred  thousand  dollars  for  selling  a  railroad 
property,  his  services  being  trifling.  Such  a  contract  is 
beyond  the  power  of  the  directors  to  make.^  A  director 
cannot  use  the  funds  of  the  corporation  in  payment  of  a 
note  made  by  them  to  the  president  of  the  corporation  as 
payee,  and  for  its  benefit.^  So  directors  who  sell  to  them- 
selves stock  at  one  third  of  its  par  value  are  liable  to  the 
company  and  its  creditors  for  the  full  value  of  the  stock.' 
A  director  cannot  speculate  with,  the  funds  of  the  corpo- 
ration, and  appropriate  the  profit.  Nor  can  he  in  making 
sales  and  purchases  take  advantage  of  his  position  for  his 
own  profit.*  A  sale  by  directors  of  its  assets  to  another 
corporation  in  which  the  same  persons  are  interested  as 
stockholders,  for  an  inadequate  price,  should  be  set  aside 
as  against  any  stockholders  in  the  former  company  who 
have  not  consented  to  it.  Such  a  sale  is  in  effect  a  sale 
by  a  trustee  to  himself.  The  vendor  and  purchaser  are 
in  the  same  interest.     It  is  the  duty  of  the  managing 


'  Corbett  v.  Woodward,  5  Saw. 
403. 

'■*  Fanners'  etc.  Bank  v.  Downey,  53 
Cal.  4GG;  31  Am.  Rep.  C2. 

*  Chamberlain  v.  Pacific  Wool-grow- 
ing Co.,  54  Cal.  103. 

*  Bent  V.  Priest,  10  Mo.  App.  543. 


*  Hubbard  n  New  York  etc.  Invest- 
ment Co.,  14  Fed.  Rep.  G75. 

"  Gallery  v.  Albion  Exchange  Bank, 
41  Mich.  109. 

'  Freeman  v.  Stine,  15  Pliila.  .37. 

*  Redmond  v.  Dickerson,   9  N.  J. 
Eq.  607;  59  Am.  Dec.  41S. 


688 

lat  it  wa3 

condition 

ot  permit 

;o  make  a 

itockliold- 

cd  by  the 

uthorizcd 

was  per- 

issents  to 

'et  profit, 

jompany.* 

h  his  co- 

)f  a  profit 

1  railroad 

ontract  is 

1  director 

mcnt  of  a 

oration  as 

1  to  tliem- 

tblo  to  the 

10  stock/ 

10  corpo- 

making 

m  for  his 

another 

rested  as 

set  aside 

:)any  who 

ct  a  sale 

laser  are 

Li  an  aging 

etc.  Iiivcst- 
lo. 
lange  Bank, 

>liila.  37. 
n,   9  N.  J. 


689 


LIABILITIES. 


§411 


directors  of  the  vendor  company,  as  snch,  to  obtain  the 
highest  price  for  the  property;  while,  as  stockholders  in 
the  purchasing  company,  it  is  their  interest  to  buy  it  as 
low  as  possible.*     A  director  who,  by  agreement  with  his 
co-directors,  sells  the  bonds  of  the  corporation  on  his 
private  account,  must  account  for  the  profit  realized  to 
creditors  or  stockholders.^    The  stockholders  and  credi- 
tors of  a  canal  company  may  compel  a  railroad  to  account 
for  the  additional  value  of  property  of  the  canal  company 
appropriated  by  the  railroad  company  for  railroad  pur- 
poses, with  the  assent  of  the  board  of  directors  of  the 
canal  company  elected  in  the  interest  of  the  railroad  com- 
pany, the  compensation  therefor  being  agreed  upon  by 
the  directors  of  the  two  companies,  and  being  far  below 
the  value  of  the  property,  although  they  cannot,  after  the 
railroad  has  been  completed,  reclaim  the  property  or  en- 
join its  use.^     The  executive  committee  of  a  company 
have  no  right  to  vote  money  to  themselves  in  addition  to 
their  regular  compensation,  for  their  services  as  promoters 
and  originators  of  the  company,  or  in  ^consideration  of 
the   members   retiring    from   the   executive   committee,. 
And  if  large  sums  are  granted  for  those  purposes,  this 
affords  a  good  reason  for  the  appointment  of  a  receiver.'' 
A  creditor  of  a  corporation  may  pursue  its  property  into 
the  hands  of  a  director,  a  share-holder,  to  whose  use  were 
appropriated  bonds,  assets  of  the  corporation,  under  a 
resolution  in  the  passage  cf  which  he  aided,  he  being- 
liable  to  the  creditors  as  trustee  for  the  value  of  such 
bonds.®     A  creditor  holding  property  of  a  corporation,  in 
order  to  apply  the  profits  thereof  to  reimburse  himself 
and  pay  its  other  debts,  is  analogous  to  a  trustee,  and 
must  return  to  the  stockholders  the  remnant  of  the  prop- 


'  Goodia  v.  Canal  Co.,  18  Ohio  St. 
169;  98  Am.  Dec.  95. 

■'  Widrig  V.  R.  R.  Co.,  82  Ky.  511. 

» Goodia  v.  Canal  Co.,  18  Ohio  St. 
169;  98  Am.  Dec.  96. 
Vol.  L— 44 


*Blatchford  v.  Ross,  54  Barb.  42;. 
5  Abb.  Pr.,  N.  S.,  434;  37  How..  Pr. 
110. 

'Union  Bank  r..  Douglass,,  I  Mc- 
Crary,  86. 


§411 


CORPORATIONS. 


690 


erty  in  liis  hands  after  tho  purposes  of  the  quasi  trust 
have  been  subsorvod.'  Directors  are  quasi  trustees,  and 
without  special  power  under  the  charter  cannot  bind  the 
corporation  or  its  assets  by  a  contract  to  pay  usury.' 
A  promissory  note  made  by  a  corporation  to  its  trustees 
is  void  as  against  public  policy.*''  The  officers  and  direc- 
tors of  a  railroad  corporation  are  not  technical  trustees, 
and  have  a  perfect  right  to  buy  up  tho  shares  of  stock- 
holders at  loss  than  tho  par  value,  and  sell  them  at  a  profit 
to  another  corporation,  which  thereby  acquires  a  majority 
of  tho  stock,  and  so  tho  control  of  the  railroad.*  A  direc- 
tor may  become  its  creditor,  and  foreclose  a  mortgage  and 
purchase  at  tho  execution  sale,  but  ho  is  bound  to  act  in 
the  utmost  good  faith,  and  the  sale  will  be  set  aside  on 
slighter  grounds  than  in  ordinary  cases.*  The  doctrine 
that  the  directors  are  trustees  for  the  stockholders  has 
relation  only  to  the  acts  of  the  directors  in  connection 
with  the  property  held  by  the  corporation  itself,  and  to 
their  management  of  its  business.  And  a  director  in 
purchasing  his  stock  is  not  bound  to  communicate  to  tho 
stockholder  his  knowledge  of  its  worth,  although  the 
same  was  obtained  by  reason  of  his  official  relation  to  the 
company;  nor  is  he  bound,  in  order  to  make  a  valid  pur- 
chase, to  pay  a  fair  and  adequate  price  therefor.*  A  di- 
rector of  a  railroad  company  stands  in  a  fiduciary  relation 
to  a  stockholder,  and  in  acting  for  him  in  his  absence  can- 
not bo  regarded  as  a  stranger.' 

Illustrations.  —  A  majority  of  etockholders.  aut^  )rizeu  .  v 
law  to  dissolve  the  corporation   and   distribn  property, 

themselves  having  become  the  purchasers  .  unfair  ap 

praisal,   held,   accountable  to  the  other  8t>      aolders  for  ito 


-  Pioneer  Gold  Mining  Co.  v.  Baker,  ^  Hallara  v.  Indiauola  I   >tel  Co.,  56 

20  Fed.  Rep.  4.  Iowa,  178. 

'^  Planters'  Warehouse  Co.  v.  John-  *  Comm'rs  of  Tippecsuioe  County  v. 

8on,  62  Ga.  308.  Reynolds,  44  Ind.  609;  15  Am.  Rep. 

3  Wilbur  V.  Lynde,  49  Cal.  290;  19  245. 

Am.  Rep.  645.  '  Philadelphia  etc.  R.  R.  Co.  v.  Cow- 

*  Deaderick  v.  Wilson,  8  Bsuct.  10$.  ell,  28  Pa.  St.  329;  70  Am.  Dec  128. 


690 

,81  trust 
068,  and 
)iiid  the 
usury." 
trustees 
d  diree- 
trusteos, 
)f  stock- 
t  a  profit 
majority 
A  direc- 
Tage  and 
to  act  in 
aside  on 
doctrine 
[ders  has 
nnection 
f,  and  to 
rector  in 
ite  to  the 
)ugh   the 
on  to  the 
alid  pur- 
p."    A  di- 
rection 
nee  can- 


irized  by 
property, 
mfair  ai 
s   for  ito 

tel  Co.,  56 

County  V. 
Ain.  Rep. 

Co.  V.  Cow- 
1.  Dec  128. 


691 


LIADILITIES. 


§411 


value:  Ervin  v.  Oregon  R\j  &  Nav.  Co.,  20  Fed.  Rep.  577.  A 
director  of  a  bank  loaned  tlic  moneys  of  a  bank  on  a  note  run- 
ning to  the  bank  at  a  stipulated  rate  of  interest,  but  on  a  secret 
agreement  with  the  borrowers  that  he  should  participate  in  the 

Erofits  of  lands  to  be  purchased  with  the  moneys.    Ifdd,  that 
owas  bound  to  surrender  those  acquired  profits  to  the  bank. 
Farmers*  etc.  Bank  v.  Downey,  53  Cal.  4GG;  81  Am.  llcp.  G2. 
The   president  of  a  company  who  was   also  director,  having 
knowledge  through   his   ollicial   position  that   the  company's 
stock  was  worth  more  than  its    nominal   market  value,  pur- 
chased stock  of  a  stockholder  for  the  market  price,  and  without 
disclosing  to  him  the  facts  within  his  knowledge,  as  to  the  real 
value.     Held,  that  there  was  no  relation  of  trust  between  the 
parties,  and  that  in  the  absence  of  actual  fraud  the  purchase 
was  valid:    Commissioners  v.  Reynolds,  44  Ind.   509;    15  Am. 
Rep.  245.     One,  in  order  to  secure  his  pay  as  president  and 
attorney  of  a  private  corporation,  caused  its  secretary  to  assign 
to  him  certain  certificates  of  purchase  of  land  held  by  the  corpo- 
ration, and  in  their  possession  as  officers  thereof.     Held,  that  a 
court  of  equity  might  compel  an  unconditional  return  of  the  cer- 
tificates; the  officers  had  no  lien  thereon:  Emporium  etc  v.  Emrie, 
54  111.  345.    A  bill  was  brought  by  the  assignees  of  a  foreign  cor- 
poration against  several  citizens  of  Massachusetts,  who  had  been 
directors  of  said  corporation,  alleging  that  they  had  not  used 
the  property  and  moneys  of  the  corporation  for  lawful  purposes, 
but  had  illegally  misused  and  expended  ii,  and  divided  some 
of  the  money  among  themselves  for  their  own  benefit.     Held, 
that  it  was  not   demurrable:    Gindrat  v.  Dane,  4  Cliff.  260. 
The  trustees  of  a  corporation  resolved  by  vote  to  borrow  money 
upon   mortgage  of  the  corporate  property  to  pay  corporation 
debts,  and  authorized  A,  the  president,  to  execute  a  mortgage. 
A  purchased  the  debts,  and  had  tbcm  assigned  to  a  firm  of 
which  he  was  a  member,  to  which  firm  the  mortgage  was  made. 
In  an  action  to  foreclose,  held,  that  this  transaction  was  not 
authorized  by  the  resolution  of  the  trustees,  nor  would  the  law 
permit  the  president  thus  to  deal  with  himself:  Davis  v.  Rock 
Creek  etc.  Mining  Co.,  55  Cal.  359;  36  Am.  Rep.  40.     The  trus- 
tee of  a  corporation  contracted  to  purchase  land  for  the  corpo- 
ration, to  take  the  title  in  his  own  name,  and  to  then  convey  to 
the  corporation,  the  land  having  been  paid  for.     Held,  that  he 
could   be  compelled  to  accept  a  deed  and  to  convey:   Eins- 
phar  v.  Wagner,  12  Neb.  458.     A  sale  to  a  stockholder  of  the 
corporate  property  ordered  sold   at  a  general  meeting  of  the 
stockholders,  not  all  the  stockholders  being  present,  there  being 
no  board   of  directors,  held,  voidable,  though  the   purchaser 
paid  a  fair  price:  Reilly  v.  Oglebay,  25  W.  Va.  36.    B  and  C,  ae 
promoters  of  a  projected  corporation,  negotiated  an  agreement 


§412 


CORPORATIONS. 


692 


between  it  and  A,  a  patent  owner,  by  which  B  and  C  were  to 
receive  certain  shares  of  the  stock.  B  and  C  then  offered  the 
public  an  option  to  take  stock,  disclosing  that  a  portion  was  to 
be  issued  to  A  in  part  payment,  but  not  that  B  and  C  were  to 
have  stock  on  any  different  terms.  B  was  elected  president 
and  C  treasurer,  and  they  placed  a  large  amount  at  seven  dol- 
lars a  share,  getting  their  own  stock  for  nothing  Held,  that 
their  fiduciary  relation  was  such  that  any  secret  profits  must 
be  refunded  to  the  company;  and  that  they  were  jointly  liable 
therein  as  partners:  Chandler  v.  Bacon,  30  Fed.  Rep.  538.  A 
lease  was  made  by  the  board  of  directors  on  the  day  their  terms 
of  office  expired,  two  of  the  board  having  been  concerned  in  a 
fraudulent  issue  of  spurious  stock  to  two  lessees  in  the  employ 
of  the  corporation,  one  of  whom  had  been  an  agent  in  the  issue 
of  such  stock,  and  securing  such  lessees  a  clear  profit  equal  to 
one  half  of  the  gross  earnings  of  the  road.  Held,  a  fraud  on  the 
rights  of  the  stockholders:  Stevens  v.  Davison,  18  Gratt.  819;  08 
i^.m.  Dec.  692.  A  debt  of  a  corporation  beyond  the  limit  pre- 
scribed by  its  charter  was  held  by  its  directors,  and  they  in 
good  faith  took  a  mortgage  on  the  property  of  the  corporation 
for  security.  Held,  that  they  may  enforce  such  security,  even 
though  they  participated  in  the  management  of  the  corporate 
business  in  such  a  way  as  to  permit  the  accumulation  of  the 
debt  beyond  the  allowed  limit,  and  though  the  corporation  was 
insolvent  when  the  mortgage  was  taken,  and  the  mortgage  gave 
them  a  preference  over  other  creditors:  Garrett  v.  Plow  Co.,  70 
Iowa,  697;  59  Am.  Rep.  461. 


§  412.  Must  not  have  Contrary  Interests. — Therefore 
a  director  cannot  represent  the  company  wheu  he  has 
adverse  interests  of  his  own  in  any  transaction.^  Acts  of 
officers  of  a  corpcration,  v.  any  transaction  in  which  both 
the  corporation  and  they  ihemselves  individually  are  inter- 
ested, do  not  bind  the  corporation.'*  A  contract  between 
a  railroad  and  a  construction  company  is  void,  when  any 


'  Hoyle  V.  R.  R.  Co.,  54  N.  Y.  314; 
13  Am.  Rep.  595;  Cumberland  Bank 
V.  Sherman,  30  Barb.  553;  Gilmau  etc. 
R.  R.  Co.  V.  Kelley,  77  111.  42G; 
Goodinv.  Canal  Co.,  18  Ohio  St.  1C9; 
98  Am.  Dec.  95;  Simons  v.  Vulcan  Oil 
Co.,  61  Pn.  St.  204;  100  Am.  Dec.  628; 
Covington  R.  R.  Co.  v.  Bowler,  9  Bush, 
468;  Paine  v.  R.  R.  Co.,  31  Ind.  283; 
Cook;r.  Berlin  Wool  Co.,  43  Wis.  443; 
Stark.  Bank  v.  U.  S.  Pottery  Ca,  31 


Vt.  144;  Warden  r.  R.R.  Co.,  4  Dill. 
330;  103  U.  S.  751 ;  European  etc.  R. 
R.  Co.  V.  Poor,  59  Me.  277;  First  Nat. 
Bank  v.  GiflFord,  47  Iowa,  575;  Stew- 
art V.  R.  R.  Co.,  38  N.  J.  L.  505; 
San  Diego  V.  R.  R.  Co.,  44  Cal.  106; 
Gallery  v.  Bank,  41  Mich.  169;  32  Am. 
Rep.  149. 

''  Davenport   Bonk    v.   Gifford,    il 
lowa^  575^ 


692 


693 


LIABILITIES. 


§412 


C  were  to 
(ffered  the 
on  was  to 
C  were  to 
president 
seven  dol- 
Held,  that 
)fits  must 
itly  liable 
».  538.  A 
\ie\r  terms 
rned  in  a 
le  employ 
the  issue 
b  equal  to 
ud  on  the 
t.  819;  08 
limit  pre- 
\  they  in 
>rporation 
rity,  even 
corporate 
on  of  the 
"ation  was 
?age  gave 
)w  Co.,  70 


!'herefore 
»  he  has 
Acts  of 
ich  both 
ire  inter- 
between 
hen  any 

Co.,  4  Dill, 
ean  etc.  R. 
First  Nat. 
575;  Stew- 
J.  L.  50.5; 
4  Cal.  IOC; 
69;  32  Am. 

iifford,    17 


of  the  directors  of  the  railroad  are  members  of  the  con- 
struction company,  and  the  fact  of  long  acquiescence  on 
the  part  of  the  stockholders  of  the  railroad  makes  no  dif- 
ference.* Directors  of  one  telegraph  company,  who  are 
also  directors  of  another  company,  which  owns  two  fifths 
of  the  stock  of  the  former  company,  cannot  vote  to  lease 
the  former  company  to  the  latter.^  A  contract  between 
a  corporation  and  a  director  thereof,  embodied  in  a  reso- 
lution for  the  passage  of  which  the  director's  vote  was 
necessary  and  was  given,  is  invalid.'  A  contract  between 
two  corporations  is  not  void  because  all  the  directors  of 
one  corporation  are  members  of  the  board  of  directors 
of  the  other  corporation.**  A  purchase  by  a  corporation 
will  not  be  set  aside  because  of  the  interest  of  one  of  the 
directors,  where  the  complaining  stockholder  has  suffered 
no  damage.*  A  party  who  constructs  ditches  under  a 
written  contract  with  the  directors  of  a  draining  com- 
pany may  recover  on  the  contract,  although  he  was  one 
of  the  directors  at  the  time  of  its  execution.*  In  order  to 
enable  a  manufacturing  corporation  to  pay  its  debts,  and 
thus  continue  its  business,  its  directors  may  guarantee 
payment  of  its  note  made  to  its  own  order,  and  take  as 
security  for  their  liability  its  mortgage  on  all  its  prop- 
erty.' While  an  arrangement  by  which  a  managing 
director  of  a  railroad  corporation  puts  forward  a  third 
person  as  a  contractor  to  do  work  for  the  corporation,  the 
director  designing  to  secure  a  special  benefit  to  himself 
may  be  constructively  fraudulent,  yet  where  the  relation 
of  the  director  to  the  contract  is  not  that  of  an  undis- 
closed principal,  and  the  stockholders  have  knowledge  of 
the  facts  and  power  to  prevent  the  consummation  of  the 


*  Thomas  v.  R.  B.  Co.,  1  McCrary, 
392. 

» Bin  V.  Western  Union  Tel.  Co.,  16 
Fed.  Rep.  14. 

^  Bennett  v.  St.  Louis  Car  Roofing 
Co.,  19  Mo.  App.  349. 


*  Alexanders.  Willauu,  14  Mo.  App. 

la 

0  Hill  V.  Nisbet,  100  Ind.  341. 

•  Ward  V.  Polk,  70  Ind.  309. 

^  Hopson  V.  Mtva,  Axle  and  Spring 
Co.,  50  Cona  597. 


§413 


CORPORATIONS. 


694 


contract,  if  they  choose,  actual  fraud  not  existing,  con- 
structive fraud  will  not  be  presumed.* 

Illustrations, — The  president  of  a,  railroad  company,  who 
was  not  a  stockholder,  loaned  it  $81,000,  to  secure  which  its 
board  of  directors  directed  its  treasurer  to  deliver  to  him,  for  it, 
810  of  its  bonds,  each  for  $1000.  In  an  action  to  foreclose  a 
mortgage  given  to  secure  its  bonds,  held,  that  in  absence  of  any 
showing  of  fraud  or  of  insolvency  of  the  company  when  he  was 
entitled  to  take  the  bonds,  ho  might  prove  them  for  their  full 
amount,  and  share  in  the  distribution  up  to  the  amount  of  his 
claim;  and  this  thoujgh  two  other  members  of  the  board  were 
guarantors:  Duncombv.  R.  R.  Co.,  88  N.  Y.  1. 

§  413.  Liability  of  Directors  for  Fraud.  — The  direc- 
tors are  liable  to  the  company  for  losses  resulting  from 
their  frauds  or  willful  acts.^  For  the  damage  sustained 
by  a  stockholder  from  illegal  and  fraudulent  acts  of  di- 
rectors and  officers  of  a  company,  an  action  may  be  sus- 
tained by  the  stockholder  against  the  officers  and  directors.^ 
So  a  court  of  equity,  at  the  instance  of  the  stockholders, 
may  call  the  directors  of  a  corporation  to  account  for 
abuse  of  trust,  waste,  or  misapplication  of  funds.*  Direc- 
tors of  a  corporation  placing  bonds  in  the  hands  of  an 
agent  for  sale,  and  falsely  and  knowingly  causing  them 
to  be  indorsed  "first-mortgage  bonds,"  are  liable  in  dam- 
ages to  purchasers  in  good  faith  relying  on  such  indorse- 
ment and  injured  by  the  misrepresentation.'*  So  if  direc- 
tors of  a  corporation  knowingly  issue  spurious  stock  and 
obtain  a  loan  on  it,  they  are  personally  liable."  A  director 
of  a  corporation  who  sees  a  card  issued  by  the  officers  of 
the  company  in  the  ordinary  course  of  their  business, 


'  Union  Pacific  R.  R.  Co.  v.  Cretlit 
Mobilier,  135  Mass.  3G7. 

*  Percy  v.  Millaudon,  3  La.  508; 
United  Society  w.  Underwood,  9  Bush, 
C17;  15  Am.  Rep.  731;  Verplauch  v. 
Ins.  Co.,  I  Edw.  Ch.  87;  Robinsou  v. 
Smith,  3  Paige,  222;  24  Am.  Dec. 
212;  Smith  v.  Rathbun,  (iO  Barb.  405; 
Hodges  v.  New  England  Screw  Co.,  1 
R.  I.  312;  53  Am.  Dec.  G24;  Smith  v. 
Poor,  40  Me.  415;  C3  Am.  Dec.  C72. 


Oao  who  has  acted  as  trustee  may  bo 
liable,  although  ho  was  not  legally 
elected,  and  was  not  a  stockholder: 
Halstead  v.  Dodge,  51  N.  Y.  Sup.  Ct. 
lOi). 
8  Crook  V.  Jewett,  12  How.  Pr.  19. 

*  Buyless  v.  Orne,  1  Freem.  Cli.  101. 

*  Clark  V.  Edgar,  12  Mo.  App.  345; 
84  Mo.  lOG;  54  Am.  Rep.  84. 

"  Exchange  Bank  v.  fciiblcy,  71  Ga. 

r2b. 


694 
i»g,  con- 


any,  who 
which  its 
im,  for  it, 
•reclose  a 
CO  of  any 
n  he  was 
their  full 
int  of  his 
)ard  were 


le  direc- 
ng  from 
ustained 
ts  of  di- 
T  be  sus- 
rectors.^ 
;holders, 
)unt  for 
Direc- 
Is  of  an 
ig  them 
in  dam- 
indorse- 
if  dircc- 
)ck  and 
director 
Rcers  of 
usiness, 

ee  may  I)o 

ot  legally 
ickholilcr: 
.  Sup.  Ct. 

w.  Pr.  1!). 
1.  Ch.  Kil. 
App.  345; 

y,  71  Ga. 


695 


LIABILITIES. 


§413 


with  the  names  of  the  directors  attached,  cannot' be  held 
liable  for  false  representations  contained  in  the  card, 
where  it  appears  that  he  did  not  circulate  the  cards,  and 
had  no  knowledge  as  to  the  truth  or  untruth  of  the  repre- 
sentations  thereon,  but  allowed  his  name  to  be  used 
without  reflection  as  to  the  consequences.*  A  director  of 
a  manufacturing  company,  who  has  assented  to  a  dividend 
amounting  to  more  than  the  profits,  may  be  sued  for  such 
violation  of  duty  without  joining  with  him  the  company 
as  defendant.''  False  representations,  made  by  the  officers 
of  a  corporation  which  has  become  a  stockholder  in  an- 
other corporation,  as  to  the  financial  condition  of  the 
latter,  do  not  subject  the  former  to  liability  as  a  member 
of  the  latter  for  debts,  etc.''  The  directors  of  an  insurance 
company  are  liable  personally  to  the  assured,  who,  by 
reason  of  the  insolvency  of  the  company,  has  been  unable 
to  recover  upon  his  policy,  where  they  have  fraudulently 
made  and  published  false  representations  as  to  the  finan- 
cial condition  of  the  company  whereby  the  plaintiff  was 
induced  to  insure  therein;  and  it  is  no  defense  that  they 
were  acting  officially,  or  that  there  was  no  priviJiLy  of  con- 
tract between  them  and  the  plr.intiff.'* 

Illustrations. — An  insolvent  corporation  being  indeUed  to 
its  officers  and  directors,  they  executed  the  notes  of  the  corpo- 
ration in  their  own  favor,  and  having  obtained  judgment  by 
default,  issued  execution  thereon.  lu  the  distribution  of  the 
proceeds  of  the  sherir's  sale  of  the  personal  property  of  t!ie  cor- 
poration, hcM^  that  this  conduct  of  the  officers  was  a  fraud  in 
law,  which  gave  them  no  preference  over  general  creditors  in 
the  distribution:  Hopkins's  Appeal,  90  Pa.  St.  69.  The  defend- 
ant, a  director  in  a  life  insurance  company,  in  consideration  of 
certain  railroad  bonds  delivered  to  his  business  partner,  agreed 
to  and  did  advocate  and  vote  for  the  assignment  of  the  com- 
pany's policies  to  another  company,  and  for  the  reinsurance  of 
the  same  in  the  latter  company.  Held,  that  so  many  of  the 
bonds  as  defendant  received   belonged    to   the  corporation  of 


'  Wakemaii   v.    Dalley,    44    Barb. 
498. 

^Hill     V.     Frazier,     22     Pa.     St. 


*  Langan   v.    Iowa    and    Miimesota 
Constr.  Co.,  49  Iowa,  .317. 

*  Salmon  v.  lliuhardscwi,  30  Conn. 
3C0j  79  Am.  Dec.  255. 


§414 


CORPORATIONS. 


696 


which  he  was  a  director,  and  on  his  failure  to  produce  the  same, 
a  judgment  for  their  estimated  value  was  rightly  entered:  Bent 
V.  Priest,  86  Mo.  475.  A  treasurer  of  a  corporation  presented 
his  claim  for  pay  for  services  to  the  hoard  of  directors,  and  it 
was  allowed;  all  the  proceedings  were  strictly  regular,  but  it 
was  shown  that  the  quorum  of  directors  present  at  the  meeting 
consisted  of  the  treasurer  himself,  his  father,  and  another  rela- 
tive. The  payment  of  such  compensation  to  the  treasurer  was 
contrary  to  the  distinct  understanding  of  the  parties.  Held,  that 
a  suit  against  these  three  directors  by  one  stockholder,  in  behalf 
also  of  the  rest,  would  lie,  and  that  a  judgment  setting  aside  the 
transaction  as  an  abuse  of  trust,  and  for  the  repayment  of  the 
money,  was  correct:  Butts  v.  Wood,  38  Barb.  181.  A  statute,  pro- 
viding for  the  making  of  a  return  by  the  officers  of  certain  corpo- 
rations, enacted  that  if  the  certificate  of  the  state  of  the  company 
were  false  in  any  material  representation,  the  officers  signing  it 
should  be  personally  liable,  etc.  A  certificate  set  forth  that  the 
capital  stock  had  been  paid  in  in  cash,  whereas  in  fact  it  had 
been  paid  in  in  property  of  an  uncertain  value.  Held,  that  this 
was  a  material  misrepresentation,  and  the  officers  were  liable: 
Waters  v.  Quimby,  27  N.  J.  L.  198.  Certain  partners,  as  direc- 
tors in  a  corporation,  voted  to  award  a  construction  contract, 
which  they  knew  was  then  going  to  be  transferred,  to  their  co- 
partners, who  were  also  directors.  Held,  that  they  could  not 
enforce  an  agreement  giving  them  a  share  in  the  transaction,  as 
they  were  participants  in  the  fraud:  Weed  v.  R.  R.  Co.,  31 
Minn.  154.  A.  bought  property  for  eighty  thousand  dollars, 
and  eight  months  afterwards  conveyed  it  to  a  corporation  for 
the  nominal  sum  of  seven  hundred  thousand  dollars,  taking 
all  the  capital  stock  of  the  corporation  in  payment.  The  direc- 
tors swore  to  a  certificate  stating  that  the  amount  of  capital 
stock  paid  in  full  was  seven  hundred  thousand  dollars.  Held, 
that  the  directors  were  properly  found  to  have  sworn  to  a 
false  certificate,  and  therefore  to  be  personally  liable  to  a  credi- 
tor of  the  corporation:  Huntington  v.  Attrill,  42  Hun,  459. 

§  414.  Liability  of  Directors  for  Neglect.— They  are 
likewise  liable  for  losses  caused  by  their  carelessness  or 
neglect  in  attending  to  the  duties  of  their  office.*  It  is 
no  defense  that  they  acted  gratuitously  and  without  com- 
pensation. The  law  requires  that  he  who  undertakes  the 
responsibilities  of  the  position  of  a  director  shall  bring 
to  the  exercise  of  his  trust  a  skill  and  knowledge  com- 

^  Sperings'B  Appeal,  71  Pa.  St.  11;  10  Am.  Rep.  QSA. 


696 


697 


LIABILITIES. 


^4U 


Lhe  same, 
ed:  Bent 
)resented 
•s,  and  it 
ir,  but  it 

meeting 
ther  rela- 
urer  was 
leld,  that 
in  behalf 
aside  the 
nt  of  the 
tute,  pro- 
in  corpo- 
company 
signing  it 

that  the 
ct  it  had 
that  this 
re  liable: 
as  direc- 
contract, 
their  co- 
ould  not 
lotion,  as 

Co.,  31 

dollars, 
ition  for 
taking 
he  direc- 

capital 

Held, 

brn  to  a 

a  credi- 

59. 

ley  are 
iness  or 
It  is 
lit  eom- 
kes  the 
bring 
e  com- 


mensurate with  the  duties  of  that  important  position.    A 
director  is  liable  for  ordinary  neglect,  and  is  bound  to 
exercise  reasonable  diligence  proportionate  in  every  case 
to  the  undertaking.'     When  directors  of  a  corporation 
'lave  the  means  of  knowledge,  ignorance  will  not  excuse 
them  for  allowing  the  funds  thereof  to  be  diverted  from 
the  purposes  of  the  trust;   and  they  are  individually  re- 
sponsible therefor.''    To  charge  a  trustee  of  a  manufactur- 
ing corporation  within   the  statute  for   signing  a  false 
report,  knowing  it  to  be  false,  some  fact  or  circumstance 
must  be  shown  indicating  that  it  was  made  in  bad  faith, 
or  for  some  fraudulent  purpose,  and  not  ignorantly  nor 
inadvertently;  and  this  is  a  question  of  fact  that  must  be 
passed  upon  before  the  liability  can  be  adjudged.     If  the 
report  filed  be  untrue,  and  constitutes  a  false  representa- 
tion, it  renders  liable  only  the  trustee  who  signed  it,  and 
who  signed  knowing  it  to  be  false.'     A  creditor  of  a  cor- 
poration cannot  maintain  an  action  against  the  directors 
for  damages,  on  the  ground  that  their  misconduct  has 
caused  the  insolvency  of  the  corporation.*     Directors  are 
not  necessarily  bound  to  keep  corporate  property  insured.* 
Under  a  statute  making  the  directors  of  a  corporation 
liable  to  its  creditors  for  losses  occurring  from  their  of- 
ficial   mismanagement,  they  are  personally  responsible 
only  for  the  official  mismanagement  which  occurred  dur- 
ing  the  year  for  which  they  were  chosen,  and  during 
which  they  acted.     One  board  of  directors  cannot  be  an- 
swerable for  renewals  of  worthless  paper,  discounted  by  a 
previous  board.*     Under  a  statute    making  the  trustees 
of  a  manufacturing  corporation  liable  for  debts  existing 
at  the  time  of  the  neglect  of  the  trustees  to  file  the  annual 
report  required,  a  judgment  existing  at  the  time  of  such 


^  Bank  v.  Hill,  56  Me.  385;  96  Am. 
Dec.  471. 

*  Shea  V.  Mabry,  1  Lea,  319. 

"Pier  V.  Haninore,  86  N.  Y.  95; 
Pier  V.  George,  86  N.  Y.  613. 


*  Winter  v.  Baker,  34  How.  Pr.  183. 

*  Charleatown  Boot  and  Shoo  Co.  v, 
Dunsmore,  60  N.  H.  85. 

*  Bank  of    Mutual  Redemption  v. 
Hill,  56  Mu.  385;  96  Am.  Dec.  470. 


§415 


CORPORATIONS. 


698 


neglect  is  a  "debt"  within  the  meaning  of  the  statute.* 
Under  a  statute  making  directors  of  a  corporation  liable 
for  debts  beyond  the  amount  of  its  capital,  debts  to  them 
are  not  to  be  counted.^ 

§  415.    Liability  for  Mistakes  Made  in  Good  Faith.— 

Directors,  like  mandataries  and  other  agents,  are  not  re- 
sponsible for  an  error  in  judgment  when  duty  compels 
them  to  choose  between  difficulties,  and  the  case  is  one 
in  which  doubt  may  reasonably  be  said  to  exist  and  it  is 
hard  to  say  which  is  the  safe  course.  But  when  the  error 
is  gross,  the  necessity  for  the  act  not  xpparent,  and  the 
consequences  fatal,  they  must  be  held  responsible,  or  the 
principal  be  left  without  protection.'     Where  certain  per- 


*  Lewis  V.  Armstrong,  8  Abb.  N.  C. 
385. 

^  McClave  v.   Thompson,   36  Hun, 
365. 

'•^  Hodges  V.  New  England  Sci'ow  Co., 
R.  I.  312;  53  Am.  Dec.  624;  Scott  v. 
Dcpeyster,  1  Edw.  Ch.  513.  In  Sper- 
ing's  Appeal,  71  Pa.  St.  11,  10  Am. 
Rep.  684,  the  law  is  well  stated  by 
Sharswood,  J.,  as  follows:  "It  is  by 
no  means  a  well-settled  point  what  is 
the  precise  relation  which  directors 
sustain  to  stockholders.  Tliey  are, 
undoubtedly,  said  in  many  authorities 
to  be  trustees,  but  that,  as  I  apprehend, 
is  only  in  a  general  sense  as  wo  term 
an  agent  or  any  bailee  intrusted  with 
the  care  and  management  of  the  prop- 
erty of  another.  It  is  certain  that 
they  are  not  technical  trustees.  They 
can  only  be  regarded  as  madataries,  — 
persons  who  have  gratuitously  under- 
taken to  perform  certain  duties,  and 
who  are  therefore  bound  to  apply  or- 
dinary skill  and  diligence,  out  no 
more.  Indeed,  as  the  directors  are 
themselves  stockholders,  interested  as 
well  as  all  others  that  the  affairs  and 
business  of  the  corporation  should  be 
successful,  when  we  ascertain  and  de- 
termine that  they  have  not  sought  to 
make  any  profit  not  cr>mmon  to  all  the 
stockholders,  we  raise  a  strong  pre- 
sumption that  they  have  brought  to 
the  administration  their  best  judgment 
and  skill.     Ought  they  to    bo    held 


responsible  for  mistakes  of  judgment, 
or  want  of  skill  and  knowledge?  They 
have  been  requested  by  their  co-stock- 
holders to  take  their  positions,  and 
they  have  given  their  servicer  without 
compensation.  Wo  are  dealing  now 
with  their  responsibility  to  stock- 
holders, not  to  outside  parties,  — 
creditors  and  despositors.  It  is  un- 
necessary to  consider  what  the  rule 
may  be  as  to  them.  Upon  a  close 
examination  of  all  the  reported  cases, 
altnough  there  are  many  dicta  not 
easily  reconcilable,  yet  I  have  found 
no  judgment  or  decree  which  has  held 
directors  to  account,  except  when  tliey 
have  themselves  been  personally  guilty 
of  some  fraud  on  tlie  corporation,  or 
have  known  and  connived  at  some 
fraud  in  others,  or  where  such  fraud 
might  have  been  prevented  had  they 
given  ordinary  attention  to  their 
duties.  I  do  not  mean  to  say  by  any 
means  that  their  responsibility  is 
limited  to  these  cases,  and  that  there 
might  not  exist  such  a  case  of  negli- 
gence, or  of  acts  clearly  ultra  virc*,  as 
Would  make  perfectly  honest  directors 
personally  liable.  But  it  is  evident 
that  gentleman  elected  by  the  stock- 
holders from  their  own  body  ought  not 
to  be  judged  by  tlio  same  strict  stan- 
dard as  the  agent  or  trustee  of  a  private 
estate.  Were  such  a  rule  applied,  no 
gentlemen  of  character  and  responsi- 
bility would  be  found  willing  to  accept 


698 


699 


LIABILITIES. 


§416 


e  statute.^ 
tiou  liable 
is  to  them 

Faith.— 

ire  not  re- 
f  compels 
ise  is  one 
'  and  it  is 
I  the  error 
i,  and  the 
Die,  or  the 
rtain  per- 

of  judgment, 
ledge?  They 
lieir  co-stock- 
ositions,  and 
viced  without 
dealing  now 
y  to  stock - 
p  parties,  — 
p.  It  is  un- 
lat  the  rule 
Fpon  a  close 
ported  cases, 
f  dicta  not 
have  found 
lich  has  held 
)t  when  tlioy 
onally  guilty 
■poration,  or 
'ed  at  some 
such  fraud 
:ed  had  tlu.'y 
to     their 

0  say  by  any 
msibility    is 

1  that  there 
ise  of  negli- 
dtra  vln'i<,  aa 
est  directors 

is  evident 
y  the  stock- 
ly  ought  not 
!  strict  stan- 
of  aprivatd 
!  applied,  no 
id  respousi- 
ng  to  accept 


sons  enter  into  a  contract  claiming  to  be  directors  of  a 
corporation,  if  no  such  corporation  really  exists,  such 
persons  are  individually  liable  on  the  contract.^  The 
publication  by  savings  bank  directors,  that  directors  and 
stockholders  are  personally  responsible  for  its  debts,  does 
not  constitute  a  contract  with  depositors,  but  if  intention- 
ally false,  aflbrds  the  basis  of  an  action  for  deceit.^ 

Illustrations. — The  officers  of  a  public  corporation  in  their 
official  capacity  made  a  contract  under  a  mistake  of  law.  The 
other  party  to  the  contract  was  equally  mistaken  as  to  the  law. 
Each  had  the  same  opportunities  of  knowing  the  law.  Held, 
that  the  officers  were  not  personally  liable,  and  that  a  like  rule 
would  apply  to  public  bodies  not  incorporated:  Humphrey  v. 
Jones,  71  Mo.  62.  The  directors  of  an  insurance  company  re- 
elected their  secretary,  but  took  no  new  bond,  supposing  that 
the  bond  first  given  was  a  continuing  security.  They  took  no 
legal  advice,  but  were  good  business  men,  stockholders  in  the 
company,  and  acted  in  good  faith.  Held,  that  they  could  not 
be  made  personally  liable  for  the  secretary's  defalcation:  Vance 
V.  Phoenix  ins.  Co.,  4  Lea,  oS5.  The  president  of  an  omnibus 
company  directed  its  drivers  to  exclude  all  colored  persons. 
Held,  that  he  was  individually  liable  for  the  ejection  and  per- 
sonal injury  of  such  persons,  although  an  action  might  have 
been  maintained  against  the  company:  Peck  v.  Cooper,  112  111. 
192;  54  Am.  Rep.  231. 

§  416.  Directors  must  Act  as  Board — Majority  Gov- 
ern.— The  directors  must  act  as  a  board,  and  not  singly. 
All  must  either  be  present  or  have  been  notified,  and  the 
vote  of  a  majority  binds  all.'  A  majority  of  the  directors 
must  be  present  to  constitute  a  board  competent  to  trans- 


Huch  places These  citations, 

whicli  inight  be  multiplied,  establish, 
as  it  seems  to  me,  that  while  directors 
are  personally  responsible  to  the  stock- 
holiturs  for  any  losses  resulting  from 
fraud,  embezzlement,  or  willful  mis- 
conduct, or  breach  of  trust  for  their 
own  benelit,  and  not  for  the  benefit  of 
tile  stockholders,  for  gross  inattention 
and  negligence  by  which  such  fraud  or 
misconduct  has  been  perpetrated  by 
agents,  officers,  or  co-diroctors,  yet 
they  are  not  liable  for  mistakes  of 
judgDaeat,  even  though  they  may  be 


so  gross  as  to  appear  to  us  absurd  and 
ridiculous,  provided  they  are  honest, 
and  provided  they  arc  fairly  within 
the  scojje  of  the  powers  and  discretion 
confided  to  the  managing  body." 

'  Herod  v.  Rodman,  Hi  Ind.  L'41. 

'•*  Westcrvelt  v.  Demarcit,  4(J  N.  J. 
L.  37;  50  Am.  Rep.  400. 

'  Morawetz  on  Corporations,  sec. 
247;  Despatch  Line  v.  Bellamy  Mfg. 
Co.,  12  N.  IL  205;  37  Ain.  D.c.  'Mi; 
Elliot  V.  Abbot,  12  N.  II.  519;  37 
Am.  Dec.  227;  BucU  v.  Buckingham, 
IG  Iowa,  284;  85  Am.  Dec.  51G. 


§416 


CORPORATIONS. 


700 


act  business.*    A  contract  bv  a  board  of  directors  cannot 

V 

be  changed  by  less  than  a  quorum.''  Where  a  quorum 
votes  to  make  a  contract  with  one  of  their  number,  the 
contract  is  not  necessarily  void  because  such  member 
voted,  no  fraud  or  bad  faith  being  charged."  Where  a 
quorum  attend  a  meeting,  it  will  be  presumed  that  all 
were  notified.*  If  a  quorum  meet  and  unite  in  any 
action,  the  corporation  is  bound,  although  the  other 
directors  were  not  notified.'  An  assessment  on  stock, 
authorized  to  be  made  by  a  board  of  managers,  may,  in 
the  absence  of  a  regulation  as  to  the  number  necessary  to 
constitute  a  quorum,  be  made  by  a  majority  of  the  board.® 
An  assignment  for  the  benefit  of  creditors,  made  by  a 
majority  of  the  directors  constituting  a  ^egal  quorum,  is 
not  invalid  because  two  of  the  directors,  being  out  of  the 
state  at  the  time,  failed  to  receive  actual  notice  of  the 
meeting.' 

Illustrations.  — The  charter  of  a  corporation  empowered  the 
president  and  directors  to  make  by-laws.  Held,  that  the  power 
might  be  exercised  by  the  president  and  a  majority  only  of  the 
directors:  Cahill  v.  Kalamazoo  Mutual  Ins.  Co.,  2  Doug.  (Mich.) 
124;  43  Am.  Dec.  457.  An  original  charter  granted  by  the  state 
of  Connecticut  required  four  directors  to  constitute  a  quorum. 
The  company  was  afterwards  merged  with  a  corporation  char- 
tered by  Rhode  Island,  whose  charter  was  silent  as  to  the  num- 
ber required.  By  the  contract  of  merger,  which  was  affirmed 
by  the  Rhode  Island  legislature,  the  latter  company  surren- 
dered its  franchises,  powers,  and  privileges  to  the  Connecticut 
company;  and  the  Connecticut  legislature,  by  an  act  confirm- 
ing the  merger,  declared  that  all  the  rights  of  the  old  company 
in  this  state  should  be  preserved  to  the  new  one.  Held,  that 
after  the  merger,  four  only,  and  not  a  majority,  were  necessary 
for  a  quorum :  Lane  v.  Brainerd,  30  Conn.  565.  The  charter  of 
a  railroad  company  provided  that  for  non-payment  of  assess- 
ments, "the  directors  may  order  the  treasurer  to  sell  such 


» Ex  parte  Willcocks,  7  Cow.  402; 
17  Am.  Dec.  525. 

2  Tennessee  etc.  R.  R.  Co.  v.  R.  R. 
Co.,  73  Ala.  426. 

*  Leavittw.  Mining  Co.,  3  Utah,  265. 

*  Chouteau  Ins.  Co.  t*.  Holmes,  C8 
Mo.  601;  30  Am.  Hep.  807. 


*  Edgerly  v.  Emerson,  23  N.  H.  555; 
55  Am.  Dec.  207. 

*  St.   Louis    Colonization  Ass'n   v. 
Hennessy,  11  Mo.  App.  555. 

7  Chase  v.  Tuttle,  55  Conn.  455;  3 
Am.  St.  Rep.  64. 


700 

Ts  cannot 
a.  quorum 
mber,  the 
L  member 
Where  a 
d  that  all 
e  in  any 
the  other 
on  stock, 
s,  may,  in 
icessary  to 
he  board.® 
lade  by  a 
[uorum,  is 
)ut  of  the 
ice  of  the 


(owered  the 

i  the  power 

only  of  the 

ig.  (Mich.) 

)y  the  state 

a  quorum. 

itioii  char- 

the  nuni- 

affirnied 

ny  surren- 

onnecticut 

t  confinn- 

company 

'leld,  that 

necessary 

charter  of 

of  assess- 

sell   such 

3  N.  H.  555; 

on   Asa'n   i". 
55. 
'onn.  455;  3 


701 


LIABILITIES. 


§417 


shares  at  auction,  etc.,  and  the  delinquent  subscriber  shall  be 
held  accountable  for  the  balance,  if  the  shares  sell  for  less  than 
the  assessments."  The  directors  voted  that  the  president  and 
treasurer  be  a  committee  to  collect  arrearages,  and  enforce  such 
collection  by  sales  or  otherwise.  Held,  that  a  sale  under  this 
vote  was  void;  that  the  directors  could  not  delegate  the  power 
of  ordering  sales  to  a  committee,  and  that  an  order  to  the  treas- 
urer must  be  absolute,  and  not  in  the  alternative:  York  etc. 
B.  R.  Co.  v.  Ritchie,  40  Me.  425. 

§  417.  Directors'  Meetings. — It  is  immaterial  in  what 
manner  the  stated  meetings  of  directors  have  been  fixed. 
It  is  enough  if  they  are  in  fact  regularly  held  on  stated 
days.*  Where  the  charter  of  such  corporation  does  not 
restrict  the  directors  as  to  the  place  of  their  meeting,  they 
may  meet  in  another  state,  and  there  appoint  a  secretary.' 
A  trustee  elected  to  fill  a  vacancy  holds  over  until  his  suc- 
cessor is  elected  and  qualified,  if  that  is  the  rule  as  to  or- 
dinary trustees.'  Where  the  action  of  the  directors  at  a 
special  meeting  is  ratified  at  a  subsequent  special  meet- 
ing, of  which  all  the  directors  had  legal  notice,  and  at 
the  next  regular  meeting  "the  minutes  of  the  last  two 
meetings  were  read  and  approved,"  it  is  immaterial 
whether  all  the  directors  were  legally  notified  of  such  first 
special  meeting,  in  the  absence  of  fraud  or  conspiracy.* 

Illustrations.  —  A  mortgage  was  executed  under  a  resolution 
passed  at  a  special  meeting  of  the  directors.  The  resolution 
recited  that  written  notices  of  the  meeting  had  been  served  on 
each  director.  The  purpose  of  the  meeting  was  not  specified 
in  the  notices.  Held,  that  the  meeting  was  regularly  called, 
and  the  mortgage  valid :  Granger  v.  Original  Empire  Mill  etc. 
Co.,  59  Cal.  678.  The  by-lawe5  of  a  corporation  fixed  stated 
days  for  directors'  meetings,  and  provided  that  when  less  than 
a  quorum,  but  more  than  three,  should  be  present,  they  might 
adjourn  to  any  day  prior  to  the  next  regular  meeting.  Held, 
that  at  a  meeting  so  adjourned  the  acts  of  a  majority  of  a  quorum 
present  were  binding,  though  the  absentees  had  no  special  no- 

'  Atlantic  Fire  Ins.  Co.  v.  Sanders,  '  Hngueuot  Nat.  Bank  v.  Studwell, 

36N.  H.  252.  6  Daly,  13. 

■'  MoCall  V.  Bryam  Mfg.  Co.,  6  Conn.  *  County  Court  v.  R.  R.  Co.,  35  Fed. 

428.                                     ,  Rep.  161. 


8  418 


CORPORATIONS. 


702 


tice  of  the  adjourned  meeting:  Smith  v.  Law,  21  N.  Y.  296.  A 
meeting  of  the  directors  of  a  bank  in  New  Haven,  called  by 
the  cashier,  by  direction  of  the  president,  who  was  then  in  New 
York,  by  personal  notice  to  the  directors  in  Now  Haven,  with- 
out specifying  in  such  notice  the  object  of  the  meeting,  held, 
to  be  a  legal  meeting  for  the  transaction  of  ordinary  business: 
Savings  Bank  v.  Davia,  8  Conn.  191. 

§  418.  Implied  Authority  to  Appoint  Inferior  Agents, 
and  Delegate  Authority. — Tho  directors  have  implied  au- 
thority to  employ  inferior  agents  to  attend  to  tho  affairs 
of  the  corporation.*  But  tho  general  power  of  manage- 
ment  cannot  be  delegated  by  the  directors.  "Hence,"  says 
Mr.  Morawetz,^  "it  has  been  held  that  the  board  of  di- 
rectors of  a  colliery  company  cannot  delegate  the  power 
of  allotting  shares  to  two  members  of  the  board  and  the 
manager;'  nor  can  the  directors  of  a  corporation  delegate 
the  power  of  making  calls,*  or  of  declaring  dividends,*  or 
of  ordering  a  sale  of  shares  for  non-payment  of  assess- 
ments."" The  board  of  directors  may  appoint  agents  to 
receive  subscriptions  to  its  capital  stock,  and  the  sub- 
scriptions so  received  are  binding.^  If  a  corporation  fur- 
nishes its  secretary  with  money  to  pay  its  employees,  and 
an  employee  monthly  delivers  to  the  secretary  receipts 
for  the  month's  salary,  and  leaves  the  money  with  the 
secretary,  the  corporation  is  not  liable  for  the  default 
of  the  secretary  in  failing  afterwards  to  pay  over  the 
amounts.*  In  order  to  render  a  corporation  liable  for 
services  of  an  attorney  employed  by  a  subordinate  agent, 
a  delegation  of  authority  to  employ  must  be  shown.' 

Illustrations. — The  articles  of  association  provided  that 
the  directors  sbould  have  power  to  appoint  and  remove  agents 

'  Western  Bank  v.  Gilstrap,  46  Mo. 
419;  Kitchen  v.  R.  R.  Co.,  69  Mo. 
614;  Hoyt  v.  Thompson,  19  N.  Y.  207; 
Burrill  v.  Nahant  Bank,  2  Met.  163. 

''  Morawetz  on  Corporations,  sec. 
249. 

»  Howard's  Case,  L.  R.  1  Ch.  App. 
561. 

*  Silver  Hook  Road  v.  Oresne,  12 


R.  1. 164;  Farmers' Mutual  Ins.  Co.  v. 
Chase,  66  N.  H.  341. 

0  Gratz  V.  Redd,  4  B.  Mon.  186. 

•  York  etc.  R.  R.  Co.  v.  Ritchie,  40 
Me.  425. 

'  Lohman  ».  R.  R.  Co.,  2  Sand.  39. 

8  Gardner  v.  R.  R.  Co.,  63  Cal.  326. 

'Maupin  v.  Virginia  Lead  Mining 
Co.,  78  Mo.  24. 


3 


702 


ro3 


LI.VniLITIKS. 


§419 


Y.  296.  A 
1,  called  by 
hen  in  New 
[aven,  with- 
eeting,  heldy 
ry  business: 

ior  Agents, 

mplied  au- 
tho  affairs 
f  manage- 
3nce,"  says 
>ard  of  di- 
the  power 
rd  and  the 
>n  delegate 
idends,®  or 

of  assess- 
t  agents  to 

the  sub- 
ration  fur- 
oyees,  and 
y  receipts 

with  the 
le  default 

over  the 

liable  for 
ate  agent, 
)wn." 

dded  that 
lOve  agents 

lal  Ins.  Co.  V. 

Ion.  186. 

t>.  Ritchie,  40 

,  2  Sand.  .39. 

63  Cal.  326. 

jead  Mining 


of  the  corporation.  ITrhl,  that  n  contract  with  A,  agreeing  to 
appoint  r>  the  agent  and  manager  of  all  the  mining  property  of 
the  corporation,  and  that  15  Hhonld  be  rctuiiicd  in  that  position 
until  ii  should  pay  A  out  of  the  profits  a  certain  Hum  which  A 
claimed  was  duo  him,  and  that  15  should  Iji"  removable  at  A'a 
pleasure,  was  one  which  the  directors  had  no  power  to  make, 
and  was  not  binding  upon  the  corporation:  Fl(i(jslaff  Silver 
Mining  Co.  v.  Patrick,  2  Utah,  304. 

§  419.  Powers  of  Secretary  and  Treasurer.  —  The 
clerk  of  a  corporation,  unless  the  laws  of  the  state  or  by- 
laws of  the  corporation  provide  otherwise,  remains  in 
office  until  another  is  chosen.'  A  signature  by  a  corpora- 
tion by  their  secretary  ia  prima  facie  their  act,  and  must 
be  denied  under  oath.^  The  secretary  is  the  proper  per- 
son to  prove  the  corporate  books."  He  cannot,  in  the  ab- 
sence of  special  authority,  bind  the  corporation  by  a 
"due  bill"  given  a  stockholder  in  consideration  of  his 
surrender  of  his  stock.*  The  secretary  of  a  mining  com- 
pany has  no  implied  authority  to  make  an  assignment  of 
promissory  notes  belonging  to  the  company.^ 

It  is  the  duty  of  a  treasurer  to  keep  the  moneys  of  his 
principal  distinct  from  his  own  (unless  a  special  agree- 
ment be  made  to  the  contrary),  and  to  be  able  and  ready 
at  all  times  to  pay  over  what  balance  he  owes  to  his  prin- 
cipal, and  to  pay  it  upon  demand."  The  treasurer,  who 
holds  money  to  pay  a  dividend  which  has  been  declared, 
and  who  refuses  to  pay  the  dividend  upon  certain  shares, 
upon  the  ground  that  he  is  himself  the  owner  of  the 
shares,  is  liable  personally  to  an  action  of  assumpsit  for 
money  had  and  received,  brought  in  the  name  of  the  real 
owner  of  the  shares,  to  recover  the  amount  of  such  divi- 
dend/     The  treasurer,  who  is  held  out  to  the  world  as  the 

*  South  Bay  Meadow  Dam  Co.  v.        ^  Blood  v.  Marcuse,  .38  Cal.  590;  99 
Gray,  30  Me.  547.  Am.  Dec.  4!?"). 

^  Frye  v.  Tucker,  24  111.  180.  "  Secoiul  Avenue  R.  R.  Co.  v.  Cole- 

'  Smith  V.  Natchez  Steamboat  Co.,  man,  24  Bail).  300. 

2  Mias.  479.  "  Williams    v.    Fullertou,    20    Vt. 

*  Gregory  v.  Lamb,  16  Neb.  205.  340. 


§419 


CORPORATIONS. 


704 


11 


proper  agent  to  whom  a  payment  to  the  corporation  is  to 
bo  made,  is  an  agent  to  whom  notice  may  be  given  as  to 
the  purpose  for  which  the  payment  is  made.*  The  treas- 
urer has  the  right  to  negotiate  notes  or  bills  taken  in  the 
name  of  his  office.'  If  the  directors  authorize  their  treas- 
urer to  indorse  notes  of  the  corporation  to  a  third  person, 
or  if  such  treasurer  is  suffered  to  draw  and  accept  drafts, 
to  indorse  notes  payable  to  the  corporation,  and  to  do 
other  similar  acts  whereby  he  is  held  out  to  the  public  as 
having  the  general  authority  implied  from  his  official 
name  and  character,  an  indorsement  made  in  pursuance 
of  such  express  or  implied  authority  passes  a  valid  title 
to  the  indorsee.'  A  treasurer  has  no  authority  to  pay 
liimself  a  claim  he  holds  against  it,  unless  the  claim  has 
been  approved  and  its  payment  authorized  by  the  cor- 
poration.* If  the  power  of  the  treasurer  of  an  association, 
incorporated  for  the  purpose  of  erecting  and  obtaining  a 
monument,  is  expressly  limited  in  the  by-laws  to  the 
payment  of  such  bills  as  have  been  approved  by  the  direc- 
tors in  a  particular  form,  he  cannot  bind  the  corporation 
by  a  negotiable  promissory  note  on  demand,  given  in 
part  payment  for  the  monument,  although  the  directors 
have  authorized  a  committee  to  contract  for  the  same, 
and  draw  on  the  treasurer  for  the  price,  and  the  com- 
mittee have  accordingly  contracted  for  the  same,  and  the 
monument  has  been  erected  and  approved  by  the  corpora- 
tion, and  the  committee  have  verbally  authorized  the 
treasurer  to  pay  the  price,  and  he  thereupon,  not  having 
on  hand  sufiicient  money  for  the  purpose,  has  executed 
the  note.^  The  treasurer  of  a  corporation  has  not  any 
authority  to  pay  the  debts  of  the  corporation,  nor  set  off 
the  debts  due  from,  by  those  due  to,  the  company;*  nor  to 

*  New  Eiiulr'.nd  CV.r  Sprin-^;  Co.  v.  ♦  Peterborough  R.R.  Co.  v. Wood,  61 

Union  India  Rubber  Co.,  4  'Blatchf.  N.  H.  418. 

1.  "  Torrey  v.   Dustia    etc.    Aas'n,  5 

'^  Perkins  v.  Bradley,  24  Vt.  CG.  Allen,  327. 

»  Lester  v.  Webb,  1  Allen,  34.  «  Brown  r.  Weymouth,  36  Me.  414. 


704 


705 


LIABILITIES. 


§420 


ion  is  to 
ven  as  to 
ho  treas- 
n\  in  tho 
eir  troas- 
i  person, 
pt  drafts, 
lid  to  do 
public  as 
3  official 
ursuance 
alid  title 
iyto  pay 
jlaim  has 
'  the  cor- 
sociation, 
taining  a 
'3   to  the 
the  direc- 
rporation 
given  in 
directors 
he  same, 
Ithe  com- 
,  and  tho 
corpora- 
ized  the 
•t  having 
executed 
not  any 
lor  set  off 
;®  nor  to 

I  V.Wood,  61 

Ass'n,   5 

36  Me.  414. 


confess  judgment  for  it;'  nor  to  assume  a  debt  against  a 
third  person." 

Ilu'stkations. — On  a  bill  by  a  savings  bank  to  fon^clopo  a 
mortgage,  wlioro  the  defoneo  of  usury  was  set  up,  (Ixio  ■was 
proof  that  a  prcniiuni  had  been  paid  to  its  treaFurcr.  for  (ho 
loan,  in  pursuanc(!  of  a  contract  made  liy  hlni  with  tlie  l.orrower 
in  tho  nanio  of  tlio  corporation.  Jfcld,  tliat  the  i)reiniuiu  must 
be  presumed  to  have  boon  paid  to  tlie  eorporation:  JJ'tinc  Sue- 
iiKja  Ini^t.  V.  Mulford,  31  N.  J.  Eq.  91).  Tho  treasurer  uf  an 
incorporated  joint-stock  company,  who  was  charged  with  tlie 
custody  of  the  corporate  seal,  and  of  all  the  hooks  rehitin^  to 
the  issue  and  transfer  of  stock  certifieates,  borrowed  tiirou^h  a 
broker  large  sums  of  money  on  certificates  fraudulently  issued 
by  himself.  These  certificates  bore  the  signature  of  the  pnsi- 
dent  of  tho  company,  were  countersigned  by  the  treasurer,  sealed 
with  tho  corporate  seal,  and  purported  to  bo  genuine  in  every 
respect.  The  lender  of  tho  money  acted  in  good  faith,  not 
knowing  for  whom  the  money  was  wanted,  and  supposing  tho 
certificate  to  he  genuine.  Held,  that  the  company  was  l)ound 
by  the  act  of  its  agent,  and  was  liable  in  damages  to  the  lender 
of  the  money:  Tome  v.  R.  R.  Co.,  39  Md.  36.  An  employee  of 
a  corporation  was  accustomed  to  leave  part  of  his  wages  on 
deposit  with  tho  treasurer,  tho  amount  being  indorsed  on  tho 
pay-roll,  supposing  it  was  deposited  with  tho  corporation.  This 
practice  was  not  known  to  the  other  oflicers,  and  the  treasurer 
appropriated  the  funds.  Held,  that  the  company  was  liable  to 
tho  employee:  Carroll  v.  People's  Ry  Co.,  14  Mo.  App.  490. 

§420.    President  of  Corporation — Powers  of. — It  has 

been  laid  down  in  some  cases  that  tho  president  of  a  cor- 
poration has,  as  such,  no  greater  power — except  that  of 
presiding  officer — than  any  other  member  of  the  board  of 
directors.'  The  express  powers  of  a  president  are  usually, 
however,  larger  than  this,  and  are  given  either  by  tho 
charter  or  the  by-laws  of  the  corporation.  He  may,  without 
express  authority,  perform  all  acts  which  are  incident  to 
the  execution  of  the  trust  reposed  in  him,  and  which  cus- 
tom or  necessity  imposes  upon  the  office.*    His  powers, 


*  Stevens  v.  Carp  River  Iroa  Co.,  57 
Mich.  427. 

2  Stark  Bank  v.  United  States  Pot- 
tery  Co.,  34  Vt.  144. 

»TitU8  V.  R.  R.  Co.,  37  N.  J  L. 
V0UL-4S 


98;  Walworth  Co.  Bank  v.  Loan  Co., 
14  Wis.  325;  but  see  Smith  v.  Smith, 
62  111.  493. 

«  Mitchell  V.  Deeds,  49  111.  416;  95 
Am.  Dec.  621;  Chicago  etc.  R.  R.  Co.. 


§420 


CORPORATIONS. 


706 


however,  to  bind  by  contracts,  extend  only  to  matters 
arising  in  tlio  ordinary  30urse  of  its  business.*  If  he 
was  in  the  habit  of  acting  as  a.  business  agent  for  the 
company  with  its  knowledge  and  without  objection,  ac- 
tual authority  will  be  inferred  from  such  acts,  and  the 
company  will  be  bound  by  them.'^  His  power  to  bind 
the  company  aa  its  agent  may  be  implied  from  acts  and 
circumstances.'^  When  a  corporate  body  intrusts  its 
president,  or  other  principal  officer,  with  the  conduct  of 
its  proper  business,  it  thus  clothes  him  with  the  power  of 
a  general  agent,  and  the  restrictions  imposed  privately 
on  him  will  be  immaterial  to  third  parties.*  A  vote  of 
the  directors  that  the  president  have  full  power  and  control 
of  its  business  authorizes  him  to  purchase  the  materials 
to  be  used  in  its  operations,  and  to  borrow  money  for  the 
corporation,  and  give  its  note  for  the  money  borrowed.® 
Where  a  corporation  is  embarrassed,  and  without  funds 
to  purchase  its  past-due  outstanding  bond,  its  j^resident 
may  purchase  the  same  and  hold  it  as  against  the  com- 
pany, but  not  if  he  purchase  with  the  funds  or  credit  of 
the  company.®  The  president  has  implied  power  to  in- 
stitute suit  to  enjoin  a  party  from  illegally  using  water 
belonging  to  the  corporation;'  to  take  a  lease  of  f.n 
office  on  behalf  of  a  foreign  corporation;*  to  appear  and 
confess  a  judgment  against  it;^  to  indorse  securities  for 
transfer.*"  With  power  to  contract  on  its  behalf,  he  has 
power  to  release  a  contract."    Where  the  president  of 


V.  Coleman,  18  lil.  297;  68  Am.  Dec. 
544.  A  corporation  cannot  be  bound 
by  a  contract  made  by  its  president, 
unless  powei  to  bind  it  is  given  to  him 
by  the  act  of  incorporation,  or  he  is 
authorized  by  the  corporation  to  make 
the  contract:  Mount  Sterling  etc. 
Turnpike  Roaut .  LooD'^y,  1  Met.  (Ky.) 
550;  71  Am.  Dec.  491. 

1  Blen  V.  Bear  River  etc.  Co.,  20  Cal. 
602;  81  Am.  Dec.  132. 

•^  Dougherty  V.  Hunter,  54  Pa.  St.  380. 

*  Northern  etc.  R.  R.  Co.  v,  Bastian, 
15  Md.  494. 


*  Grr^.us  v.  Land  Co.,  3  Phil.  447. 

*  Castle  V.  Belfast  Foundry  Co.,  72 
Me.  1G7. 

*  Bradly    v.   Williams,    3    Hughes, 
26. 

^  Reno  Wat6r  Co.  v,  Leete,  17  Nev. 
203. 

*  Steamboat  Co.  v.  McCutcheon,  1  .S 
Pa.  St.  13. 

*  Chamberlin  v.  Mammoth  Mining 
Co..  20  Mo.  90. 

'»  Caryl  v.  McElratb,  3  Sand.  176. 
"  Indianapolis  Rolling  Mill  Co.  v. 
R.  R.  Co.»  120  U.  S.  256. 


706 

matters 
If  he 
for  the 
tion,  ac- 
and  the 
to  bind 
acts  and 
■usts    its 
nduct  of 
power  of 
privately 
\.  vote  of 
d  control 
materials 
'Y  for  the 
orrowed.^ 
lut  funds 
president 
the  corn- 
credit  of 
er  to  in- 
ng  water 
of  f.n 
3ear  and 
rities  for 
',  he  has 
ident  of 

i'hil.  447.^ 
idry  Co.,  72 

Hughes, 

etc,  17  Nev. 

'utcheon,  13 

lOth  Mining 

Sand.  176. 
Mill  Co.  V. 


707 


LIABILITIES. 


420 


a  private  business  corporation  has  previously  been  its 
attorney,  and  has  general  charge  of  its  business,  o.u- 
thority  on  his  part  to  employ  attorneys  is  implied.* 
He  has  the  right  to  indorse  and  assign  notes  and  mort- 
gages given  to  it  to  aid  in  its  construction,  and  the  in- 
dorsee, before  maturity,  takes  the  notes  free  from  any 
equities  between  the  maker  and  the  company.^  Where 
notice  is  required  to  be  given  by  the  president  of  a  bank, 
a  notice  by  the  president  and  directors,  under  the  seal  of 
the  corporotion,  is  sufficient.*  Presidents  and  cashiers 
of  incorporated  companies,  acting  as  their  executive  offi- 
cers, can  make  indorsements  in  their  behalf  by  simply 
indorsing  their  own  names,  with  +heir  titles  of  office.* 
That  the  president  of  a  railroad  usually  gave  notes  of 
the  company  on  printed  forms,  and  signed  them  as  pres- 
ident, will  not  prevent  a  recovery  against  the  company 
upon  a  duo  bill  not  upon  a  printed  form,  and  not  signed 
as  president,  but  is  a  mere  circumstance  to  be  weighed 
by  the  jury  in  determining  whether  or  not  the  considera- 
tion passed  to  th<  ompany  so  as  to  make  them  liable.* 
A  president  of  a  corporation  has  no  authority  ex  officio  to 
buy  or  sell  land  for  the  corporation.*  He  cannot  borrow 
money  in  its  name  and  pledge  its  responsibility,  unless 
authorized  by  its  charter  or  by  a  i-'-law  or  resolution  of 
the  directors/  He  has  no  authority  ex  officio  to  execute  a 
bond  and  warrant  of  attorney  for  an  entry  of  judgment 
against  the  corporation.*  A  corporation  which,  by  its 
charter,  can  only  act  through  its  board  of  directors 
cannot  contract,  through  its  president,  without  the  au- 
thority of  the  board,  except  as  to  matters  of  simple 
aJministration,  which  of  necessity  should   be  managed 


1  Wctherbee  v.  Fitch,  117  HI.  67. 

s  Irwin  V.  Bailey,  8  Biss.  523. 

"  Crawford  v.  State  Bank,  5  Ala. 
G7!). 

*  State  Bank  v.  Fox,  3  Blatchf.  431. 

'^  Richmond  etc.  R.  R.  Co.  v.  Snead, 
19  Gratt.  354;  100  Am.  Dec.  670. 


"  Bliss  V.  Kaweah  Canal  and  Irriga- 
tion Co.,  65  Cal.  502;  Blen  v.  Water 
Co.,  20  Cal.  602;  81  Am.  Dec.  132. 

'  Life  and  Fire  Ins.  Co.  v.  Mechan- 
ics' Fire  Ins.  Co.,  7  Wend.  31. 

»  Stokes  V.  New  Jersey  Pottery  Co., 
46  N.  J.  L.  237. 


vJK.'i%. 


§420 


CORPORATIONS. 


708 


by  the  president  without  such  authority.*  A  deed  de- 
scribing the  grantors  as  a  corporation,  executed  by  the 
president  thereof  in  his  own  name,  and  under  his  own 
seal,  does  not  pass  the  title  from  the  corporation.'* 

Although  a  president  of  a  corporation  should  have  con- 
sulted the  board  of  directors  before  authorizing  certain 
expenditures,  yet  if  he  acted  in  good  faith,  and  did  only 
what  they  would  probably  have  authorized,  he  is  not  lia- 
ble to  the  corporation  for  damages;  nor  can  it  set  up  his 
conduct,  by  set-off  or  otherwise,  in  bar  of  his  actio-  foi 
his  salary.'  Where  the  constitution  and  by-laws  of  a  large 
corporation  likely  to  be  engaged  in  litigation  are  silent 
as  to  the  duties  of  its  president,  he  has  authority  to  de- 
fend suits  brought  against  it,  and  may  apply  for  a  writ  of 
error,  and  employ  and  dismiss  counsel,  unless  rest.v'ained 
by  some  act  of  the  directors.*  A  by-law  of  a  railroad  cor- 
poration authorizing  its  president  to  act  as  its  "business 
and  financial  agent"  does  not  authorize  him  to  mortgage 
a  locomotive  owned  and  in  use  by  it.*  A  by-law  giving 
the  president  of  a  corporation  "the  general  charge  and 
direction  of  the  business  of  the  company,  as  well  as  all 
matters  connected  with  the  interests  and  objects  of  the 
corporation,"  does  not  authorize  him  to  do  an  act  which, 
by  another  by-law,  is  expressly  given  to  a  committee." 
Where  a  board  of  directors  refers  a  matter  to  a  com- 
mittee of  three,  one  of  whom  is  the  president  of  the 
corporation,  the  president  cannot  act  alone  so  as  to 
bind  the  corporation.'  The  president  is  liable  for  ne- 
glect in  not  taking  a  bond  from  the  secretary,  where 
the  by-laws  make  it  his  duty  to  take  bonds  from  the  offi- 
cers.*    The  president  of  a  corporation  is  not  made  liable 


'  Bright  V.  Metairie  Cemetery  Asa'n, 
33  La.  Ann.  58. 

^  Hatch  V.  Burr,  1  Ohio,  390. 

»  Davia  V.  R.  R.  Co.,  22  Fed.  Rep. 
883. 

*  Cohnan  v.  West  Virginia  Oil  etc. 
Co.,  25  W.  Va.  148. 


»  Luae  V.  R.  R.  Co.,  6  Or.  125;  25 
Am.  Rep.  506. 

«  Twelfth  Street  Market  Co.  v.  Jack- 
son, 102  Pa.  St.  269. 

'  Railroad  Co.  v.  Ebling,  12  Daly,  99. 

8  Pontchartrain  R.  R.  Co.  v.  Pauld- 
ing, 11  La.  41;  30  Am.  Dec.  709. 


708 


709 


LIABILITIES. 


§  420 


3eed  de- 
1  by  the 
his  own 

2 

lave  con- 
;  certain 
did  only 

not  lia- 
st  up  his 
3tiot  fOi 
)f  a  large 
re  silent 
;ty  to  de- 
a  writ  of 
3stA*ained 
road  coi- 
business 
mortgage 
w  giving 
irge  and 

11  as  all 
ts  of  the 

t  which, 
nmittee." 
a  com- 
of  the 

0  as  to 
for  ne- 

%  where 

the  offi- 
de  liable 

3r.  125;  25 

Co.  V.  Jack- 

2  Daly,  99. 

>.  ?•.  PaulJ- 
j.  709. 


to  an  action  for  a  personal  injury  merely  by  transmitting 
an  order  of  the  corporation  to  a  servant,  who  in  executing 
it  uses  illegal  force;  but  if  the  order  is  issued  by  him  on 
his  own  responsibility,  he  is  liable.^  On  the  death  of  tho 
president,  the  vice-president  may  act  in  his  stead,  though 
thai  ofiBce  was  not  provided  for  by  name  in  the  by-laws, 
the  directors  simply  being  authorized  to  create  other 
offices,  and  they  having  created  that  of  vice-president.' 
The  president  of  a  corporation  properly  elected  hok's 
over  until  another  president  is  elected,  although  there 
is  no  special  provision  in  tho  charter  to  that  effect.' 
Tho  death  of  a  bank  president  in  whose  name  a  judgment 
was  obtained  does  not  abate  a  suit  brought  in  behalf  of 
the  bank.^  A  contract  entered  into  by  the  president  of  a 
corporation  is  binding  upon  the  corporation,  and  not  vKra 
vires  and  void,  though  the  power  to  make  contracts  i.s 
vested  in  the  board  of  directors,  if  the  evidence  suffi- 
ciently establishes  a  ratification  by  the  directors  in  pah 
of  the  president's  act.®  When  the  charter  of  a  corpora- 
toin  provides  that  certain  officers  may  be  elected,  and 
their  salary  fixed  by  a  board  of  directors,  and  a  president 
is  thus  elected,  but  without  a  salary  being  named,  the  law 
raises  an  assumpsi!  on  t,he  part  of  the  corporation  to  pay 
a  reasonable  compensation  for  his  services  rendered  after 
such  election.® 

Illustrations.  —  A  note  svas  made  by  the  directors  of  one 
corporation,  as  individuals,  £.nd  transferred  to  ano'.her  corpora- 
tion, one  of  the  makers  being  payee  und  indorser,  and  president 
of  both  corporations.  Held,  that  hi  could  not  consent  for  the 
creditor  to  any  arrangement  releasing  or  impairing  tho  indi- 
vidual liability  of  himself  or  hip.  co-directors:  Gallery  v.  A'a- 
tUmal  Exchange  Bank  of  Albion,  41  Mich.  1G9;  32  Am.  Kc)).  1 49. 
Tho  p'-esident  and  superintendent  of  a  corporation  liad  autlior- 
ity  to  buy  and  sell  material,  and  to  make  contrr.cts  for  it.    Hcldj 

1  Ilewef  t  V.  Swift,  '^  Allen,  420.  *  Wright  v.  Rooters,  20  In<l.  2 IS. 

■'  Cohnau  v.  West  Virgiuia  Oil  etc.  *  Pixley  v.  R.  K.  Co.,  3:i  Cal.   1S3; 

Co.,  25  W.  Va.  148.  91  Am.  Dec.  623. 

■'  Olcott  V.  R.  R.  Co.,  27  N.  Y.  546;  sGruuy  v.  Fine  Hill  Coal  Co.,  Ky- 

84  Aui.  Dec.  298.  1SS8. 


§421 


CORPORATIONS. 


710 


that  their  authority  extended  to  releasing  the  purchaser  (who 
hud  become  unable  to  meet  his  payments),  and  to  substituting 
a  third  person  in  his  stead:  Indianapolis  Rolling  Mill  Co.  v.  R. 
R.  Co.,  26  Fed.  Rep.  140.  The  president  of  a  corporation  sub- 
scribed for  stock  in  the  name  of  the  defendant,  promising  "to 
take  care  of  it  for  him."  Tliere  was  also  evidence  tending  to 
show  that  he  transferred  a  portion  of  the  defendant's  stock. 
IlchI,  that  in  all  that  the  president  did  for  the  defendant,  he 
must  be  regarded  simply  as  the  defendant's  private  agent,  and 
that  the  character  of  his  acts  as  such  could  not  be  affected  by 
the  fact  of  his  presidency:  St.  Nicholas  Ins.  Co.  v.  Howe,  7  Bosw. 
450.  A  steamship  company  had  virtually  ceased  to  exist  for 
all  purposes  of  business,  and  for  promoting  the  object  of  the 
charter  as  originally  granted,  all  its  powers  had  been  taken 
a'vay,  its  property  was  expended,  and  it  was  hopelessly  insol- 
vent. Held,  that  the  president  might  contract  on  his  individual 
behalf  to  run  steamers,  and  do  the  business  which  the  company 
had  ceased  to  do,  provided  he  put  no  duty,  obligation,  or  re- 
straint upon  the  company:  Murray  v.  Vanderhilt,  39  Barb.  140. 
The  president  of  a  corporation  had  general  discretionary  powers 
as  to  all  matters  in  the  prosecution  of  the  company  projects;  he 
bought  a  house,  to  be  used  as  an  office,  and  the  trustees  held 
their  meetings  in  it  during  six  weeks.  Held,  that  even  if  he 
had  no  authority,  the  trustees  had  ratified  his  acts,  and  there- 
fore that  a  subsequent  rejection  of  the  contract  was  of  no  avail, 
and  could  not  excuse  the  company  from  payment:  Shaver  v. 
Btrir  River  etc.  Co.,  10  Cal.  396.  An  article  in  the  by-laws  of  a 
religious  corporation  provided  that  the  president  should  convene 
the  board  of  trustees  at  least  once  ir  every  month,  and  might 
call  extra  meetings,  whenever  iri  his  opinion,  or  in  the  opinion 
of  three  members  of  that  body,  it  should  be  deemed  necessary 
for  the  interest  or  welfare  of  the  congregation.  Another  article 
provided  that  a  nif  jority  of  the  board  might  admit  new  mem- 
bers. The  president,  on  application  by  four  members  of  the 
board,  refused  to  call  a  meeting  thereof,  after  which  a  majority 
of  the  board  convened  without  such  call,  after  giving  the  presi- 
dent notice  of  the  time  and  place  of  their  intended  meeting. 
Held,  that  the  board  thus  convened  had  v. )  power  to  elect  new 
members  of  the  corporation,  and  that  all  their  acts  were  illegal 
and  void:  State  v.  Ancker,  2  Rich.  245. 

§  421.  Removal  of  Officers.  —  The  power  of  amotion, 
i.  e.,  of  removal  of  its  officers  for  cause,  is  inherent  in  a 
corporation.'    But  a  corporation  cannot  exercise  the  power 

'  Angoll    and    Ames    on    Corpora-    pal  Corporations,  270;  2  Kent's  Com. 
tioiis.  408,  400;   Wilcock  ou  Muuici-    ii77. 


710 


711 


LIABILITIES. 


§421 


baser  (who 
iubstituting 
III  Co.  V.  R. 
)ration  sub- 
)mising  "to 
tending  to 
mt's  stock, 
fendant,  he 
agent,  and 
affected  by 
me,  7  Bosw. 
to  exist  for 
)ject  of  the 
been  taken 
lessly  insol- 
3  individual 
be  company 
ition,  or  re- 
)  Barb.  140. 
nary  powers 
projects;  he 
ustees  held 
even  if  he 
,  and  there- 
of no  avail, 
Shaver  v. 
)y-laws  of  a 
uld  convene 
and  might 
the  opinion 
d  necessary 
>ther  article 
new  mem- 
Ders  of  the 
a  majority 
g  the  presi- 
meeting. 
0  elect  new 
were  illegal 


amotion, 
erent  in  a 
the  power 

Kent's  Com. 


of  amotion  except  for  reasonable  cause, —  as  to  tliose  offi- 
cers who  are  of  the  essence  of  the  corporation,  that  is, 
who  have  such  voice  or  office  in  the  management  and 
direction  of  the  corporation  that  without  them  its  busi- 
ness could  not  be  carried  on,  as  directors  of  private  cor- 
porations, or  aldermen  in  municipal  corporations.'  As  to 
mere  ministerial  officers,  such  as  clerks,  agents,  or  subor- 
dinates, they  may  be  discharged  as  any  other  master  may 
discharge  a  servant.^ 

The  causes  for  which  an  officer  may  be  removed  wore 
stated  by  Lord  Mansfield  in  an  English  casc,^  and  his 
classification  lias  been  adopted  in  our  courts.'*  They  arc: 
1.  The  commission  of  an  infamous  offense;  or  2.  A  vio- 
tion  of  official  duty  so  gross  as  to  amount  to  a  breach  of 
the  tacit  condition  annexed  to  the  oflice;  or  3.  An  ofrense 
constituting  not  only  a  breach  of  official  duty,  but  also 
matter  indictable  at  common  law.  The  power  to  remove 
directors  is  conferred  in  some  cases  b}'  express  statute,  or 
the  charter  of  the  corporation,  or  the  by-laws  provide  for 
such  contingencies.*'  Where  by  such  statutory  power  the 
stockholders  may  remove  for  "reasonable  cause,"  their 
discretion  in  deciding  what  is  or  is  not  such  cause  will 
not  be  inquired  into  (except  in  cases  of  fraud)  by  the 
courts.^  When  tlic}^  prescribe  the  terms  and  conditions 
under  which  the  power  can  be  exercised,  their  provisions 
must  be  pursued.''  Where,  however,  the  charter  enu- 
merates certain  causes  for  which  removal  will  lie,  wlutlior 
this  excludes  the  power  to  remove  for  causes  not  ciiumcr- 
ated  would  depend  on  the  legislative  intent  as  gatliered 
from  the  whole  charter.     Thus  where  power  was  given  to 


'  Fuller  V.  Plainfield  School,  G  Conn. 
532. 

^  Angoll  auil  Ames  on  Corporations, 
sec.  420,  420. 

"11.  r.  llichardaon,  1  Burr.  517. 

*  Evans  t\  Philadelphia  Club,  50  Pa. 
St.    107,    114;   Com.    v.  St.   Patrick's 


Wis.  63;  Potter  on  Corporations,  725; 
Dillon  on  Municipal  Corpuratious, 
189. 

"  Hunter  If.  Ins.  Co.,  20  La.  Ann.  13. 

*"  luderwick  r.  Snell,  2  McX.  &  8. 
210. 

'  State  ?•.   Vincennes    University,   5 


Society,  2  Binn.  441;  4  Am.  Dec.  453;     Ind.  77,  89;   State  v.  Brycc,  7  Ohio, 
State  V,   Chamber  of   Commerce,  20    pt.  2,  pp.  82,  S3. 


.^^.      f^ 


§421 


CORPORATIONS. 


712 


appoint,  "subject  to  removal  only  for,"  etc.  this  was  held 
to  limit  the  power  of  removal  to  the  specified  causes.'  In 
the  absence  of  statutory  or  charter  power,  a  suit  will  lie  at 
the  instance  of  either  the  corporation  or  a  stockholder  to 
remove  a  director  who  is  incapable  or  unwilling  to  per- 
form his  trusts.'^  But  except  in  a  gross  case  of  miscon- 
duct, a  director  elected  for  the  ordinary  term  of  a  year 
cannot  be  removed     .fore  that  time.' 

Charges  must  be  made  setting  forth  with  substantial 
accuracy  the  grounds  of  complaint,  and  a  reasonable  no- 
tice of  these  charges,  and  of  the  time  and  place  of  hearing 
them,  should  be  given  to  the  party  accused.  A  hearing  of 
the  evidence  in  support  of  the  charges  must  be  had,  and 
an  opportunity  given  to  the  party  of  making  his  defense, 
either  in  person  or  by  counsel,  and  a  sentence  of  the  loss 
of  the  right  to  the  office  must  be  pronounced.*  In  Cali- 
fornia it  is  held  that  the  removal  of  mere  private  or  min- 
isterial officers  of  a  corporation  is  a  right  which  belongs 
to  the  corf)oration  alone,  and  the  courts  have  no  jurisdic- 
tion to  order  such  removal,  or,  it  seems,  to  enjoin  such 
officer  from  acting.^  The  individual  bankruptcy  of  a  per- 
son who  is  a  stockholder  in  and  a  director  and  officer  of 
a  corporation  which  is  not  in  bankruptcy  does  not  in- 
capacitate him  from  exercising  his  functions  as  such  offi- 
cer, nor  render  inop<?rative  and  void,  as  to  third  parties, 
the  acts  and  conveyances  done  and  executed  through  him 


1  state  r.  Higgins,  15  111.  110. 

•^  Morawetz  on  Corporations,  sec. 
543. 

•*  Taylor  on  C'orporations,  sec.  G50. 

■•  State  V.  '■'iiiceuues  University,  5 
Ind.  89,  90:  -^tate  ».  Bryce,  7  Ohio, 
pt.  2,  p.  S'2;  ^tatu  v.  Adams,  44  Mo. 
580,  587;  DillDU  on  MunicipaJ  Oorpo- 
ratioua,  see.  188.  But  wlure  an  offi- 
cer is  rcmov  •(!  because  convicted  of  an 
infanum.s  nironse,  it  is  not  necessary  to 
prefer  enlarges  and  !iu  ve  a  hearing  be- 
fore tbv  corporation ;  tlie  conviction 
iu  a  court  of  law  takes  the-  place  of 


this.  A  Vvito  passing  a  resolution  re- 
citing the  .itfense  and  conviction,  and 
declaring  the  right  to  the  office  for- 
feited, is  all  that  is  required:  AnguU 
and  Ames  on  Corporations,  4'22.  Tlie 
stockholiicrs  of  a  corporation  in  ■\vliich 
the  general  public  has  no  interest  may 
depo.se  its  officers,  for  cau.ses  stated  in 
the  cliarter  or  by-laws,  without  notice 
and  trial:  Adamantine  Brick  Co.  v. 
Woodrufl',  4  McAr.   218. 

'■>  Neall  V.  Hill,  10  Cal.  145;  70  Am. 
I>tc.  5o8;  and  see  (iriffin  v.  >St.  Louis 
Wme  Co.,  4  Mo.  App.  595. 


712 


713 


LIABILITIES. 


421 


was  held 
ses,'  In 
vill  lie  at 
bolder  to 
;  to  per- 
miseon- 
)f  a  year 

bstantial 

lable  no- 

r  hearing 

earing  of 

had,  and 

I  defense, 

'  the  loss 

In  Cali- 

3  or  min- 

i  belongs 

jurisdic- 

oiii  such 

of  a  per- 

fficer  of 

not  in- 

ueli  offi- 

parties, 

ugh  him 

solution  re- 
iction,  and 

office  for- 
3(1:    AngL'll 

4'2-J.  The 
on  in  wliiuh 
iterest  may 
OS  stated  in 
hout  notice 
rick  Co.  V. 

45;  70  Am. 

V.  >St.  Louia 


as  its  representative.*  Whore,  after  a  decision  removing 
certain  directors  from  office,  they,  on  the  same  day,  met 
and  executed  a  note  for  the  company,  and  on  the  next 
day  the  judgment  was  filed  and  recorded,  it  was  held  that 
they  being  dc  facto  directors,  the  note  was  binding  on  the 
company.^  The  title  of  directors  of  a  corporation,  who 
are  in  under  color  of  an  election,  cannot  be  inquired  into 
in  a  suit  in  equity,  instituted  to  restrain  them  from  exer- 
cising the  functions  of  directors,  upon  the  ground  of  an 
irregularity  in  their  election.'  The  directors  of  a  corpo- 
ration against  which  judgment  of  ouster  has  been  pro- 
nounced are  individually  ^nswerable  for  the  costs  of  the 
proceeding,  though  they  had  no  direct  agency  in  defend- 
ing the  suit.'*  The  effect  of  an  amotion  is  to  vacate  the 
office,  and  the  subsequent  acts  of  the  officer  are  not  bind- 
ing unless  permitted  by  the  corporation.®  But  his  rights 
as  a  member  of  the  corporation  are  not  affected. 

Where  the  removal  is  unauthorized,  because  of  insuffi- 
cient cause,  or  because  the  proceedings  wero  irregular  and 
illegal,  the  officer  may  be  restored  by  mar  damns, ^  except 
that  the  court  will  only  in  extreme  cases,  when  the  cause 
is  sufficient  and  the  proceedings  simply  irregular,  compel 
the  restoration,  for  the  reason  that  the  officer  being  still 
subject  to  removal  in  a  new  proceeding,  the  order  will 
have  little  effect.^  A  director  improperly  excluded  from 
meetings  by  his  co-directors  has  an  individual  right  of 
action  against  them  for  the  injury  caused  to  him  by  such 
exclusion.® 


*  Atlas  Bank  v.  F.  B.  Gardner  Co., 
8  Biss.  537. 

•^  Mahoney  Mining  Co.  v.  Anglo- 
Califoruian  Bank,  104  U.  S.  192;  San 
Jo.se  Sav.  Bank  v.  Lunibex'  Co.,  63  Cal. 
170. 

=•  Hughes  V.  Parker,  20  N.  H.  58. 

*  People  V.  Ballon,  12  Wend.  277. 

*  Dillon  on  J'unicipai  Corporations, 
194. 

<■'  Fuller  V.  Plainfield  School,  6  Conn. 
632;  State  v.  Chamber  of  Commerce, 


20  Wis.  03;  Sibley  v.  Cartei(;t  Club, 
40  N.  J.  L.  295.  And  l)y  tlio  restora- 
tion the  acts  of  the  officer  whilu  no  re- 
moved are  made  valid:  Angell  and 
Ames  on  Corporations,  431. 

'  Dillon  on  Municipal  Corporations, 
sec.  192;  R.  v.  Griffiths,  5  Bini.  & 
Aid.  7  35. 

8  Pulbrook  V.  Richmond  Mining  Co., 
27  Week.  Rep.  .377,  the  court  saying: 
"This  motion  raises  a  (piestion  of  im- 
portance, viz.,  whether  a  director  who 


§422 


CORPORATIONS. 


71^ 


§  422.  Corporation  Bound  by  Acts  of  Agents  within 
their  Authority.  —  Corporations,  like  natural  persons,  are 
bound,  and  bound  only,  by  the  acts  and  contracts  of  their 
agents,  done  and  made  within  the  scope  of  their  author- 
ity.' But  to  establish  agency  on  behalf  of  a  corporation, 
it  is  not  indispensable  to  show  a  written  authority,  or  vote 
or  resolution  of  the  corporation.'^  Drafts  accepted  by  the 
treasurer  of  a  corporation  are  presumed  to  be  properly  ac- 
cepted by  the  corporation,  there  being  no  circumstances 
to  indicate  fraud  or  illegality;  and  in  an  action  by  the 
holder  against  the  corporation  as  acceptor,  the  burden  of 
proof  is  upon  the  defendant  corporation  to  show  that  the 
plaintiff  had  knowledge  that  the  acceptances  were  for 
accommodation,  and  that  he  was  not  a  bona  fide  holder  for 
value." 

Illustrations. — A  trustee  under  a  marriage  settlement  was 
also  president  and  acting  manager  of  a  mining  corporation,  and 
in  violation  of  his  duty  as  trustee  sold  all  the  trust  property  at 
public  auction,  part  of  which  he  purchased  at  the  sale,  as  man- 
ager of  the  company.  Held,  that  the  corporation  was  liable  as 
a  participator  in  the  breach  of  trust:  Barksdale  v.  Finney,  14 
Gratt.  388. 


is  impropc'ly  excluded  by  his  brother 
directors  from  the  board  is  entitled  to 
an  order  restraining  his  brother  direc- 
tors from  so  excluding  him.  As  a 
director  he  is  entitled  lo  certain  fees, 
and  it  is  doubtful  whether  he  could 
claim  sucli  foes  if  he  did  not  attend 
meetings.  Therefore,  it  seems  to  me, 
his  exclusion  is  aia  individual  wrong, 
and  an  invasion  of  his  legal  rights,  for 
which  tlio  directors  are  jiersonally 
liable.  He  has  a  right  to  take  a  part 
in  the  management  of  the  company, 
and  to  vote  at  the  meetings,  and  a 
right  to  know  what  takes  place  at  the 
meetings,  because  it  has  sometimes 
been  held  that  a  director  not  attending 
is  liable  for  what  is  done.  Besides,  he 
is  in  ths  position  of  a  managing  part- 
ner, and  has  a  right  to  remain  so,  and 
to  receive  remuneration  for  his  ser- 
vices. Therefore,  for  the  injury  done 
him  by  excluding  him  from  the  meet- 
ings, he  has  a  right  to  sue;  and  when 
the  decisions  say  that  when  a  wrong 


is  done  to  the  company  by  excluding 
a  director  from  board  meetings,  tlie 
company  must  sue,  that  is,  for  a  wrong 
done  to  the  company,  and  not  for  oiio 
done  to  the  individual.     It  may  hap- 

Een  that  the  wrong  is  done  to  botli; 
ut  in  the  case  of  an  individual  wrong, 
a  share-holder  cannot,  on  behalf  of 
himself  and  others,  not  sufferers  by 
the  wrong,  maintain  an  action  for  that 
wrong.  Therefore  the  plaintiff  here 
has  a  right  of  action. " 

*  Chicago  etc.  R.  R.  Co.  v.  James,  22 
Wis.  199;  Hayden  v.  Middlesex  Tp. 
Co.,  10  Mass.  397;  6  Am.  Dec.  143; 
Mott  V.  Hicks,  1  Cow.  513;  13  Am. 
Dec.  550;  Rabassaw.  Orleans  Nav.  Co., 
5  La.  461;  25  Am.  Dec.  200;  Lamm  v. 
Port  Deposit  etc.  Ass.,  49  Md.  233;  .IS 
Am.  Rep.  246;  Peterborough  11.  li. 
Co.  V.  R.  R.  Co.,  59  N.  H.  3S5. 

^  Williams  v.  Christian  Female  Col- 
lege, 29  Mo.  250;  77  Am.  Duo.  5()9. 

^  Cred't  Co.  r.  Howe  Maohiao  Co., 
54  Conn.  357;  1  Am.  St.  Rep.  123. 


714 

3  of  Agents  within 

latural  persons,  are 
i  contracts  of  their 
3e  of  their  author- 
If  of  a  corporation, 
n  authority,  or  vote 
fts  accepted  by  the 
d  to  be  properly  ac- 
y  no  circumstances 
1  an  action  by  the 
Dtor,  the  burden  of 
Dn  to  show  that  the 
3eptance3  were  for 
bona  fide  holder  for 


rriage  Bettlemont  was 
ning  corporation,  and 
the  trust  property  at 
i  at  the  sale,  as  man- 
)oration  was  liable  as 
irksdale  v.  Finney,  14 


the  company  by  excluding 
rom  board  meetings,  the 
1st  sue,  that  is,  for  a  wrong 
company,  and  not  for  one 

individual.  It  may  hap- 
e  wrong  is  done  to  both; 
ise  of  an  individual  wrong, 
ier  cannot,  on  behalf  of 
.  others,  not  sufferers  by 
aaintain  an  action  for  that 
erefore  the  plaintiff  here 
)f  action." 

etc.  li.  R.  Co.  V.  James,  22 
layden  v.  Middlesex  Tp. 
13.  397;  6  Am.  Dec.  14.'}; 
ks,  1  Cow.  513;  13  Am. 
ibassa  V.  Orleans  Nav.  Co., 
5  Am.  Dec.  200;  Lamm  v. 
;etc.  Ass.,49Md.  233;  33 
146;   Peterborough    11.  li. 

Co.,  59  N.  H.  385. 

V.  Christian  Female  Col- 

250;  77  Am.  Dec.  5tJ9. 
t'.  Howe  Machine  Co., 
1  Am.  St.  Rep.  123. 


715 


LIABILITIES. 


§  423 


§  423.  Acts  of  Agents  beyond  Powers  of  Corporation 
not  Binding.  —  Acts  of  an  agent  in  excess  of  the  chartered 
powers  of  the  corporation  are  of  course  not  binding  on  tho 
corporation.'  Where  a  director  assumes  a  power  never 
delegated,  such,  for  instance,  as  to  tell  a  merchant  that 
the  corporation  will  be  responsible  for  goods  furnished 
to  an  employee  of  the  corporation,  the  merchant  cannot 
charge  tho  corporation  for  goods  furnished  in  the  belief 
that  the  corporation  would  pay  for  them."  "Where  an 
agent  of  a  railroad  company  is  empowered  "  to  procure 
a  right  of  way,"  this  does  not  give  him  power  to  promise 
an  owner  of  land  that  the  company  will  locate  a  depot  in 
a  certain  place.^  The  president  of  a  corporation,  who,  in 
behalf  of  the  corporation,  attempts  to  bind  it  by  a  contract 
ultra  vires  the  corporation,  does  not  bind  himself,  tho 
other  party  knowing  that  his  action  was  not  so  intended.^ 
The  officers  of  a  corporation  have  no  power  to  make  or 
ratify  a  note  given  by  one  of  their  number  to  secure  his 
individual  indebtedness;^  nor  to  authorize  the  execution  of 
a  note  as  surety  for  another  in  respect  to  a  matter  having 
no  relation  to  the  corporate  business;  and  a  party  receiv- 
ing such  note  with  notice  cannot  recover  it."  A  person 
dealing  with  a  corporation  is  bound  to  know  whether  or 
not  the  officer  or  agent  who  represents  it  and  acts  in  its 
name  is  authorized  so  to  do.  If  he  is,  and  tho  act  is 
within  the  apparent  scope  of  his  authority,  the  dealer  is 
not  bound  to  have  knowledge  of  intrinsic  facts  making  it 
improper  for  him  to  act  in  that  case.''  Though  by  tho 
by-laws  of  a  corporation  an  officer  has  power  to  make  con- 

^  Morawetz  on  Corporations,  sec.  60;        *  Holt  v.  Winfield  Bank,  25  Fed. 
Rollins  V.  Clay,  33  Me.  133;  The  Floyd    Rep.  812, 


Acceptances,  7  Wall.  666;  New  Haven 
etc.  R.  R.  Co.  V.  Hayden,  107  Mass. 
525;  Boynton  v.  Lynn  Gaslight  Co., 
124  Mass.  197. 

^  Rice  V.  Peninsular  Club,  52  Mich. 
87. 

^  Houston  etc.  R.  R.  Co.  v.  McKin- 
ney,  55  Tex.  176. 


Hallr.  Turnpike  Co.,  27  Cal.  255; 
87  Am.  Dec.  75. 

*  Hall  V.  Turnpike  Co.,  27  Cal.  255; 
87  Am.  Dec.  75. 

'  Credit  Co.  v.  Howe  Maeliine 
Co.,  54  Conn.  357;  1  Am.  St.  Rep. 
123. 


§§  424,  425 


CORPORATIONS. 


71G 


tracts  and  execute  conveyances,  yet  where  a  contract  is 
made  directly  with  the  corporation  and  registered  on  its 
books,  any  papers  executed  by  the  officer  to  carry  the 
contract  into  effect  are  prima  facie  unwarranted,  in  so  far 
as  they  depart  from  the  terms  agreed  upon  and  so 
registered.* 

§  424.  Acts  of  Agents  not  in  Form  Required  by  Char- 
ter not  Binding. — In  like  manner,  the  acts  of  an  agent 
not  in  the  form  required  by  the  charter  are  not  binding 
on  the  principah' 

§  425.  Agent  with  General  Powers — Third  Parties  not 
Presumed  to  Know  Limitations  of  his  Power.  —  But  where 
an  agent  has  general  power  to  do  similar  acts,  his  power 
in  the  particular  case  depending  on  the  existence  of  facts 
peculiarly  within  the  knowledge  of  the  principal,  a  party 
dealing  with  him  has  a  right  to  presume  his  authority, 
and  the  corporation  will  be  bound  by  his  acts  or  con- 
tracts.^ Ofljccrs  of  a  corporation  are  special  and  not 
general  agents,  consequently  they  have  no  power  to  bind 
the  corporation  except  within  the  limits  prescribed  by 
the  charter  and  by-laws.  Persons  dealing  with  such  oifi- 
cers  are  charged  with  notice  of  the  authority  conferred 
upon  them,  and  of  the  limitations  and  restrictions  upon 
it  contained  in  the  charter  and  by-laws.  Nor  is  there 
any  grant  of  power  in  the  name  by  which  such  officer  is 


^  East  Rome  Town  Co.  v.  Brewer, 
Ga.  1SS8. 

'^  McL'uUongh  v.  Moss,  5  Denio,  567; 
Beatty  r.  Marhio  Ins.  Co.,  2  Johns. 
101);  8  Am.  Dec.  401;  Dawes  v.  North 
KivtT  Co.,  7  Cow.  4G2;  Hemming  v. 
U.  S.  Ills.  Co.,  47  Mo.  425;  Murphy 
V.  Louisville,  9  Bush,  189;  Salem 
Bank  v.  (Jloucester  Bank,  17  Mass.  1; 
9  Am.  Dec.  Ill;  Badger  v.  Am.  Ins. 
Co.,  103  Mass.  244;  Saffordv.  Wyckoff, 
4  Hill,  440;  Gordon  v.  Preston,  1 
Watts,  38.");  20  Am.  Dec.  75;  Head  v. 
Providence  Ins.  Co.,  2  Cranch,  127; 


People  Ins.  Co.  v.  Westcott,  14  Gray, 
440;  St.  Andrews  Bay  Land  Co.  v. 
Mitchell,  4  Fla.  192;  54  Am.  Dec.  340. 
*  New  York  etc.  R.  R.  Co.  r.  Sehiiv- 
ler,  34  N.  Y.  30;  West  St.  Louis 
Bank  v.  Shawnee  Bank,  95  U.  S.  557; 
East  River  Nat.  Baidt  v.  Gove,  57  N. 
Y.  597;  Ossipee  Manufacturing  Co.  i: 
Canney,  54  N.  H.  295;  Bank  of  Gen- 
esseo  V.  Patchin  Bank,  13  N.  Y.  30!); 
19  N.  Y.  312;  Moss  v.  Mining  Co.,  '' 
Hill,  137;  Royal  British  Bank  ».  Tiir- 
quand,  6  El.  &  B.  327;  Ryan  v.  Dun- 
lap,  17  111.  40;  63  Am.  Dec.  334. 


71G 


717 


LIABILITIES. 


426 


contract  is 
3rc(l  oil  its 
I  carry  tho 
d,  in  so  far 
)n    and   so 


d  by  Char- 

if  an  agent 
LOt  binding 


Parties  not 

-But  where 

,  his  power 

nee  of  facts 

pal,  a  party 

J  authority, 

,cts  or  con- 

al  and   not 

^'er  to  bind 

scribed  by 

1  such  otfi- 

y  conferred 

ctions  upon 

or  is  there 

h  officer  is 

tcott,  U  Gray, 
y  Land  Co.   ''■ 
4  Am.  Doc.  340. 
1.  Co.  V.  8oluiy- 
^''est   St.    Louis 
\i,  95  U.  S.  iwT; 
V.  Gove,  57  N. 
acturing  Co,  i: 
Bank  of  Gcn- 
13  N.  Y.  :Wi)j 
Mining  Co.,  Ti 
h  Bank  v.  Tiir- 
;  llyau  V.  Dun- 
Dec,  334. 


designated.*  Directions  and  assurances  made  by  tho 
managing  agent  and  superintendent  of  a  company,  if 
made  within  tho  general  scope  of  his  powers  and  duties, 
are  binding  upon  the  company,  although  not  authorized 
by  them,  unless  the  party  who  claims  to  have  acted  in 
reliance  upon  them  is  chargeable  with  notice  of  the  want 
of  authority.'' 

Illustrations. — Tho  president  of  a  railroad  company  fraudu- 
lently issued  certificates  of  stock,  properly  signed  ami  sealed,  in 
excess  of  tho  amount  authorized  by  law.  Held,  that  tho  stock 
should  bo  treated  as  genuine  in  tho  hands  of  bona  fide  holders: 
W'dlis  V.  Fry,  13  Phila,  33.  The  president  and  treasurer  of  a 
railroad  corporation  confided  to  a  clerk  tho  duty  of  filling  up 
and  supplying  certificates  to  the  holders  of  coupons.  The  cer- 
tificates were  delivered,  signed,  to  the  clerk,  who  fraudulently 
filed  them  up,  and  put  them  on  the  market,  whence  they  came 
into  the  hands  of  innocent  purchasers  for  value,  without  knowl- 
edge of  the  fraud.  Held,  that  tho  railroad  corporation  was 
responsible  for  the  fraud  of  its  clerk,  and  must  bear  tho  loss: 
Western  Maryland  R.  R.  Co.  v.  Franklin  Bank,  60  Aid.  36. 

§  426.  Third  Person  Presnmed  to  Know  Limitations  in 
Charter.  — A  person  dealing  with  the  agent  of  a  corpora- 
tion is  bound  to  know  the  limits  of  his  authority  as  con- 
tained in  tho  charter  or  articles  of  association.'  Under  a 
statute  providing  that  oflBcers  of  a  corporation  shall  have 
no  powers  except  such  as  are  conferred  by  resolution  or 
by-laws  of  the  stockholders,  which  by-laws  must  be  filed 
with  the  county  recorder,  after  which  all  contracts  made 
by  such  officers  in  violation  of  the  by-laws,  or  in  excess  of 
their  powers  under  them,  shall  be  void  as  against  the  cor- 
poration, but  binding  upon  all  officers  making  them  or 
dissenting  therefrom,  such  officers,  by  virtue  of  their 
office,  acquke  no  power  whatever.     Their  office  is  dor- 

*  Adriance  v.  Roome,  52  Barb.  399.  v.  R.  R.  Co. ,  21  How.  443;  Hoyt 

'  Spelinan  v.   Fisher  Iron  Co.,   56  Thompson,  19  N.  Y.  207;  Alexandei 

Barb.  IM.  v.  Cauldwell,  83  N.  Y.  480;  Bocock  v. 

»Merrittw.  Lambert,  1  HofiF.  Ch.  168;  Alleghany  Coal  etc.  Co.,  82  Va.  913; 

Silliman  v.  R.  R.  Co.,  27  Gratt.  119;  3  Am.  St.  Rep.  128. 

Boot  V.  Wallace,  4  McLean,  8;  Pearco 


IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


1.0 


I.I 


1.25 


■SUA    125 

|50     ■^~       M^H 


Photographic 

Sdences 

Corporation 


33  WEST  MAIN  STREET 

WEBSTER,  N.Y.  14S«0 

(716)  872-4303 


^o 


L« 


h 


§§  427,  428 


CORPORATIONS. 


718 


mant  until  they  have  been  vested  with  power  by  by-laws 
adopted  and  filed  by  the  corporation.  Until  then  their 
personal  liability  doe&  not  begin;  they  have  no  power  ex 
officio,  and  can  do  no  act  and  make  no  contract  which 
will  bo  1  binding  upon  the  corporation.' 

§  427.    But  not  By-laws  or  Regulations  of  Company. 

—  But  this  rule  does  not  extend  to  the  rules  or  by-laws  of 
the  corporation.'  A  by-law  which  is  a  mere  rule  for  the 
government  of  the  officers  of  the  corporation  in  conducting 
the'r  own  business  can  have  no  effect  upon  the  contracts 
of  •-i:^  oFDoration  with  other  parties.'  But  it  was  held  in 
a  New  ..  Jik  case  that  the  president  of  a  manufacturing 
corap^py,  organized  under  the  general  act  of  1848, cannot 
lawfully  bind  it  in  the  purchase  of  goods  required  in  its 
business;  where  there  is  a  resolution  to  the  contrary  on 
its  books,  even  if  the  other  party  has  no  notice  thereof, 
unless  there  has  been  a  well-recognized  general  course  of 
dealing  creating  an  implied  authority.* 

§  428.  Liability  of  Oorporation  for  Fraudulent  Repre- 
sentations of  Agents. — The  liability  of  a  corporation  for 
the  fraudulent  representations  of  its  agents  depends  on 
the  same  principles  as  its  liability  for  their  contracts,  as 
shown  in  the  previous  sections." 

Illustrations. — The  treasurer  of  a  private  corporation,  whose 
duty  it  was  to  issue  certificates  of  the  stock  of  the  corporation, 
fraudulently  issued  certificates,  regular  in  form,  but  not  repre- 
senting any  real  stock,  and  pledged  them  to  secure  money  bor- 
rowed by  himself.  Held,  that  the  corporation  was  liable  to  the 
pledgee,  who  had  no  notice  of  the  fraud,  for  the  amount  lent  by 


>  Hall  V.  Crandall,  29  Cal.  567;  89 
Am.  Dec.  04. 

« Smith  V.  Smith,  62  111.  49.3;  Wild 
V.  Bank,  3  Mason,  506;  Samuels  v. 
HoUiday,  1  Woolw.  400;  Jackson  Ins. 
Co.  i:  Cross,  9  Heisk.  283;  Kingsloy 
V.  Ins.  Co.,  8  Cash.  393;  Fay  v.  Noble, 
12  Cush.  1;  Mechanics'  etc.  Bank  v. 
Smith,  19  Johns.  115. 


'  Samuels  v.  Central  etc.  Ex.  Co., 
McCahon,  214.  A  stockholder  is 
not  charseable  with  notice  of  rules 
adopted  by  the  directors:  Pearsall  v. 
Tel.  Co.,  44  Kun,  532. 

♦  Westerfield  v.  Radde,  7  Daly, 
326. 

*  New  York  etc.  R.  R.  Co.  r.  Schuy- 
ler, 34  N.  Y.  30. 


718 


719 


LIABILITIES. 


§§  429-431 


by  by-laws 
then  their 
10  power  ex 
tract  which 


f  Company. 

p  by-laws  of 
rule  for  the 
I  conducting 
le  contracts 
was  held  in 
.nufacturing 
1848,  cannot 
luired  in  its 
contrary  on 
tice  thereof, 
ral  course  of 


ilent  Bepre- 

poration  for 
depends  on 
contracts,  as 


)ration,  whose 
corporation, 

)ut  not  repre- 

e  money  bor- 
liable  to  the 

aount  lent  by 

al  etc.  Ex.  Co., 
stockholder  is 
notice  of  rules 
tors:  Peaursall  v. 

iadde,    7    Daly, 

R.  Co.  V.  Schuy- 


liiin,  with  interest:  Tome  v.  R.  R.  Co.,  39  "Md.  36;  17  Am.  Rep. 
540.  The  general  manager  of  a  corporation,  who  was  authorized 
to  collect  its  checks,  etc.,  presented  a  check  belonging  to  it  to  a 
bank  for  payment.  By  mistake,  the  bank  overpaid  him.  Held, 
that  the  corporation  was  liable  for  the  amount  of  the  over- 
payment, without  regard  to  whether  the  manager  accounted  to 
the  corporation  for  the  amount:  Kansas  Lumber  Co.  v.  Central 
Bank,  U  Kan.  635. 

§  429.  Unauthorized  Act  of  Agent  may  be  Ratified  by 
Corporation. — An  unauthorized  act  of  an  agent  or  agents 
may  bo  ratified  by  the  corporation,  and  will  thou  bind  it.' 
The  corporation  cannot  afterwards  dispute  hi.s  authority 
on  the  ground  that  he  was  not  regularly  appointed  by 
the  directors.^ 

§  430.  Or  by  Superior  Agent. — An  act  performed 
by  an  inferior  agent  without  authority  may  bo  ratified 
by  a  superior  agent  in  some  cases.  The  directors  of  a 
corporation,  for  instance,  have,  in  very  many  cases,  power 
to  ratify  the  unauthorized  acts  of  inferior  agent?  of  the 
corporation.' 

§  431.    Ratification  maybe  Inferred  from  Conduct. — 

A  ratification  need  not  be  in  words,  but  may  be  implied 
from  conduct  or  acquiescence.*  A  binding  contract  may 
be  implied  from  the  acts  of  a  corporation,  without  proof 
of  an  express  vote.^  It  is  immaterial  as  against  strangers 
whether  the  person  acting  as  managing  director  of  a  cor- 


'  Morawetz  on  Corporationa,  sec. 
74;  Kent  v.  Quicksilver  Mining  Co., 
78  N.  Y.  159;  Watt's  Appeal,  78  Pa. 
St.  370;  Ohio  etc.  R.  R.  Co.  v.  Mc- 
Pherson,  35  Mo.  13;  86  Am.  Dec.  128; 
Blun  V.  Water  and  Mining  Co.,  20Cal. 
002;  81  Am.  Dec.  132.  See  title 
Agency,  »upra. 

''  Flynn  r.  R.  R.  Co.,  63  Iowa,  490. 

^  Flcckner  v.  Bank,  8  Wheat.  338; 
Kdsey  v.  Bank,  09  Pa.  St.  426;  Sher- 
man V.  Fitch,  98  Mass.  59;  Lynde- 
borough  Glass  Co.  v.  Mass.  Glass  Co., 
Ill  Mass.  315. 

*  Kclsey  v.  National  Bank,  69  Pa. 


St.  426;  Paysoa  v.  Stoever,  2  Dill.  427; 
Walworth  Bank  v.  Farmers'  Trust  Co., 
16  Wis.  629;  Chicago  etc.  R.  R.  v. 
James,  24  Wis.  388;  Daist  v.  (Jale,  83 
111.  136;  Perry  v.  Simp^ion,  27  Conn. 
520;  Pacific  R.  R.  Co.  r.  Thomas,  19 
Kas.  256;  Union  Gold  Mining  Co.  i'. 
National  Bank,  96  U.  S.  640;  Blen  v. 
Bear  River  W.  &  M.  Co.,  20  Cal.  002; 
81  Am.  Dec.  132;  Btink  of  United 
States  V.  Dandridgc,  12  Wheat.  64; 
Bank  v.  Comegys,  12  Ala.  772;  46 
Am.  Dec.  278. 

^  Canal  Bridge  v.  Gordon,  1   Pick. 
2%:  11  Am.  Dec.  171. 


§§  432,  433 


CORPORATIONS, 


720 


poration  received  a  specific  appointment  to  that  position 
from  the  board  of  directors,  if  he  has  long  acted  in  that 
capacity  without  objection,  and  if  his  services  as  such 
have  been  invariably  accepted.* 

Illustrations. — The  cashier  of  a  bank,  having  agreed  to  dis- 
charge his  duties  without  compensation,  appropriated  funds  of 
the  bank  for  compensation.  Knowing  that  the  rules  of  the 
bank  forbade  interest  on  demand  certificates,  he  issued  demand 
certificates  on  interest  to  himself,  and  took  funds  of  the  bank 
to  pay  such  interest,  ile  also  sold  bonds  belonging  to  the  bank 
to  himself  for  less  than  their  value.  These  transactions  were 
entered  on  the  bank  books,  but  the  directors  had  no  actual 
knowledge  thereof.  Held,  that  a  ratification  by  the  bank  could 
not  be  implied:  First  National  Bank  of  Fort  Scott  v.  Drake j  29 
Kan.  311;  44  Am.  Rep.  646. 

§  432.  Act  beyond  Authority  of  Agent  cannot  be  Rat- 
ified by  Majority  of  Share-holders. — Acts  in  excess  of  the 
authority  of  the  charter  can  only  be  ratified  by  all  the 
stockholders.     A  majority  cannot  ratify  such  an  act.^ 

§  433.  Implied  Ratification  by  Stockholders  from  Con- 
duct. —  The  question  whether  there  has  been  a  ratification 
by  the  share-holders  of  a  corporation  is  generally  a  ques- 
tion of  fact.  Proof  that  every  individual  share-holder 
concurred  is  not  essential.  It  is  sufficient  if  it  appear 
that  the  act  in  question  was  generally  known  among  the 
share-holders,  and  that  none  of  them  objected.'  These 
circumstances  have  been  held  evidence  of  ratification  on 
the  part  of  the  share-holders;  viz.,  that  the  share-holders, 
knowing  of  the  unauthorized  act  having  been  performed 
by  their  agents,  took  no  steps  to  set  it  aside  or  to  disaffirm 
it;*  that  the  share-holders  have  abstained  from  inquiring 


»  Walker  v.  R.  R.  Co.,  47  Mich.  .S38. 

»  Marsh  v.  Fulton  Co.,  )0  Wall.  67C; 
Hazard  v.  Durant,  11  R.  I.  ISXJ;  Phos- 
phate of  Lime  Co.  v.  Green,  L.  R.  7 
Coni.  P.  43. 

'  Morawetz  on  Corporation,  sec.  79. 

*  Phosphate  of  Lime  Co.  v.  Green 
L.   R.   7  Com.   P.  43.    In   Kent  r. 


Quicksilver  Mining  Co.,  78  N.  Y.  187, 
Folger,  J.,  says:  "  Where  third  parties 
have  dealt  with  the  company,  relying 
in  good  faith  upon  the  existence  of  cor- 
porate authority  to  do  an  act,  where  it 
la  not  needed  that  there  he  au  express 
assent  thereto  on  the  part  of  stock- 
holders  to  work  an  equitable  estoppel 


720 

,  position 
d  in  that 
3  as  such 


reed  to  dis- 
id  funds  of 
ales  of  the 
ed  demand 
f  the  bank 
to  the  bank 
LCtions  were 
1  no  actual 
bank  could 
V.  Drake,  29 


DOt  be  Rat- 

ccess  of  the 
by  all  th« 
m  act.^ 

^  from  Con- 
ratification 
ally  a  ques- 
h  are-holder 
f  it  appear 

among  the 
ed.»     These 

fication  on 
»re-holders, 

performed 

,0  disaffirm 
inquiring 

,78N.  Y.  187, 
ire  third  parties 
mpany,  relying 
xistence  of  cor- 
m  act,  where  it 
a  be  an  express 
fpart  of  stock- 
Iftablo  estoppel 


r2l 


LIABILITIES. 


g  433 


intotheaffairsof  the  company  and  attending  its  meetings;' 
tiiat  the  corporation  has  accepted  the  benefits  of  the  act;' 
that  a  share-holder  or  share-holders  have  not  protesiled 
against  a  vote  of  the  majority,  though  thoy  did  not  join  in 
it.'  Stockholders  of  a  corporation  who  do  not  vote  against 
the  re-election  of  directors  may  bo  deemed  to  acquiesce, 
by  suL'li  omission,  in  acts  of  such  directors  done  prior  ti) 
the  re-election,  and  of  which  such  stockholders  had  in- 
formation suflicient  to  put  them  on  inquiry,  and  are  not 
entitled  afterward  to  have  those  directors  suspended  on 
the  ground  of  misconduct  previous  to  the  re-election.* 
Where,  at  the  meeting  of  a  board  of  directors  of  a  cor- 
poration formed  for  purposes  of  pecuniary  profit,  an  act 
is  ordered  to  bo  done  without  objection  either  then  or 
subsequently  made  to  the  regularity  of  the  meeting  by 
any  director  or  stockholder,  and  the  act  thus  author- 
ized is  afterwards  performed,  its  legality  cannot  afterwards 
be  questioned  in  a  suit  in  equity  on  the  ground  of  irreg- 
ularity.'' If  stockholders  would  impeach  transactions  en- 
tered iAto  on  behalf  of  the  corporation  by  the  fraud  of  its 
directors,  they  must  act  promptly;  they  cannot,  however, 
be  charged  with  acquiescence  by  remaining  still  while 
some  of  their  number  are  seeking  to  impeach  the  trans- 
actions.* Where  the  directors  have  transferred  its  origi  nal 
charter  without  authority  of  stockholders,  and  such  stock- 
holders have  subsequently  participated  in  the  company's 


upon  them.  Their  conduct  may  have 
been  such,  though  negative  in  char- 
ajter,  as  to  be  taken  for  an  acquiescence 
in  the  act;  and  when  harm  would 
crime  to  such  third  parties  if  the  act 
\ve:-c  held  invalid,  the  stockholders  are 
estopped  from  questioning  it.  We 
fcuppose  acquiescence  or  tacit  assent 
to  moan  the  neglect  to  promptly  and 
actively  condemn  the  unauthorized 
act,  and  to  seek  judicial  redress,  after 
knowledge  of  the  committal  of  it, 
whereby  innocent  third  parties  have 
been  led  to  put  theniaelvea  in  a  position 
from  which  they  cannot  be  taken 
Vol.  L- 46 


without  loss.  It  is  the  doctrine  of 
equitable  estoppel,  which  appliui  to 
members  of  corporate  or  associated 
bodies,  as  well  as  to  persons  acting  in 
a  natural  capacity." 

*  Morawetz  on  Corporations,  sec.  79. 
»Burrill  v.    Nahant  Bank,  'J  Met. 

163;  35  Am.  Dec.  395. 

'  Biche  t\  Ashbury  Caniage  Co.,  L. 
R.  9  Ex.  224. 

*  Ramsey  v.  R.  R.  Co.,  7  Abl).  Pr., 
N.  S.,  15G;  38  How.  Pr.  193. 

*  Samuel  v.  Holladay,  1  Woolw.  400. 
"  Metropolitan  etc.  R.  R.  Co.  v.  R. 

R.  Co..  14  Abb.  N.  C.  lOa 


§433 


CORPORATIONS. 


722 


business  under  a  new  management,  or  permitted  the 
scheme  to  bo  eanied  out  without  objection,  they  are 
estopped  from  denying  the  validity  of  the  transfer.' 
"Where  the  bank  account  of  a  mining  company  is  over- 
drawn by  its  president  and  secretary,  without  special 
authority  of  its  directors,  the  company  will,  no'avithstand- 
ing,  bo  held  liable  for  the  overdraft,  if  their  acts  in  this 
respect  be  subsequently  ratifiea  by  the  directors.  Such 
ratification  may  be  made  by  their  ordering  the  issue  of 
a  note  of  the  company  for  the  amount  overdrawn.'  When 
the  directors  have  allowed  the  president  to  purchase  loco- 
uiotives,  and  have  afterwards  taken  possession  of  them 
and  acquiesced  in  their  use  on  the  company's  road  for 
several  years,  they  cannot  repudiate  ^he  president's  au- 
thority to  draw  bills  in  payment  for  t*.  .m.''  Where  stock- 
holders sanctioned  a  contract  under  which  moneys  were 
loaned  to  a  corporation  by  its  directors,  and  its  bonds 
therefor  secured  by  a  mortgage  given,  and  the  moneys 
have  been  properly  applied,  the  corporation  is  estopped 
from  setting  up  that  the  bonds  and  mortgage  are  void  by 
reason  of  the  trust  relations  which  the  directors  sustained 
to  it.^  A  bill  to  restrain  a  corporation  from  employing 
its  assets  in  excess  of  its  corporate  powers  must  show  duo 
diligence  to  prevent  the  same.  The  right  to  restrain 
ceases  when  the  members  have  consented  to  the  rule  of 
the  majority  within  such  powers.^ 

Ilia'strations. — The  constitution  and  by-laws  of  an  associa- 
tion provided  that  its  business  should  be  conducted  upon  the 
cash  principle,  and  that  no  credit  should  in  any  case  be  given. 
Held,  that  the  holder  of  a  note  against  the  association  might 
prove  that  the  cash  system  was  abandoned,  that  goods  were  sold 
on  credit,  and  the  money  was  hired  with  the  knowledge  and 
consent  of  the  association:  Dow  y.  Moore,  47  N.  H.  419.  By 
the  by-laws  of  the  defendent  corporation,  the  executive  coih- 
mittee,  which  was  empowered  to  hire  rooms,  required  for  a 

*  Hotel  Company  v.  Wade.  97  U.  S. 


1  Upton  V.  Jackson,  1  Flip.  413. 
'  Auglo-Californian    Bank    v.    Ma- 
honev  Mining  Co.,  5  Saw.  255. 
» Olcott  V.  R.  R.  Co.,  27  N.  Y.  546. 


13. 

*Leo  V.  R.  R.  Co.,  19  Fed.  Rep. 
283. 


722 

itted    the 
they  are 
transfer.* 
y  is  over- 
it    special 
atlistund- 
cts  in  this 
irs.     Such 
c  issue  of 
1.-     When 
;hase  loco- 
n  of  them 
's  road  for 
ident's  au- 
hcre  stock- 
oneys  were 
its  bonds 
he  moneys 
IS  estopped 
ire  void  by 
sustained 
employing 
t  show  duo 
o  restrain 
the  rule  of 


f  an  associa- 
ed  upon  the 
se  be  given, 
ation  might 
ds  were  sold 
)\vledge  and 
H.  419.  By 
■cutive  coui- 
uired  for  a 

Ivade.  97  U.  S. 
19  Fed.  Rep. 


723 


LIAB'LITIES. 


§134 


quorum  to  transact  business  two  directors  and  the  president, 
and  if  the  latter  were  absent  a  president  pro  tcvi.  mu?t  bo 
chosen.  Two  of  this  committee  met  informally  in  the  absence 
of  the  president,  and  without  electing  any  pro  tern,  notified 
the  agent  of  the  plaintiff  corporation,  who  was  a  third  member 
of  such  committee,  that  they  would  hire  the  rooms  to  be  lot  by 
the  plaintiff  corporation.  The  defendants  never  occupied  the 
rooms.  Held,  on  suit  brought  for  rent,  that  there  was  no  con- 
tract made  which  was  binding  on  the  defendants,  and  no  ratifi- 
cation of  the  informal  action  by  the  subsequent  acts  of  the 
corporation:  Corn  Exchange  Bank  v.  Cumberland  Coal  Co.,  1 
Bosw.  43G.  The  U.,  a  rolling-stock  company,  and  the  A.,  a 
railroad  company,  by  their  respective  boards  of  directors,  en- 
tered into  a  contract  whereby  the  U.  agreed  to  supply  the  A. 
with  all  the  rolling  stock  required  in  the  operation  of  the  A.'s 
railroad  for  seven  years,  at  an  agreed  monthly  rental.  The 
five  persons  composing  the  A.'s  board  were  members  of  tho 
U.'s  board,  which  consisted  of  thirteen  persons.  At  the  meet- 
ing of  the  U.'s  board,  at  which  tho  contract  was  confirmed, 
there  were  present  only  eight  directors,  two  of  whom  were  di- 
rectors of  the  A.  The  U.  supplied  the  rolling  stock  as  agreed, 
and  the  A.  received  and  used  the  same  for  nearly  two  years 
and  a  half,  when  the  contract  was  terminated.  Held,  that  evon 
if  tho  contract  was  voidable  in  equity  at  the  election  of  the  U. 
within  a  reasonable  time,  for  want  of  a  quorum  of  directors  at  the 
meeting  who  were  not  directors  of  the  A.,  the  delay  in  exercising 
the  election  to  avoid  it  operated  as  a  waiver  of  the  right  so  to 
do:  United  States  Rolling  Stock  Co.  v.  R.  R.  Co.,  34  Ohio  St.  4-50; 
32  Am.  Rep.  380.  A  corporation  paid  a  bill  for  furniture  con- 
tracted by  A,  and  subsequently  used  other  furniture  also  bought 
by  him.  Held,  that  they  were  liable  therefor,  as  having  made 
A  their  agent,  though  he  had  never  been  appointed  by  any  act 
under  the  corporate  seal:  Bancroft  v.  Wilmington  Conference 
Academy,  5  Del.  577. 

§  434.  What  Acts  cannot  be  Ratified. — Acts  in  viola- 
tion of  the  charter  of  the  corporation  or  contrary  to  law 
or  statute  are  void,  and  cannot  be  ratified.^  A  corpora- 
tion cannot  ratify  a  contract  made  by  their  agent  which 
they  could  not  lawfully  authorize.''  A  proposition  from 
tho  officers  of  a  corporation  to  settle  a  suit  brought  against 
the  corporation  for  malicious  prosecution  does  not  import 
a  ratification  of  the  act  or  charge  complained  of  therein.'^ 

*  la  re  Comstock,  3  Saw.  218;  Tip-        *  Downing   v.  Mount  Washington 
pecanoe  Co.  v.  R.  E.  Co.,  60  Ind.    etc.  Co.,  40  N.  H.  230. 
86.  f  Green  v.  South.  Ex.  Co.,  41  Ga.  515. 


CORPORATIONS. 


724 


CHAPTER  XXVII. 


RIGHTS  AND  LIABILITIES  OP   STOCKHOLDERS    AND   OF   CRED- 
ITORS  OP  THE  CORPORATION. 

§  435.  The  contract  of  membership  —  How  created, 

§  436.  Statutory  method  of  becoming  a  stockholder  must  bo  followed. 

§  437.  De  /acto  corporation  —  Subscriber  for  shares  not  liable  until  corpora- 
tion legally  organized. 

§  438.  Corporator  cannot  avoid  bis  contract  because  corporation  not  duly  or- 

ganized. 

§  439.  Subscribers  not  stockholders  until  all  shares  have  been  taken. 

§  440.  Agreements  to  form  corporation — Inchoate  corporation. 

§  441.  Mutual  assent  necessary  to  contract  of  membership. 

§  442.  Preliminary  deposit  with  subscription  —  When  a  condition  precedent. 

§  443.  Proof  of  contract  of  membership. 

§  444.  Liability  of  stockholder  to  contribute  his  share  of  capital  stock. 

§  445.  Liability  of  subscriber — Capital  agreed  must  be  subscribed. 

§  446.  Other  conditions  precedent. 

§447.  Assessments  and  calls — Who  may  make. 

§  448.  Notice  of  time  and  place  of  pajrment,  when  requisite,  and  how  given. 

§  449.  Liability  of  subscriber  after  abandonment  of  enterprise. 

§  450.  Subscriptions  upon  conditions. 

§  451.  Subscriptions  upon  conditions — When  mbscriber  held  oncondition- 
ally. 

§  452.  Subscriptions  obtained  by  fraud,  when  voidable. 

§  453.  When  not  voidable. 

§  454.  Laches  of  subscriber. 

§  455.  Stockholder  cannot  rescind  contract. 

§  456.  Violation  of  charter  no  ground  lOr  rescission. 

§  457.     Forfeiture  of  shares  for  non-payment  of  assessments. 

§  458.     Right  to  transfer  shares. 

§  459.     When  stockholder  liable  notwithstanding  transfer. 

§  460.     ££fect  of  transfer  of  sh^es. 

§  461.     Formalities  in  transfer  required  by  charter  must  be  observed. 

§  462.     Erruitable  assignments. 

§  463.     Assignment  by  indorsement  of  certificate. 

§464.     Effect  of  assignment  of  certificate  by  indorsement — Bights  of  par* 
chaser. 

§  465.    Lien  of  corporation  on  shares. 

§  466.     Remedies  against  corporation  for  refusing  to  allow  transfer, 

§467.    Liability  of  corporation   for  making  or  permitting   unauthorized 
transfers. 

§468.     Status  of  shares  aa  property. 

§469.    What  are  "profits." 


724 


(erred. 
Rights  of  pnr- 


Lsfer. 

;   onauiiiomed 


725 


STOCKnOLDERS. 


§435 


§  470. 

§471. 

§472. 

'             §  473. 

§474. 

D   OP  CRED- 

§475. 

5  470. 

§477. 

§478. 

ollowed. 

§479. 

e  until  corpora- 

§480. 

§  481. 

ion  not  duly  or- 

§482. 

§  48.'}. 

takoQ. 

§484. 

1. 

§  48.-). 

§  480. 

tion  precedent. 

§487. 

aI  stock. 

§  488. 

ribed. 

§  489. 

§  490. 

§491. 

and  how  given. 

§  492. 

• 

§493. 

§494. 

;d  nncondition- 

§495. 

§490. 

§497. 

§498. 

§499. 

§500. 

§501. 

§502. 

Dividends  and  interest  can  only  be  paid  out  of  profits. 

Distribution  of  profits  — DUcretion  of  directors. 
Stock  dividends. 

Issuing  new  stock  -  Increasing  the  capital  stock. 

Payment  of  dividends. 

Higlit  to  examine  books -Other  rights  of  stockholders. 

Stockholders'  meeeings  -  Notice  of  time  and  place  essential. 

VVho  may  call  meetings. 

General  and  special  meetings-—  Distinction. 

Adjourned  meetings. 

VVho  1ms  right  to  vote. 

Election  of  officers. 

Tower  of  majority  to  make  by-laws. 

By-laws  held  valid. 

By-laws  held  invalid. 

Individual  stockholders  cannot  sue  for  injury  to  corporation. 

Wlicu  stockholders  entitled  to  relief. 

Discretionary  powers  of  officers  will  not  be  interfered  with  at  mit  of 

stockholdors. 
Stockholders'  bill- Who  may  or  must  be  complainants. 
Who  may  or  must  bo  defendants. 

Stockholders  not  personally  liable  on  corporate  contracts. 
Nor  for  debts  of  corporation. 

Capital  stock  a  trust  fund  for  creditors. 
Shares  must  bo  paid  for  in  money  or  property. 
When  property  cannot  be  taken  in  payment  of  shares. 
Rights  of  a  creditor  to  unpaid  assessments. 

Personal  liability  of  stockholders  by  statute. 

Construction  of  such  statutes. 

Nature  of  personal  liability. 

Personal  liability  for  wages  of  employees  and  laborers. 

Rights  of  a  bona  Jlde  holder  of  shares  apparently  paid  up 

Rights  of  creditors -To  interfere  in  management  of  corporation. 

lo  prevent  dissolution  or  alteration  in  charter. 

§  435.    The  Contract  of  Membership— How  Created.  — 

Persons  become  stockholders  either  by  original  contract 
with  the  other  members  at  the  formation,  or  by  snbstitu- 
tion  for  some  original  share-holder.^  Thus  if  tho  statute 
requires  the  subscriptions  to  be  in  writing,  an  oral  sub- 

9-,-/^Tr*f    °°    Corporations,   sec.  either  as  between  themselve .  and  the 

2oo.     A  broker,  purchasing  stock  for  corporation    or  creditors      Tl^ov   nro 

a  cus  omer,  and  treating  it  as  his  own,  still  entitled  to  show  St  t^  cTheld 

s^oo^hrlf  ^'^'f  ^?th  tho  liability  of  a  such  stock  as  colSera    seen  it(-  an 

stockholder:  McKim  v.  Glenn,  06  Md.  not  otherwise:  Union  Sav    C , ';   s"e 

4.9.    But  the  act  of  voting  stock  does  ligman.  92  Mo   635-  1  Am   St  ho^ 

not  make  voters  absolute  Btockholders,  7fcV  •  ^- 


§435 


CORPOBAIIONS. 


726 


scriptiou  is  not  valid.'  It  is  competent  evidence,  to  show 
a  prrson  to  be  a  stockholder  in  a  corporation,  that  ho 
had  subscribed  for  some  shares  therein;  that  his  name 
"vvas  entered  upon  the  records  of  the  corporation;  that  ho 
had  slated  that  he  had  taken  such  shares;  and  that  the 
corporation  treasurer  liad  otFered  him  his  certificate  there- 
for." A  receipt  for  a  certificate  of  stock,  written  on  the 
margin  of  the  subscription-book,  is  a  sufficient  subscrip- 
tion for  stock.^  Subscriptions  for  shares  in  the  stock  of 
an  incorporated  company  constitutes  the  subscriber  a 
stockholder  in  such  company,  even  though  he  fail  to 
meet  the  subsequent  calls  on  his  subscription.*  A 
subscription  to  stock  is  not  only  an  undertaking  "with 
the  company,  but  with  all  other  subscribers,  and  a  sub- 
scriber cannot  bo  permitted  to  set  up  a  secret  parol 
arrangement  with  the  agents  of  the  company,  by  which 
he  may  be  released  from  his  subscription,  while  his 
fellow-subscribers  continue  to  be  bound."*  A  certificate 
issued  in  tho  ordinary  form  of  certificates  of  stock,  but 
containing  a  promise  on  the  part  of  the  corporation  to 
pay  interest  thereon  until  the  happening  of  a  specified 
event,  constitutes  the  person  to  whom  it  is  issued  a  stock- 
holder.® A  signature  to  articles  of  association,  setting 
forth  the  name  of  tho  proposed  company,  the  amount  of 
the  capital  stock,  and  the  number  of  shares,  imports 
that  the  subscriber  will  take  and  pay  for  the  number  of 
shares  set  opposite  his  name.^  A  writing  reciting  an 
association  for  the  purpose  of  organizing  a  bank,  and 
stating,  among  other  things,  "the  names  and  residences 
of  the  share-holders,  with  the  number  of  shares  held  by 


1  Vreeland  v.  Stone  Co.,  29  N.  J. 
Eq.  188;  Pittsburgh  etc.  R.  R.  Co.  v. 
Gazzam,  32  Pa.  St.  340. 

^  New  Hampshire  Cent.  R.  R.  Co. 
V.  Johnson,  30  N.  H.  390;  64  Am.  Dec. 
300. 

»  Lohman  v.  R.  R.  Co.,  2  Sand.  39. 

*  Schaeffer  v.  Ins.  Co.,  46  Mo.  248; 


Phffinix  Warehousing  Co.  v.  Badger, 
67  N.  Y.  294. 

»  Miller  v.  R.  R.  Co.,  87  Pa.  St.  95; 
30  Am.  Rep.  349. 

«  McLaughlin  v.  R.  R.  Co.,  8  Mich. 
100. 

'  Rensselaer  etc.  Plank  Road  Co.  v. 
Barton,  16  N.  Y.  457,  note. 


726 


727 


8T0CKU0LDEBS. 


§435 


CO,  to  show 
n,  that  ho 
his  namo 
n;  that  ho 
1(1  tliat  tho 
icatc  there- 
ten  on  the 
t  subscrip- 
ho  stock  of 
ibscribcr  a 
he  fail  to 
ption.*     A 
iking  with 
and  a  sub- 
3cret   parol 
r,  by  which 
while   his 
,  certificate 
■  stock,  but 
)oration  to 
a  specified 
led  a  stock- 
on,  setting 
amount  of 
,  imports 
number  of 
eciting  an 
3ank,  and 
residences 
es  held  by 

[Jo.  V.  Badger, 

87  Pa.  St.  95; 

,  Co.,  8  Mich. 

k  Road  Co.  v. 
ote. 


each,"  and  subscribed  by  the  incorporators,  constitutes  a 
subscription  to  the  capital  stock  on  the  part  of  tho  sigti- 
crs,  and  binds  them  to  pay  for  tho  number  of  shares  sot 
opposite  their  respective  names.'  A  widow  who  assents 
to  an  order  of  distribution  of  her  husband's  estate,  by 
which  certain  shares  of  stock  are  allotted  to  lier,  becomes 
a  stockholder,  and  liable  to  creditors  of  the  corporation, 
though  she  has  not  received  the  certificates  of  stock,  and 
though  they  have  not  been  transferred  on  the  comi)any's 
books."  If  persons  sign  the  subscription-book  of  a  cor- 
poration, leaving  the  amount  blank,  intending  that  they 
shall  be  represented  as  subscribers  for  tho  purpose  of  in- 
fluencing others,  as  to  creditors  seeking  to  recover  unpaid 
subscriptions,  such  persons  impliedly  authorize  the  fill- 
ing up  of  the  blanks  by  those  taking  the  subscriptions.'^ 
An  agreement  to  subscribe  for  stock  in  a  corporation  is 
not  a  subscription.''  One  who  signs  a  mere  subscri[)tion 
paper,  agreeing  to  take  a  number  of  shares  in  a  corpora- 
tion to  be  formed,  is  not  liable  thereon  after  the  forma- 
tion of  the  company.''  Aji  action  will  not  lie  on  a  stock 
snbscrii:)tion,  unless  its  terms  express  a  promise  to  pay." 
An  oral  promise,  pending  the  organization  of  a  corpora- 
tion, to  take  shares  of  the  stock,  does  not  constitute  the 
promisor  a  stockholder  or  member,  and  will  not  support 
a  note  given  by  him  to  pay  for  such  shares.'  The  mere 
fact  of  subscribing  to  the  stock  of  an  incorporated  com- 
pany docs  not  constitute  the  subscriber  a  stockholder; 
but  it  seems  that  such  a  subscription  puts  it  in  his  power 
to  become  a  stockholder,  by  compelling  the  corporation 
to  give  him  the  legal  evidence  of  his  being  a  stockholder, 

>  Nulton  V.  Clayton,  54  Iowa,  425;    nacht,  21  Pa.  St.  220;  CO  Am.  Dec.  49; 
37  Am.  Rep.  213.  -    -     •       ■  .      -    -       ,        __ 

^  Coquard  v.  Marshall,  14  Mo.  App. 
80. 

'  Jewell  V.  Rock  River  Paper  Co., 
101  111.  57. 

*  Mt.  Sterling  Coalroad  Co.  v.  Little, 
14  Bush,  429. 


Hedge's  Appeal,  6.1  Pa.  St.  279; 
McClure  v.  K.  R.  Co.,  90  Pa.  St.  271; 
Peninsular  R.  R.  Co.  v.  Duncan,  28 
Mich.  152. 

«  Odd  Fellows'  Hall  Co.  v.  Glazier,  5 
Harr.  172. 

'  Fanning  v.  Ins.  Co.,  37  Ohio  St. 


Strasburg  R.  R.   Co.   v.   Echter-    339;  41  Am.  Rep.  517. 


§435 


CORPOKATIOKB. 


728 


upon  his  corrapl)riug  with  tho  terms  of  the  subscription.' 
One  who  signed,  with  others,  a  subs'^ription  pupcr,  prom- 
ising to  take  and  pay  for  shares  in  a  joint-stock  ussocia- 
lion  to  build  a  hotel,  most  of  which  subscribers  were 
afterwards  incorporated,  but  tho  defendant  was  not  one 
of  tliem,  is  not  bound  by  his  subscription  to  pay  for  hiri 
shares  to  tho  corporation,  there  being  no  privity  of  con- 
tract.'*  Tho  issue  of  a  certificate  of  stock  is  not  essential 
to  make  a  subscriber  a  stockholder;*  Making  a  cortifR-ate 
and  mailing  it  to  a  stockholder  is  regarded  as  the  issuing 
of  it.^  No  certificate  of  stock  need  be  tendered  before 
bringing  a  suit  for  the  subscription.*  Tho  loss  of  jdain- 
tid's  certificates  and  the  advertisement  thereof  being 
sullicicntly  established,  the  defendants  cannot  refu.se  to 
issue  new  certificates  on  the  ground  that  a  bond  of  in- 
demnity is  not  furnished.  The  stock  cannot  be  trans- 
ferred by  relator  except  upon  the  books  of  tho  respondent, 
and  on  the  production  of  tho  certificates.  This  is  suffi- 
cient  protection  to  tho  company.®  The  authority  of  an 
agent  appointed  to  receive  subscriptions  to  tho  stock  of  a 
company  is  exhausted  by  the  act  of  receiving  the  sub- 
scriptions. The  subscription  instantly  inures  to  the  bene- 
fit of  tho  company,  creating  a  contract  between  it  and  the 
subscriber,  which  tho  agent  cannot  rescind.''  Where  a 
corporation  has  no  secretary  or  clerk,  and  the  president 
has  charge  of  tho  stock-books,  a  demand  on  tho  latter  to 
make  the  necessary  transfer  of  stock  to  a  purchaser  of 
outstanding  shares  is  sufficient." 

Illustrations. — A  stock  subscription  simply  agreed  "to  take 
the  amount  of  shares  set  against  our  respective  names."  Held, 
to  impose  no  personal  obligation  to  pay  for  the  shares:  Belfast 


'  Busey  v.  Hooper,  35  Md.  15;  6 
Am.  Rep.  350. 

^  Machiaa  Hotel  Co.  v.  Coyle,  35  Me. 
405;  58  Am.  Dec.  712. 

''  Butler  Univ.  v.  Scoonover,  114  Ind. 
381 

*  Jonea  w.  R.  B»  Co.,  17  How.  Pr.  529. 


<*  Vawter  v.  K.  R.  Co.,  14  Ind.  174; 
Hardy  v.  Merriweather,  14  Ind.  203. 

•^  State  V.  New  Orleans  Gas  Light 
Co.,  25  La.  Ann.  413. 

•»  Lowe  V.  R.  R.  Co.,  1  Head,  659. 

8  Green  Mount  etc.  Turnpike  Co.  v. 
Bulla,  45  Ind.  1. 


728 


729 


STOCKHOLDEHS. 


§130 


>scription.' 
per,  i>roin- 
t;k  ussocia- 
ibors  were 
IS  not  ono 
)ay  for  his 
ity  of  con- 
t  csHcntial 
cortiiicule 
he  issuing 
red  l)cfore 
3  of  pluin- 
•cof   being 

refuse  to 
Dnd  of  in- 

be  trans- 
Dspondcnt, 
lis  is  suffi. 
>rity  of  an 

stock  of  a 
f  tlie  sub- 

tlic  bcne- 
it  and  the 

Where  a 

president 
e  latter  to 
rchaser  of 


d  "to  take 
s."  IIcUJ, 
es:  Belfast 


14  Ind.  174; 
|4  Iiid.  203. 
s  Gas  Light 

Head,  659. 
rnpike  Co.  v. 


etc.  R.  n.  Co.  V.  Moore,  GO  Mo.  5G1.  The  state  of  North  l^  arohna 
Bubflcribod  twonty-livo  thousand  dolhirs  to  the  stock  of  a  cor- 
poration, to  bo  i)aid  in  sums  "not  exceeding  ten  thousand  dol- 
lars in  any  one  year,"  and  no  time  was  specified  when  tho  htato 
Bhould  become  a  stockholder.  Held,  that  she  became  a  stock- 
liolder  niton  subscription:  AUornnjGcncral  v.  Cape  Fear  Nav. 
Co.,  2  Iriid.  E<i.  444.  An  association  was  incorporated  for  tho 
purpose  of  improving  tho  breed  of  IIolstein-Friesian  cattle,  and 
of  disseminating  information  concerning  them.  Ihld,  that  tho 
courts  could  not  compel  the  admission  of  certain  owners  and 
breeders  of  such  cattle  to  membership,  mombcrshii)  being  nccea- 
Bary,  under  the  corporate  by-laws,  to  tho  registration  of  cattle, 
and  such  registration  constituting  an  important  factor  in  their 
marketable  i)rice:  People  v.  Ilohtcin-Friesian  A..^n,  IG  Abb. 
N.  C.  oU7.  A  subscription  of  stock,  "subject  alwa>  s  to  tho  by- 
laws, rules,  and  articles  of  incori)oration,"  one  of  which  was 
that  the  stock  should  bo  paid  for  after  fivo  b  ,  idred  share.^  had 
been  subscribed,  and  that  ten  per  cent  should  be  payal>!o  on  tho 
fifteen^  h  >  i  each  month.  Held,  to  render  tho  subscn  •  "jr  a  share- 
liolder  J  and  the  installments  to  come  duo  even  if  no  assessments 
v,t  re  made:  Wmihon  etc.  It.  R.  Co.  v.  Dwycr,  4U  Iowa,  121.  The 
members  of  a  corporation  took  subscriptions  on  a  sheet  of  paper, 
which  was  placed  in  a  bound  book  used  as  a  record  of  the  coui- 
pany.  The  names  of  tho  subscribers  and  the  amounts  sub- 
Bcribed  wore  then  entered  in  tho  book  by  tho  commissioners 
appointed  to  open  books  of  subscription.  Held,  that  this  was  a 
Bufficicnt  subscription  to  the  stock  of  tho  corporation:  Woodruff 
V.  McDonald,  33  Ark.  97. 

§  436.  Statutory  Modes  of  Becoming  Stockholder  must 
be  Followed. — Where  the  charter  or  a  general  statute 
prescribes  tho  mode  in  which  a  person  shall  become  a 
stockholder,  that  method  must  be  followed.'  It  is  generally 
sufficient  that  the  requirements  be  substantially  complied 
with.^  Where  notice  is  directed  to  be  given  of  tho  time 
and  place  for  receiving  subscriptions  for  stock  in  an  in- 
corporated company,  tho  object  is  to  prevent  a  monopoly 
of  the  stock,  and  the  want  of  the  notice  is  no  defense  to 


•  Morawetz  on  Corporations,  sec. 
258,  205;  Cliilda  v.  Smith,  55  Barb.  45; 
Carlisle  v.  R.  11.  Co.,  27  Mich.  315; 
Hibernia  Corporation  v.  Henderson,  8 
Serg.  &  Tw.  219;  11  Am.  Dec.  593. 

'  People  V.  R.  B.  Co.,  45  Cal.  306; 


13  Am,  Rep.  178;  Ashtabula  K.  K.  Co. 
I'.  Smith,  15  Ohio  St.  32S;  Browuleo  v. 
R.  R.  Co.,  18  Ind.  G8;  Hamilton  etc. 
R.  R.  Co.  V.  Rice,  7  Barb.  157;  iiultby 
V.  R.  R.  Co.,  IG  Md.  422, 


§437 


CORPORATIONS. 


730 


one  who  does  subscribe.*  The  failure  of  a  corporation  to 
issue  certificates  of  stock  to  a  'Stockholder  is  no  defense 
to  an  action  by  the  corporation  against  the  stockholder 
for  borrowed  money .^  Where  the  power  to  require  pay- 
ment from  stockholders  is  vested  in  a  board  of  directors, 
an  action  will  not  lie  to  recover  installments,  unless  all 
the  prerequisites  of  the  charter  have  been  complied  with.^ 
Where  the  charter  provides  that  the  president  and  direc- 
tors shall  cause  a  certificate  to  be  given  to  each  share- 
holder, signed  by  them, and  countersigned  by  the  treasurer, 
certificates  issued  by  the  president  alone,  signed  by  him, 
and  countersigned  by  the  treasurer,  withou^  authority  of 
the  directors,  and  without  consideration,  are  void.  And 
since  the  president,  in  issuing  such  certificates,  acts  ^nth- 
out  the  scope  of  his  authority,  the  corporation  is  not 
liable  for  his  act.* 

Illustrations.  — The  constitution  of  a  charitable  corporation 
provided  that  any  person  could  apply  for  admission  by  paying 
an  admittance  fee,  and  when  declared  elected,  could,  after 
signing  the  constitution,  vote  at  all  meetings  and  be  eligible  to 
office;  and  that  each  member  should  pay  a  certain  amount 
yearly  to  the  corporation.  Held,  that  the  signing  of  the  con- 
stitution was  not  a  prerequisite  to  membership;  and  that  an 
action  would  lie  by  the  corporation  against  a  member  wlio  had 
not  signed,  for  his  yearly  dues:  United  Hebrew  Benevolent  Asshi 
v.  Benshimol,  130  Mass.  325.  The  defendant  had  subscribed  for 
additional  stock,  and  his  subscription  was  procured  by  the 
directors  after  the  organization  of  the  company,  without  the  in- 
tervention of  the  commissioners  named  in  the  charter.  The 
defendant  had  afterwards  acted  as  a  director.  Held,  that  by  go 
doing  he  should  be  deemed  to  have  waived  all  objection,  if  any 
existed,  to  the  regularity  of  his  subscription:  Lane  v.  Brainenh 
30  Conn.  565. 

§  437.  De  Facto  Corporation — Subscriber  for  Shares 
not  Liable  until  Corporation  Legally  Organized.  — A  sub- 
scriber for  shares  of  a  corporation  not  organized  cannot 


*  Hagerstown  Turnpike  v.  Creeger, 
6  Har.  &  J.  122;  9  Am.  Dec.  495;  see 
also  Union  Turnpike  Co.  v.  Jenkins, 
1  Caiues,  381. 


«  Hazelett  v.  Butler  Univ. ,  84  Ind.  230. 
»  Banet  v.  R.  R.  Co.,  13  111.  504. 
*  Holbrook  v.    Fauquier  etc.  Turn- 
pike Co.,  3  Craach  C.  C.  425. 


730 


731 


STOCKHOLDERS. 


§437 


rporation  to 
no  defense 
stockholder 
require  pay- 
)f  directors, 
s,  unless  all 
iplied  with.^ 
t  and  direc- 
each  share- 
le  treasurer, 
led  by  him, 
authority  of 
void.  And 
is,  acts  ^nth- 
tion  is    not 


e  corporation 

m  by  paying 

could,  after 

be  eligible  to 

tain  amount 

of  the  con- 

and  that  an 

3er  who  had 

wvolent  Ass^n 

abscribed  for 

urcd   by  the 

hout  the  in- 

lartor.     The 

/,  that  by  so 

ction,  if  any 

V.  BrainenI, 


for  Shares 
d.  — A  sub- 
zed  cannot 

iv.,84In(1.230. 
13  III.  504. 
lier  etc.  Turn- 
425. 


be  held  liable  upon  his  subscription  until  the  company 
has  been  duly  incorporated,  and  all  the  steps  required  by 
law  have  been  taken.'  Signing  a  subscription  paper  before 
the  execution  of  articles  of  association  does  not  make  the 
signer  a  stockholder.'^  But  if  one  subscribes  for  shares  in 
a  corporation  to  be  organized,  and  the  corporation  is  or- 
ganized and  the  shares  accepted  by  the  subscriber,  he 
cannot  repudiate  his  liability.^  One  who  subscribes  for 
stock  in  a  company,  chartered  but  not  organized,  the 
charter  providing  for  subscription  before  organization,  is 
held  to  his  subscription  unless  ho  expressly  dissents  be- 
fore the  charter  is  accepted.*  An  action  may  be  main- 
tained by  a  corporation  against  an  original  subscriber  on 
a  promise  made  before  the  act  of  incorporation,  if  it  is 
shown  than  he  recognized  it  as  binding  after  the  incor- 
poration.^ A  subscription  to  a  proposed  corporation  may 
be  withdrawn  at  any  time  before  application  for  the 
charter.® 

Illustrations. — A  subscription  to  the  capital  stock  of  a  rail- 
road company,  made  before  its  incorporation,  and  agreeing  to 
take  certain  shares  therein,  held,  to  be  valid  upon  its  subsequent 
acceptance  by  the  company,  and  payment  of  an  apsi^s.-^nient 
thereon,  although  the  subscriber  did  not  sign  the  articles  of  as- 
sociation, nor  the  subscription-book  kept  by  the  company:  Jh'/- 
falo  and  Jamestown  R.  K.  Co.  v.  Clark,  22  Ilini,  oo'J.  Undei- 
the  general  incorporation  law,  articles  were  filed  to  incorporate 
the  Oregon  Central  Railroad  Company  with  a  rapital  block  of 
$7,250,000,  divided  into  72,500  shares  of  $100  each.  Six  prr.H)ns 
subscribed  one  share  each,  and  the  seventh  subscription  was  as 
follows:  "Oregon  Central  Railroad  Company,  by  G.  L.  Woods, 
chairman,  seventy  thousand  shares, — seven  million  dollars." 
Held,  that  this  was  a  nullity,  and  that  a  board  of  directors 


'  Penobscot  R.  R.  Co.  v.  White,  41 
Me.  512;  66  Am.  Dec.  257-  Kansas 
City  Hotel  Co.  v.  Hunt,  57  Mo.  126; 
Burrows  v.  Smith,  10  N.  Y.  550;  Car- 
lisle V.  R.  R.  Co.,  27  Mich.  315;  Pe- 
nobscot R.  R.  Co.  V.  Dummer,  40  Mo. 
172;  63  Am.  Dec.  654. 

*  8edalia,  Warsaw  etc.  R.  R.  Co.  v. 
Wilkerson,  83  Mo.  235. 


*  Inter-Mountain  Publisliiny  Co.  v. 
Jack,  5  Mont.  r>()8. 

*  Gleavea  v.  Turnpike  Co. ,  1  Siioe J, 
491. 

^  Vestry  of  Christ  Church  v.  Simons, 
2  Rich.  368. 

Muncy  Traction  Eagino  Co.  v.  Do 
la  Green,  Penn.  Sup.  Ct.  Dig.,  lSb8, 
I.  171. 


§§  438,  439 


CORPORATIONS. 


732 


elected  by  said  six  persons  could  not  lawfully  transact  business 
for  the  corporation:  Holladay  v.  Elliott,  8  Or.  84. 

§  438.  Corporator  cannot  Avoid  his  Contract  because 
Corporation  not  Duly  Organized. — Where  a  person  has 
agreed  to  become  a  corporator,  and  has  enjoyed  the  bene- 
fits and  privileges  of  one,  he  cannot  afterwards  set  up 
that  the  corporation  was  not  legally  organized,  or  had  not 
complied  with  the  requirements  of  the  law.*  A  corpora- 
tion may  receive  subscriptions  to  stock,  and  may  sue 
thereon,  before  being  fully  organized.^  But  a  stockholder 
is  not  estopped  by  his  subscription  to  deny  the  lawful 
existence  of  a  corporation  prohibited  by  the  state  con- 
stitution.^ Where  books  of  subscription  are  opened  at 
different  places,  pursuant  to  notice  under  a  general  law, 
a  subscription  upon  a  paper  is  binding,  though  it  be  not 
literally  a  book.*  Bufc  a  party  to  a  contract  with  a  pre- 
tended corporation,  organized  without  law  or  under  an 
unconstitutional  one,  is  not  estopped  to  deny  its  existence 
at  the  date  of  the  contract.  Whetuer  plaintiff  is  a  corpo- 
ration or  partnership,  where  the  plaintiff's  name  prima 
facie  imports  a  corporation,  is  a  question  which  may  be 
raised  by  an  answer  alleging  want  of  parties  in  interest 
in  the  suit.^ 

§  439.  Subscribers  not  Stockholders  until  all  Shares 
have  been  Taken. — Where  the  capital  of  the  corporation  is 


'  Tar  River  Co.  v.  Neal,  .3  Hawks, 
523;  Wihiiingtoii  etc.  R.  R.  Co.  v. 
Thompson,  7  Jones,  387;  Meadow 
Dam  Co.  V.  Gray,  30  Me.  547;  Dayton 
etc.  R.  R.  Co.  V.  Hatcli,  1  Disn.  84; 
Danbury  etc  R.  R.  v.  Wilson,  22 
Conn.  4.35;  Central  Plank  Road  v. 
Clomeus,  10  Mo.  3.'59;  Brookville  etc. 
R.  R.  Co.  V.  McCarty,  8  Ind.  392; 
Heaston  v.  R.  R.  Co.,  IG  Ind.  279;  79 
Am.  Dec.  430;  Dutchess  Manufactur- 
ing Co.  V.  Davis,  14  Johns.  238;  7  Am. 
Dec.  459;  Andoraoa  v.  R.  R.  Co.,  12 
Ind.  .370;  74  Am.  Dec.  218;  Aspinwall 
V.  Sacchi,  57  N.  Y.  331;  White  v. 
Rosjs,  15  Abb.  Pr.  60;  Eaton  v.  Aspin- 
wall, 19  N.  Y.  1J9;  Buffalo  etc.  R.  R. 


Co.  V.  Gary,  26  N.  Y.  75;  Phccnix 
Warehousing  Co.  v.  Ridger,  07  N.  Y. 
294;  New  Hampshire  etc.  R.  R.  Co. 
V.  Johnson,  30  N.  H.  390;  04  Am, 
Dec.  300;  Clark  v.  Navigation  Co.,  10 
Watts,  264;  St.  Charles  Manufactur- 
ing Co.  V.  Britton,  2  Mo.  App.  L*t)0; 
Chubb  V.  Upton,  95  U.  S.  055. 

*  Oregon  etc.  R.  R.  Co.  v.  Scoggin, 
3  Or.  161. 

^  St.   Louis    Colonization    Ass'n  v. 
Hcnnessy,  11  Mo.  App.  555. 

*  Hamilton  etc.  Plank  Road  Co.  r. 
Rice,  7  Barb.  157. 

»  Heaston  v.  R.  R.  Co.,  16  Ind.  279; 
79  Am.  Dec.  430. 


I 


732 
sact  business 

act  because 

person  has 
)d  the  bene- 
ards  set  up 
,  or  had  not 

A  corpora- 
id  may  sue 
stockholder 
T  the  lawful 
e  state  con- 
3  opened  at 
general  law, 
ffh  it  be  not 
with  a  prc- 
)r  under  an 
its  existence 
T  is  a  eorpo- 
name  prima 
lich  may  be 

ill  interest 

all  Shares 

)rporation  is 

Y.  75;  riiccuix 
inigcr,  (57  N.  Y. 

etc.  R.  R.  Co. 
:.  390;  C4  Am. 
vigatioti  Co.,  10 
lc3  Mauufivctiir- 

Mo.  Ai)p.  'J'JO; 
S.  G55. 

Co.  V.  Scoggin, 

sation    Ass'a  v. 

p.  555. 

nk  Road  Co.  v. 

:o.,  IG  Iml.  279; 


733 


STOCKHOLDERS* 


§439 


fixed  by  law,  subscribers  do  not  become  stockholders  until 
the  whole  amount  has  been  subscribed.*  Where  the  capital 
stock  of  a  corporation  is  fixed  at  a  given  sum,  divided 
into  shares  of  a  certain  amount  each,  the  capital  must  be 
fully  subscribed  before  the  subscriber  can  be  subject  to 
assessments,*  unless  there  is  a  contrary  provision  in  the 
articles,  or  in  the  general  law  under  which  the  corpo- 
ration is  formed.'  The  record  of  a  corporation  showing 
the  requisite  number  of  shares  subscribed  to  authorize  its 
organization,  together  with  the  names  of  the  subscribers, 
etc.,  to  have  been  duly  ascertained  and  reported  by  a 
committee,  which  report  was  duly  accepted,  is  sufficient 
evidence  of  due  organization  in  an  action  upon  a  sub- 
scription to  stock,  there  being  no  proof  to  the  contrary.* 
A  stock  subscription  is  not  invalidated  by  the  irrespon- 
sibility of  other  subscribers  for  shares  necessary  to  be 
subscribed  before  the  organization  of  the  corporation,  if 
such  other  subscriptions  were  made  and  accepted  by  the 
company  in  good  faith,  the  subscribers  being  apparently 
responsible;  and  evidence  of  their  irresponsibility  is  no 
defense  to  an  action  on  a  subscription  of  another  share- 
holder.^ But  the  subscribers  are  nevertheless  bound  from 
the  time  of  their  subscription.'  It  makes  no  difference 
in  the  stockholder's  rights  that  the  corporation  has  not 
issued  the  certificate  of  stock  to  which  he  is  entitled.' 


*  Morawetz  on  Corporations,  eec. 
259;  Peoria  etc.  R.  R.  Co.  v.  Preston, 
.35  Iowa,  115;  Penobscot  R.  R.  Co.  v. 
Dummer,  40  Me.  172;  63  Am.  Dec. 
654;  Central  R.  R.  Co.  v.  Johnson,  30 
N.  H.  390;  64  Am.  Dec.  300;  Lewey's 
etc.  R.  R.  Co.  V.  Bolton,  48  Me.  451; 
77  Am.  Dec.  236;  Hale  v.  Sanborn,  16 
Neb.  1.  Until  the  entire  capital  stock 
of  a  corporation  organizea  under  a 
general  law  is  subscribed  for  and 
token,  a  delinquent  stockholder  is  not 
liable,  unless  the  contract  of  subscrip- 
tion,  certificate,  or  general  incorpora- 
tion law  contains  a  provision  to  that 
effect,  or  the  stockholder  has  waived 


the  condition  as  to  taking  all  the 
stock:  Haskell  v.  Worthington,  94 
Mo.  560;  aliter,  Willamette  etc.  Co.  v. 
Stannus,  4  Or.  261. 

'  Fdle  V.  Sanborn,  10  Neb.  1. 

^  Hughes  V.  Antietam  Manufacture 
ing  Co.,  34  Md.  316. 

*  Penobscot  R.  R.  Co.  v.  White,  41 
Me.  512;  66  Am.  Dec.  257. 

*  Penobscot  R.  R.  Co.  v.  White,  41 
Me.  512;  66  Am.  Dec.  257. 

'  Lake  Ontario  R.  R.  Co.  v.  Mason, 
16  N.  Y.  451. 

^  Chester  Glass  v.  Dewey,  16  Maaa. 
94;  8  Am.  Dec.  128. 


§440 


CORPORATIONS. 


734 


lLLUf?TRATiONS.  — In  a  suit  by  a  corporation  on  a  stock  sub- 
Bcription,  the  defense  was  that  the  agreed  number  of  shares 
had  not  been  bona  fide  subscribed  so  as  to  make  tlie  subscrip- 
tion binding.  Held,  that  the  original  subscription-book,  made 
up  by  copying  from  lists  which  were  carried  around  to  solicit 
subscriptions,  and  accepted  by  the  directors,  was  admissible; 
not  so  the  declarations  of  another  subscriber  that  he  did  not 
intend  to  pay  for  the  subscription  he  had  made:  Hayden  v.  At- 
lanta Cotton  Factory,  61  Ga.  233.  The  defendant  subscribed 
for  one  share  in  the  plaintiff  corporation,  and  agreed  to  pay  the 
same  in  such  assessments  as  the  directors  for  the  time  being 
might  order.  The  act  of  incorporation  fixed  the  number  of 
shares  at  ten  thousand,  and  before  that  number  was  subscribed 
for,  the  directors  made  sundry  assessments  to  nearly  the  amount 
of  the  share.  Held,  that  the  shares  not  being  all  subscribed 
for,  the  assessments  could  not  be  recovered:  Contoocook  Valley 
R.  R.  Co.  V.  Barker,  32  N.  H.  363. 


§  440.  Agreements  to  Form  Corporation  —  Inchoate 
Corporation. — Where  a  number  of  persons  mutually 
agree  to  become  share-holders,  and  form  a  corporation 
to  be  afterwards  incorporated,  the  obtaining  of  the  char- 
ter makes  them  stockholders.'  A  stock  subscription  made 
in  contemplation  of  a  charter  to  construct  a  railroad  is  a 
valid  contract,  and  can  be  enforced.^  A  subscription  to 
stock  of  a  company  for  building  a  hotel,  made  before  the 
creation  of  the  company,  was  held  to  take  effect  as  an 
agreement  on  its  acceptance  by  the  company  when  or- 
ganized, and  to  bind  the  subscribers  to  take  the  shares 


'  In  Athol  Music  Hall  Co.  v.  Carey, 
116  Mass.  471,  the  law  of  such  incho- 
ate corporations  is  thus  stated:  "In 
agreements  of  this  nature,  entered 
into  before  the  organization  is  formed 
or  tho  agent  constituted  to  receive  the 
amounts  subscribed,  the  difficulty  is 
to  ascertain  the  promisjge,  in  whose 
name  alone  suit  can  be  brought.  The 
promise  of  each  subscribers,  'to  and 
with  each  other, '  is  not  a  contract  ca- 
pable of  being  enforced,  or  intended  to 
operate  literally  as  a  contract  to  be  en- 
forced between  each  eubscriberandeach 
other  who  may  have  signed  previously, 
or  who  should  sign  afterwards,  nor 
between  each  subscriber  and  all  the 


others  collectively  as  individuals.  The 
undertaking  is  inchoate  and  incom- 
plete as  a  contract  until  the  contem- 
plated organization  is  effected,  or  the 
mutual  agent  constituted  to  represent 
the  association  of  individual  rights,  in 
accepting  and  acting  upon  the  propo- 
sitions offered  by  the  several  subscrip- 
tions. When  thus  accepted,  the  prom- 
ise may  be  construed  to  have  le^al 
effect  according  to  its  purpose  and  m- 
tcnt,  and  the  practical  necessity  of  the 
case;  to  wit,  as  a  contract  with  the 
common  representative  of  the  several 

AS  80C13itiCS 

^  Tonica  etc.  R.  R.  Co.  v.  McNeely, 
21  III.  71. 


734 

a  Btock  sub- 
er  of  shares 
he  subscrip- 
-book,  made 
tid  to  solicit 

admissible; 

he  did  not 
'ay den  v.  At- 
t  subscribed 
d  to  pay  the 
}  time  being 
I  number  of 
s  subscribed 
r  the  amount 
1  subscribed 
iocook  Valley 


—  Inchoate 

3    mutually 

corporation 

)f  the  char- 

ption  made 

ailroad  is  a 

cription  to 

before  the 

ffect  as  an 

when  or- 

the  shares 

ividuals.    The 

te  and  iucom- 

il  the  contem- 

ffected,  or  the 

d  to  represent 

lual  rights,  in 

ou  the  propo- 

veral  suDscrip- 

ted,  the  proci- 

to  have  legal 

)urpo3e  and  m- 

lecessity  of  the 

tract  with  tlie 

of  the  several 

0.  V.  McNeely, 


735 


STOCKHOLDERS. 


§441 


and  pay  therefor  as  the  board  of  directors  might  require, 
even  before  the  building  of  the  hotel.*  Each  subscription 
to  a  common  fund  for  a  common  purpose  is  a  contract 
by  each  associate  with  his  follows  in  consideration  of  sim- 
ilar contracts  by  them  to  contribute  to  the  common  fund 
the  amount  subscribed,  and  when  the  full  sum  is  sub- 
scribed and  the  association  organized,  raises  a  duty  and 
liability  on  the  part  of  each  subscriber  to  pay  the  sum 
subscribed."  Persons  who  have  entered  into  articles  of 
association  with  the  intention  of  becoming  incorporated, 
but  who  have  failed  to  perfect  an  incorporation,  are  indi- 
vidually liable  upon  a  contract  which  they  may  be  found 
to  have  authorized,  or  which  they  may  have  ratified,  al- 
though such  contract  may  have  been  in  terras  the  contract 
of  the  association  or  assumed  corporation.^ 

§  441.  Mutual  Assent  Necessary. — Mutual  consent  is 
necessary  to  the  contract.''  Thus  if  a  subscription  is 
made  in  a  person's  name  without  his  authority,  he  is  not 
bound.^  If  one  subscribes  to  the  capital  stock  of  a  cor- 
poration for  and  in  the  name  of  another  without  author- 
ity, he  thereby  binds  himself,  and  becomes  the  equitable 
owner  of  the  stock.  A  transfer  thereof  from  the  person 
in  whose  name  the  subscription  is  made  is  not  necessary; 
it  is  sufficient  if  the  stock  is  carried  to  the  account  of  the 
subscriber  on  the  stock-ledger  of  the  company.*  So  if 
the  proposal  is  changed  in  any  way  without  his  consent, 
he  is  not  bound.'  A  special  statute  incorporating  certain 
persons  for  purposes  of  private  advantage  or  emolument 


»  Red  Wing  Hotel  Co.  v.  Friedrich, 
26  Minn.  112. 

^  Edinboro  Academy  v.  Robinson, 
37  Pa.  St.  210;  78  Am.  Dec.  421. 

^  Johnson  v.  Corser,  34  Minn.  365. 

*  Morawetz  ou  Corporations,  sec. 
26.3. 

'  Ticonic  Water  Power  Co.  v.  Lang, 
6.3  Me.  480.  A  person  subscribing  for 
auuther  without  authority  ia  not  per- 


sonally bound,  but  is  liable  to  an  ac- 
tion for  damages:  Mill  Dam  Co.  v. 
Ropes,  9  Pick.  187;  19  Am.  Dec.  363. 

«  State  V.  Smith,  48  Vt.  266. 

•  Dorris  v.  Sweeney,  GO  N.  Y.  463; 
Dutchess  etc.  R.  R.  Co.  i'.  Mabbett, 
58  N.  Y.  397;  Southern  Hotel  Co.  v. 
Newman,  30  Mo.  118;  Richmond  Fact. 
Ass'a  V.  Clarke,  61  Me.  351;  Mabau  v. 
Wood,  44  Cal.  402. 


§441 


CORPORATIONS. 


736 


does  not  bind  any  person  named  therein,  unless  he  con- 
sents thereto/  One  railroad  corporation,  merely  from  hav- 
ing bought  the  road-bed  of  another,  with  intent  to  complete 
the  road,  has  no  right  to  purchase  the  vendor's  stock  sub- 
scriptions, and  enforce  them  against  the  subscribers.-  An 
act  of  the  legislature  by  which  "the  members  of"  several 
mutual  fire  insurance  companies  are  made  a  new  corpo- 
ration, and  which  "shall  not  affect  the  legal  rights  of  any 
person,"  and  is  to  take  efiFect  "when  accepted  by  the  mem- 
bers of  said  corporations,"  does  not  constitute  a  member 
of  one  of  the  old  companies,  who  does  not  expressly  con- 
sent to  it,  a  member  of  the  new  corporation,  although  the 
act  be  duly  accepted  by  a  majority  of  the  members  of  each 
of  the  old  companies.'  The  company  may  recover  stock 
subscriptions  procured  by  one  who  acted  as  age  it,  though 
not  at  the  time  authorized.*  A  subscription  to  a  railroad 
company  is  valid,  though  made  to  one  who  was  not  a 
commissioner  to  receive  subscriptions,  and  though  made 
under  a  mistaken  belief  that  he  might  forfeit  his  stock  at 
his  pleasure.''  One  who  having  by  mistake  signed  au 
alphabetical  list  of  subscribers  to  the  company,  instead 
of  the  stock  subscription-book  of  the  company,  afterwards 
votes  as  a  stockholder,  is  estopped  to  deny  his  subscrip- 
tion.^ The  fact  that  the  afifairs  of  a  corporation  are  un- 
wisely managed,  or  its  coni^acts  not  authorized  by  the 
articles  of  incorporation,  will  not  relievo  a  stockholder 
from  liability  to  pay  his  subscription  for  stock.' 

Illustrations. — A  subscription  for  shares  was  in/.  '-5  A 
for  and  in  the  name  of  B.  Held,  that  B,  by  acceptiiig  cl-  v-'iice 
of  director,  to  which  he  was  not  eligible  if  not  a  8t(Jo'  Alar, 
had  recognized  the  validity  of  the  subscription:  Penobscot  R.  R. 
Co.  v.  Dummer,  40  Me.  172;  63  Am.  Dec.  654.  Persons  became 
subscribers  to  the  stock  of  a  corporation  upon  a  promise  by  the 

»  Ellis  V.  Marshall,  2  Masa.  269;  3  *  Walker  v.  R.  R.  Co.,  .34  Miss.  245. 

Am.  Dec.  49.  'N.  E.  Railroad  Co.  v.  Rodrigues,  10 

»  West  End  R.  R.  Co.  v.  Dameron,  Rich.  278. 

4  Mo.  App.  414.  6  St.  Charles  Mfg.  Co.  v.  Britton,  2 

>  Hamilton  Mat.  Ins.  Co.  v.  Hobart,  Mo.  App.  290. 

2  Gray,  643.  ^  Merrill  v.  Reaver,  50  Iowa,  404. 


737 


STOCKHOLDERS. 


736 

}S3  he  con- 
Y  from  hav- 
to  complete 
3  stock  sub- 
■ibers.-    An 
of"  several 
new  corpo- 
gbts  of  any 
y  the  raem- 
3  a  member 
pressly  con- 
Ithough  the 
bers  of  each 
scovor  stock 
;e  it,  though 

0  a  railroad 

1  was  not  a 
lough  made 
his  stock  at 
I  signed  an 
my,  instead 

afterwards 
is  subscrip- 
ion  are  un- 
ized  by  the 
stockholder 

7 


§442 


m:  ■•  ■  '-5  A 

ag  {[•    G'iice 

Btoc'      -IdfT, 

mohscor.  R.  R. 

'sons  became 

omise  by  the 

,  34  Miss.  245. 
V.  Rodrigues,  10 

)o.  V.  Britton,  2 

50  Iowa,  404. 


president  to  take  their  stock  off  their  hands  when  thoy  should 
require  it.  Held,  that  there  was  no  reciprocity  in  the  ivgroo- 
ment,  and  that  the  subscribers  could  not,  after  retaiiiinj?  the 
stock  until  the  concern  proved  disastrous,  call  upon  the  presi- 
dent to  fulfill  his  promise:  Slee  v.  Bloom,  19  Johns.  '15(j;  10 
Am.  Dec.  273.  Defendant  signed  a  paper  authorizing  J.  to 
subscribe  defendant's  name  to  a  subscription  for  shares,  iuul  J. 
entered  defendant's  name  in  a  list  of  stockholders  kept  I'y  the 
company,  but  did  not  subscribe  to  anything  containing  the  ele- 
ments of  a  contract  of  subscription.  Held,  that  an  action  by 
the  company  against  defendant  for  an  assessment  could  not  be 
maintained:  Grangers^  Market  Co.  v.  Vinson,  6  Or.  172. 

§  442.  Preliminary  Deposit  with  Subscription — When 
a  Condition  Precedent. — The  charters  and  general  laws 
often  provide  that  a  certain  money  deposit  must  be  made 
on  each  share  of  stock  subscribed.  Such  statutes  have 
been  differently  construed  by  the  courts,  some  holding 
that  actual  payment  of  the  required  deposit  is  a  condition 
precedent,  and  that  a  subscription  made  without  the  de- 
posit is  void;'  others  holding  that  such  provision  is  sim- 
ply for  the  benefit  of  the  corporation,  and  if  it  does  not 
object,  the  subscription  is  not  illegal  without  the  deposit, 
but  the  subscriber  is  bound.* 


'  Jenkins  v.  Union  Tp.  Co.,  1  Caioes 
Cas.  86;  Wood  v.  R.  R.  Co.,  32  Ga. 
273;  Higliland  Turnpike  Co.  v.  Mc- 
Kean,  llJohns.  100;  Goshen  Turnpike 
Co.  V.  Hurtin,  9  Johns.  218;  6  Am. 
Dec.  273;  Hibernia  Turnpike  Co.  v. 
Henderson,  8  Serg.  &  R.  219;  11  Am. 
Dec.  593;  Fiser  v.  R.  R.  Co..  32  Miss. 
359.  A  corporation  whose  charter 
and  by-laws  require  each  subscriber  to 
its  capital  stock  to  pay  a  given  percent- 
age of  his  subscription  in  cash,  at  the 
time  of  subscribing,  cannot  enforce 
payment  of  a  subscription  where  the 
required  cash  payment  has  not  been 
made:  State  Ins.  Co.  v.  Redmond,  1 
McCrary,  308.  Giving  a  promissory 
note  for  such  sum  is  not  payment  in 
such  case:  Leigh ty  v.  Susquehanna  etc. 
Co.,  14  Serg.  &  R.  434;  Boyd  v.  R.  R. 
Co.,  90  Pa.  St.  169. 

*  Piscataqua  Ferry  Co.  v.  Jones,  39 
N.  H.  491;  Mitchell  v.  R.  R.  Co.,  17 
Ga.  674.  A  sabscriber  to  the  stock  of 
Vol..  L -47 


a  corporation  cannot  escape  liability 
to  pay  his  subscription  on  the  ground 
that  he  did  not  pay  the  sum  required 
by  statute  to  be  paid  at  tlie  time  of 
subscription:  Pittsburg,  Wheeling  etc. 
R.  R.  Co.  V.  Applegate,  21  W.  Va. 
172.  Where  an  act  of  incorporation 
requires  tivo  per  cent  upon  .stock  to  bo 
paid  at  the  time  of  subscription,  if  the 
subscriber  does  not  then  pay  it,  but 
a  judgment  is  afterwarits  rumlered 
against  him  therefor,  which  he  satis- 
fies, he  cannot  object,  to  a  suit  brought 
for  other  assessments,  that  ho  did  not 
pay  the  five  per  cent  in  cash  when  he 
subscribed:  Hall  v,  R.  R.  Co.,  6  Ala. 
741.  The  statutory  requirement  that 
subscriptions  to  capital  stock  shall  be 
paid  in  cash  is  met  by  a  payment  by 
a  certified  check  on  a  national  bank, 
wherein  the  drawer  has  funds  sufficient 
to  meet  it:  In  re  Staten  Island  Rapid 
Transit  B.  B.  Co.,  37  Euu,  i22. 


§§  443,  444 


CORPORATIONS. 


738 


Illustrattdtts. — The  statntc  required,  as  a  condition  prece- 
dent to  the  incorporatior  of  a  company,  that  a  certain  amount 
of  stock  should  be  subscribed  for,  and  ten  per  cent  in  cash 
ther(;on  actually  and  in  good  faith  paid  in.  Ilchl,  that  payment 
of  the  ten  per  cent,  made  in  good  faith,  by  a  check  drawn  against 
a  sufiiciont  fund,  and  which  would  have  been  paid  on  presenta- 
tion, was  sufficient:  People  v.  It.  R.  Co.,  45  Cal,  300;  13  Am. 
Rep.  178.  The  charter  of  a  corporation  provided  that  its  capi- 
tal stock  should  be  "divided  into  shares  of  one  hundred  dollars 
each,  and  five  dollars  on  each  share  shall  be  paid  at  the  time 
of  subscribing."  Held,  that  the  payment  of  five  dollars  at  the 
time  of  subscribing  was  not  essential  to  the  validity  of  a  sub- 
scription for  stock:  Minneapolis  etc.  R.  R.  Co.  v.  Bassctt,  20 
Minn.  535;  18  Am.  Rep.  376.  A  subscribed  for  a  certain  num- 
ber of  shares  of  a  corporation  organized  under  an  act  requiring 
a  cash  payment  of  ten  per  cent  before  a  subscription  could  be 
received.  A  made  no  cash  payment,  but  gave  his  check  for 
ten  i.>er  cent  of  the  amount  of  his  subscription,  and  counter- 
manded payment  of  the  check  before  it  was  presented  for  pay- 
ment. Held,  that  there  was  no  binding  subscription:  Excelsior 
Grain  Binding  Co.  v.  Stayner,  61  How.  Pr.  456;  25  Hun,  91. 

§  443.  Proof  of  Contract  of  Subscription. — A  subscrip- 
tion made  in  writing  cannot  be  proved  by  parol,  unless 
the  absence  of  the  writing  is  accounted  for.^  The  terms 
of  the  written  contract  cannot  be  varied  or  added  to  by 
evidence  of  a  different  oral  agreement.''  The  name  of  the 
subscriber  on  the  stock-book  is  prima  facie  evidence  that 
he  is  a  subscriber,  and  of  the  number  of  shares  he  sub- 
scribed for.' 


§  444.  Liability  of  Stockholder  to  Contribute  his 
Share  of  Capital  Stock.  — A  person  subscribing  for  shares 
in  a  corporation  whose  charter  or  articles  provide  that 
each  share  shall  consist  of  a  certain  amount  becomes 
liable  to  pay  in  the  amount  of  shares  he  has  subscribed.* 
So  where  the  capital  is  divided  into  shares  of  a  certain 
amount  each,  an  agreement  to  be  a  member  implies  a  prom- 

>  Vreeland  v.  Stone  Co.,  29  N.  J.  »  Turnbull  v.  Payson,  95  U.  S.  421; 

Eq.  188;  Pitts,  etc.  R.  R.  Co.  v.  Gaz-  Marlborough  etc.  R.  R.  Co.  v.  Arnold, 

zam,  32  Pa.  St.  340.  9  Gray,  159;  69  Am.  Dec.  279. 

'  Morawetz  on  Corporationa,  sec.  *  Morawetz  on   Corporations,    seci 

269.  271. 


738 

tion  prece- 
lin  amount 
nt  in  cash 
at  payment 
iwn  against 
in  presenta- 
)6;  13  Am. 
lat  its  capi- 
IrhI  dollars 
at  the  time 
)llars  at  the 
ty  of  a  sub- 
Bdssett,  20 
ertain  nura- 
ct  requiring 
on  could  be 
s  check  for 
nd  counter- 
ited  for  pay- 
in :  Excelsior 
.  Hun,  91. 

A  subscrip- 
arol,  unless 
I  The  terms 
dded  to  by 
ame  of  the 
idence  that 
res  he  sub- 


ribute  his 
for  shares 
ovide  that 
it  becomes 
ubscribed.* 
a  certain 
[ies  a  prom- 

95  U.  S.  421; 
J  Co.  V.  Arnold, 
lee.  279. 
iorations,    tec. 


739 


STOCKHOLDERS. 


§444 


ise  to  contribute  to  the  capital  in  proportion  to  the  number 
of  shares  taken.*  One  who  agrees  to  take  and  fill  a  share 
in  the  capital  stock  of  a  corporation  is  liable  to  pay  all 
assessments  legally  made  on  that  shire.*  So  long  as  rhe 
corporate  organization  remains,  the  company  may  collect 
dues  to  pay  its  debts,  though  the  undertaking  for  which 
it  was  created  has  been  abandoned.^  But  in  Massachu- 
setts, where  a  person  agrees  to  take  a  certain  number  of 
shares,  without  promising  to  pay  assessments,  the  only 
remedy  on  his  failure  to  pay  an  assessment  is  to  sell  the 
shares, — he  cannot  be  sued  on  an  implied  promise  to  pay 
assessments.*  /  subscription  to  the  stock  with  the  under- 
standing of  the  president  that  the  stock  is  not  to  be  paid 
for  or  held,  but  is  to  bo  canceled,  is  a  fraud  upon  all  sub- 
sequent subscribers,  and  holds  the  party  thus  subscribing 
to  the  responsibilities  of  a  bona  fide  subscriber.'* 

Illustrations. — A  agreed  to  take  stock  in  a  corporation,  and 
then  withdrew  and  was  released,  and  his  cash  installment  was 
never  paid  nor  demanded  during  the  year  and  a  half  that  the 
corporation  did  business.  Twelve  years  afterwards  the  assignee 
in  bankruptcy  of  the  corporation  sought  to  hold  A  liable  for  an 
assessment.  Held,  that  he  was  not  liable,  although  his  name 
appeared  on  the  stock-book:  Cook  v.  Chittenden,  25  Fed.  Rep. 
545.  A  subscribed  to  stock,  stating  that  he  took  the  number 
of  shares  opposite  his  name,  and  agreed  to  pay  all  assessments 
to  be  made  by  the  directors.    It  was  shown  that  the  only  assess- 


>  Upton  V.  Tribilcock,  91  U.  S.  45; 
Webster  v.  Upton,  91  U.  S.  67;  Hart- 
ford etc.  R.  K.  Co.  V.  Kennedy,  12 
Conn.  514;  Fry  v.  R.  R.  Co.,  2  Met. 
(Ky.)  31U;  Kirksey  v.  Plank  Road  Co., 
7Fla.  23;  68  Am.  Dec.  426;  Peoria  etc. 
R.  R.  Co.  V.  Eking,  17  111.  429;  Carson 
V.  Arctic  Mining  Co.,  5  Mich.  288; 
Hughes  V.  Antietam  Mfg.  Co.,  34  Md. 
326;  Essex  Bridge  Co.  v.  Tuttle,  2  Vt. 
393;  Buffalo  etc.  R.  R.  Co.  v.  Dudley, 
14  N.  Y.  336;  Instone  v.  Bridge  Co., 
2  Bibb,  576;  6  Am.  Dec.  639;  Merri- 
mac  Mining  Co.  v.  Levy,  54  Pa.  St. 
227;  93  Am.  Dec.  697;  contra,  Belfast 
etc.  R.  R.  Co.  V.  Moore,  60  Me.  561; 
Same  v.  Cottrell,  66  Me.  185;  Atlantic 
Cotton  Mills  V.  Abbott,  9  Cnsh.  423. 

'  Buckfield  etc.  R.  R.  Co.  r.  Iriah,  39 


Me.  44;  Fry  v.  R.  R.  Co.,  2 Met.  (Ky.) 
314;  City  Hotel  v.  Dickinson,  6  Gray, 
586;  Buffalo  etc.  R.  R.  Co.  v.  Dudley, 
14  N.  Y.  336;  Dayton  v.  Borst,  31  N. 
Y.  435;  Northern  R.  R.  Co.  v.  Miller, 
10  Barb.  260;  Fort  Edward  etc.  Plank 
Road  Co.  V.  Payne,  17  Barb.  567;  Troy 
etc.  R.  R.  Co.  V.  Tibbits,  18  Barb. 
298;  Merrimac  Mining  Co.  v.  Levy,  54 
Pa.  St.  227;  93  Am.  Rep.  697. 

'  Hardy  v.  Merriweather,  14  Ind. 
203. 

♦  Andover  Tp.  Co.  v.  Gould,  6  Mass. 
40;  4  Am.  Dec.  80;  New  Bedford  Corp. 
V.  Adams,  8  Mass.  138;  5  Am.  Dec.  81 ; 
Katama  Land  Co.  v.  Jernegan,    126 

»  Robinson  v.  R.  R.  Co.,  32  Pa.  Si. 
334;  72  Am.  Dec.  792. 


§445 


COEPORATIONS. 


740 


ments  the  directors  were  authorized  to  raalco  were  calls  of  the 
capital  stock.  Held,  that  A  had  promised,  not  to  pay  at  once 
for  the  whole  sum  subscribed,  but  to  pay  such  assessments: 
Grosae  Me  Hotel  Co.  v.  V Anson,  42  N.  J.  L.  10.  Several  per- 
sons signed  a  paper  purporting  to  be  an  agreement  to  take  stock 
in  a  corporation,  which,  as  the  paper  recited,  was  about  to  be 
formed;  afterwards  the  paper  was  signed  by  the  president  and 
secretary  and  the  corporate  seal  affixed,  and  an  action  brought 
to  recover  from  one  of  said  subscribers  the  price  named  in  the 
paper.  The  complaint  did  not  state  when  the  company  was  in- 
corporated, and  it  was  not  shown  that  any  of  the  subscribers 
joined  in  its  formation  or  membership,  or  that  it  was  authorized 
to  sell  the  stock.  Held,  that  the  action  could  not  be  maintained: 
California  Sugar  Mfg.  Co.  v.  Schafer,  57  Cal.  396.  A  complaint 
by  a  turnpike  company  to  collect  a  stock  subscription  alleged 
that  the  same  was  "payable  in  such  installments  and  at  such 
times  as  the  company  may  direct";  that  it  had  "ordered  that 
the  subscription  be  paid  to  the  treasurer  in  three  equal  install 
ments  in  thirty,  sixty,  and  ninety  days  from  June  1, 1872";  and 
that  it  had  demanded  payment  of  the  same  on  April  1,  1874, 
with  which  demand  the  defendant  had  refused  to  comply.  Held, 
that  the  complaint  sufficiently  alleged  the  subscription  to  be  due 
and  unpaid,  and  that,  according  to  the  terms  of  the  call,  the 
money  became  due  without  either  publication  or  demand: 
Beckner  v.  Riverside  etc.  TumpiJce  Co.,  65  Ind.  468. 


§  446.  Liability  of  Sabscriber— Capital  Agreed  mnst 
be  Subscribed. — Where  the  capital  of  a  corporation  is 
fixed,  a  subscriber  cannot  be  called  upon  for  his  propor- 
tion until  the  whole  amount  has  been  subscribed,'  and 


*  Sfconebam  Branch  R.  B.  Co.  v. 
GoulJ,  2  Gray,  278,  the  court  saying: 
"  It  is  a  rule  of  law  too  well  settled  to 
be  now  questioned,  that  when  the  cap- 
ital stoclc  and  the  number  of  shares 
are  fixed  by  the  act  of  incorporation, 
or  by  any  vote  or  by-law  passed  con- 
formably to  the  act  of  incorporation, 
no  assessment  can  be  lawfully  made 
on  the  share  of  any  subscriber  until 
the  whole  number  of  shares  has  been 
taken:  Salem  Milldam  v.  Ropes,  6 
Pick.  23,  and  9  Pick.  187;  19  Am. 
Rep.  363;  Cabot  and  West  Spring- 
field Bridge  v.  Chapin,  6  Cusn.  60; 
Worcester  and  Nashua  R.  R.  Co.  v. 
Hinds,  8  Cush.  110.  This  is  no  arbi- 
bitrary  rule;  it  is  founded  on  a  plaia 


dictate  of  justice,  and  the  strict  prin- 
ciples regulating  the  obligation  of^con- 
tracts.  When  a  man  subscribes  a 
share  to  a  stock,  to  consist  of  one 
thousand  shares,  in  order  to  carry  on 
some  designated  enterprise,  he  binds 
himself  to  pay  a  thousandth  part  of 
the  cost  of  such  enterprise.  If  only 
five  hundred  are  subscribed  for,  and 
he  can  have  no  assurance  which  he  is 
bound  to  accept  that  the  remainder 
will  be  taken;  he  would  be  held,  if 
liable  to  assessment,  to  pay  a  five- 
hundredth  part  of  the  cost  of  the  en- 
terprise, besides  incurring  the  risk  of 
an  entire  failure  of  the  enterprise  it- 
self, and  the  loss  of  the  amount  ad- 
vanced towards  it." 


mEBmSSSBB^ 


740 

calls  of  the 
»  pay  at  onco 
assessments: 
Several  per- 
to  take  stock 
about  to  be 
(resident  and 
tion  brought 
lamed  in  the 
pany  was  in- 
e  Bubscribers 
IS  authorized 
maintained: 
A  complaint 
>tion  alleged 
and  at  such 
ordered  that 
qual  instali- 
[,  1872";  and 
pril  1,  1874, 
nply.  Held, 
ion  to  be  due 
the  call,  the 
or  demand: 


^reed  mnst 
poration  is 
his  propor- 
3ribed,'  and 

the  strict  prin- 
bligation  ot  con- 
in  aubscribea  a 

consist  of  one 
•der  to  carry  on 
-prise,  he  binds 
isandth  part  of 
rprise.  If  only 
cribcd  for,  and 
ace  which  he  is 

the  remainder 
luld  be  held,  if 

to  pay  a  five- 
I  cost  of  the  en- 
riag  the  risk  of 
le  enterprise  it- 
the  amount  ad- 


741 


STOCKHOLDERS. 


§§  446,  447 


the  amount  of  the  capital  must  be  subscribed  uncondi- 
tionally' and  in  good  faith.'*  An  unconditional  promise 
in  u  stock  subscription  to  pay  for  a  certain  number  of 
shares  at  par  is  binding,  though  the  amount  of  capital 
stock  was  not  fixed,  and  the  minimum  number  of  shares 
named  in  the  charter  was  not  ::ubscribed  for.' 

§446.    Other  Oonditions   Pre ledent.— Where  by  the 

charter  any  acts  are  required  to  be  performed  before  the 
subscribers  can  bo  called  on  to  pay,  these  acts  are  a  con- 
dition precedent  to  the  liability  of  the  subscribers  on 
their  stock  subscriptions.*  One  does  not  become  liable 
as  stockholder  in  a  corporation  by  the  issuing  to  him  by 
the  corporation  of  stock  when  the  entry  in  the  stock-book 
and  the  other  records  of  the  corporation  show  that  such 
stock  was  issued  as  collateral  security.  To  mako  one 
answerable  as  a  stockholder  to  creditors  of  a  corporation, 
he  must  be  a  stockholder  as  between  himself  and  the  cor- 
poration.^ A  contract  by  which  the  promoters  of  a  cor- 
poration agreed,  with  a  subscriber  for  stock,  to  buy  from 
him,  within  one  year  from  the  date  of  the  contract,  the 
stock  taken  by  him,  at  the  price  paid  by  him  therefor,  is 
valid.* 

§  447.    Who  may  Make  Assessments  and  Calls. — If  the 

charter  requires  that  the  assessments  and  calls  be  made  bj'^ 
the  board  of  directors,  this  must  be  done  before  the  sub- 
scriber can  be  made  liable.^  The  number  and  qualifica- 
tion of  directors  fixed  by  the  charter  must  be  adhered  to 
in  order  to  make  calls  valid;  but  if  payments  were  made 


'  Central  Tp.  Co.  v.  Valentine,  10 
Pick.  142. 

*  Lewey's  Island  R.  R.  Co.  v.  Bolton, 
48  Me.  451;  77  Am.  Dec.  236;  Phillips 
V.  Covington  etc.  Bridge  Co.,  2  Met. 
(Ky.)219. 

*  Skowhegan  etc.  R.  R.  Co.  v.  Kins- 
man, 77  Mo.  370. 

*  Carlisle  ts  R.  R.  Co.,  4  Ala.,  N.  S., 
76. 


*  Union  Sav.  Ass'n  v.  Seligman,  92 
Mo.  635;  1  Am.  St.  Rep.  776. 

«  Meyer  v.  Blair,  109  N.  Y.  600;  4 
Am.  St.  Rep.  500. 

'  Bouton  V.  Dry  Dock  Co.,  4  E.  D. 
Smith,  420;  Banet  v.  R.  R.  Co.,  13 
111.  513;  Pike?;.  R.  R,  Co.,  67  Me.  445; 
Macon  etc.  R.  K  Co.  v.  Vason,  57 
Ga.  314. 


f 


J 


§448 


CORPORATIONS. 


742 


by  any  stockholder  on  calls  issued  by  such  or  similar  di- 
rectors, such  j)ayraents  will  bo  construed  to  show  aequi* 
csccnco  in  their  conduct  and  authority,  past  and  future, 
und  the  stockholder  so  acquiescing  cannot  afterwards  ob- 
ject.* Paid  corporate  stock  cannot  be  assessed  without 
special  authority  in  the  charter  or  by  statute.''  When 
stock  is,  by  contract,  payable  in  installments,  as  called 
for  by  the  board  of  directors,  the  calls  should  be  clearly 
proved,  and  the  recovery  should  be  limited  to  the  aggre- 
gate amount  of  the  several  colls  not  met  by  payment.* 


§  448.  Notice  of  Time  and  Place  of  Payment— When 
Requisite  and  how  Given.  —  Notice  of  the  time  and  place 
for  the  payment  of  the  assessment  must  be  given  if  the 
charter  so  provides.*  A  provision  that  notice  is  to  be 
given  in  a  particular  mode  is  directory,  and  actual  notice 
given  in  another  manner  is  good.*  No  demand  for  the 
payment  of  an  assessment  need  bo  made  other  than  the 
giving  of  the  notice  required  by  the  by-laws  of  the  cor- 
poration, in  order  to  maintain  an  action  therefor."  When 
tho  charter  expressly  requires  notice  to  be  given  in  cer- 
tain newspapers,  and  for  a  certain  number  of  days,  before 
tho  calls  for  installments  shall  be  valid,  the  company 
must  show  a  compliance  with  such  condition  precedent, 
before  a  recovery  can  be  had  on  such  calls.''    Where  an 


'  Macon  etc.  R.  R.  Co.  v.  Vaaon,  67 
Ga.  314. 

'  Atlantic  De  Laine  Co.  v.  Mason, 
6  R.  I.  463. 

*  South  Georgia  etc.  R.  R.  Co.  v, 
Ayrcs,  50  Ga.  2.m 

*  Macon  etc.  R.  R.  Co.  v.  Vason,  57 
Ga.  314;  Lewey's  Island  R.  R.  Co.  v. 
Bolton,  48  Mo.  451;  77  Am.  Dec.  236; 
Tomlin  V.  R.  R.  Co.,  23111. 429.  Where 
tho  charter  of  a  company  requires  no- 
tice as  a  condition  precedent  to  suits 
for  installments  of  stock  subscriptions, 
and  there  is  no  waiver  of  the  notice, 
it  must  he  given  as  required:  Heastoa 
V.  R.  R.  Co.,  IG  Ind.  2/9;  79  Am.  Dec, 
430. 


*  Miss.  etc.  R.  R.  Co.  v.  Gaster,  20 
Ark.  455;  Jones  v.  Siason,  6  Gray, 
288;  Lexington  etc.  R.  R.  Co.  v. 
Chandler,  13  Met.  311;  Danbury  etc. 
R.  R.  Co.  V.  Wilson,  22  Conn.  435. 
A  contract  to  pay  for  stock  in  install- 
ments as  assessed  is  a  contract  to  pay 
them  on  demand,  and  the  bringing  of 
a  suit  is  a  sufficient  demand:  Smith 
V.  R.  R.  Co.,  12  Ind.  61;  Eakright  v. 
R.  R.  Co.,  13  Ind.  404;  Breedlove  v. 
R.  R.  Co.,  12  Ind.  114. 

•  Penobscot  R.  R.  Co.  v.  Duramer, 
40  Me.  172;  63  Am.  Dec.  654. 

'  Macoa  etc.  R.  R.  Co.  v.  Vason,  57 
Ga.  314. 


J 


742 


743 


STOCKHOLDERS. 


§448 


Hilar  di< 
w  acqui- 
1  future, 
rards  ob- 
without 
■  When 
IS  called 
0  clearly 
10  ftggre- 
icnt.' 

— When 

nd  place 

3n  if  the 

is  to  be 

al  notice 

d  for  the 

than  the 

the  cor- 

«    When 

in  cer- 

s,  before 

ompany 

ecedent, 

here  an 


Q, 


Gaster,  20 
6  Gray, 
K.  Co.  V. 
viibury  etc. 
Conn.  435. 

in  install- 
ract  to  pay 
bringing  of 
md;  Smith 
^kright  V. 
reetUove  v, 

Duinmer, 
154. 
Vasoo,  57 


act  of  incorporation  roqnircs  that  the  place  of  payna-nt^ 
of  stock  shall  bo  designated  in  tho  notice  ro(iiuriu;;  V'<^y- 
uient,  ii  notice  directing  payment  to  be  niudo  to  A  IJ, 
residing  in  the  city  of  D,  is  j>r/n?a  facie  a  conipliunco 
with  the  statute.'  A  statutory  provisioii  that  the  direc- 
tors may  require  subscriptions  to  be  paid  "in  such  in- 
stallments as  they  may  deem  proper,"  imports  that  a 
8ubscri[)tion  does  not  fall  due  until  notice  of  a  call 
therefor  made  by  tho  directors.  Proof  that  it  was  duly 
mailed  to  a  subscriber  makes  a  prima  facie  case  of  noti- 
fication.' If  the  charter  does  not  require  notice  to  bo 
given  to  the  share-holders  after  a  call  has  been  voted,  no 
notice  is  necessary  to  hold  a  share-holder  Uablo  to  pay 
tho  amount  assessed.^ 

Illustrations.  —  A  corporation  was  limited  to  fifteen  per 
cent  calls  per  annum,  and  tun  per  cent  had  already  boon  called. 
Held,  itiunaterial,  that  tho  last  (;all  did  not  spociiy  tho  amount, 
time,  or  place  of  payment,  tho  accompanying  notice  i)ointing 
out  the  time  and  place;  An(hrir><  v.  R.  R.  Co.,  14  Ind.  lOl).  A 
person  subscribed  for  certain  shares  of  stoc^k,  agreeing  to  ])ay 
all  charges  and  assessments  regularly  levied  or  assessed  by  tho 
board  of  directors,  and  no  assessment  or  call  was  made.  IlchJ, 
in  suit  to  recover  tho  wliolo  amount  of  tho  price  of  tho  stock, 
that  tho  company  could  only  recover  tho  price  after  assessment 
or  call:  Grouse  Ide  Hotel  Co.  v.  F Anson,  43  N.  J.  L.  442.  Sub- 
scribers to  the  stock  of  a  railroad  company  stipulated  to  ]Kiy 
the  first  installment  after  the  work  should  be  commenci'd,  "as 
shall  hereafter  bo  directed  by  tho  directors  of  said  company." 
There  was  no  stipulation  for  notice  to  the  subscribers  of  the 
calling  in  of  the  installment.  Held,  that  no  proof  of  notice  or 
demand,  other  than  an  order  passed  as  above  by  the  directors, 
and  entered  on  the  record-book,  was  necessary  in  a  suit  against 
a  subscriber  to  recover  said  installment:  Ross  v.  R.  R.  Co.,  6 
Ind.  2'J7. 


» Troy  Turnpike  etc.  R.  R.  Co.  v. 
McChesnuy,  21  Wend.  296. 

»  Braddock  v.  R.  R.  Co.,  45  N.  J.  L. 
363. 

*  Lake  Ontario  etc.  R.  R.  Co.  v. 
Mason.  16  N.  Y.  451;  Peake  r.  R.  R. 
Co.,  18  111.  88;  Eakrightv.  R.  R.  Co., 
13  lad.  404;  Wilaoa  v.  R.  R.  Co.,  33 


Ga.  4G6;  Grubbv.  Mahoning  Nav.  Co., 
14  Pa.  St.  302.  Unless  notice  of  as- 
sesamenta  and  calls  is  rcffuired  by  tlie 
charter,  it  is  not  an  indispensable  re- 
quisite of  a  suit  to  collect  tlnj  stock 
subscriptions:  Eppes  v.  R.  R.  Co.,  35 
Ala.  33;  Wilson  v.  R.  R.  Co.,  33  Ga. 
466. 


§§  449,  450 


CORPORATIONS. 


744 


§  449.  Liability  of  Subscriber  after  Abandonment  of 
Enterprise. — Where  the  object  of  the  corporation  is  aban- 
doned, no  further  payments  can  be  called  for  from  the 
subscriber/  except  for  the  purpose  of  paying  the  debts 
and  winding  up  the  organization.'^  If  a  corporation  does 
not  commence  bona  fide  the  undertaking  for  which  it  was 
incorporated,  within  the  time  prescribed  in  the  act  of 
incorporation,  it  can  maintain  no  action  against  sub- 
scribers who  do  not  assent  thereto.'  Where  no  call  is 
made  for  a  subscription  to  stock  in  a  railroad  company 
until  after  more  than  six  years  from  the  time  of  subscrip- 
tion, the  law  will  presume  that  the  company  meant  to 
abandon  the  enterprise,  and  will  not  enforce  recovery.'" 
If  a  corporation  chartered  to  construct  and  carry  on  the 
business  of  a  railroad  sells  the  road,  without  authority  of 
law,  to  another  company,  it  cannot  collect  unpaid  sub- 
scriptions of  stock  from  subscribers  who  did  not  consent 
to  the  sale." 

Illustrations.  — A  subscription  to  the  stock  of  a  hotel  com- 
pany, whose  charter  required  completion  of  the  hotel  within  a 
prescribed  time,  otherwise  the  franchise  to  be  null  and  void, 
held,  not  released  by  failure  to  complete  the  hotel  within  such 
time:  Union  Hotel  Co.  v.  Hersei,  79  N.  Y.  454. 


§450.    Subscriptions  upon  Conditions  Precedent. — A 

subscription  to  stock  may  be  made  upon  a  condition  to 
be  performed,  and  when  so,  the  subscriber  does  not  be- 
come a  member  of  the  company  until  the  condition  is 
performed."     Thus  a  subscription  may  be  made  upon  the 


'  McCully  I'.  R.  R.  Co.,  32  Pa.  St.  32. 

"Pluenix  Co.  -..  Badger,  67  N.  Y. 
294;  McMillans.  R.  R.  Co.,  15 B.  Mon. 
218;  61  Am.  Dec.  181;  Smith  w.  Gower, 
2  Duvall,  17;  Hardy  v.  Merriwether, 
14  lud.  203. 

»  McCully  V.  R.  R.  Co.,  32  Pa.  St.  25. 

*  Pittsburgh  etc.  R.  R.  Co.  v.  Byers, 
32  Pa.  St.  22. 

"  South  Georgia  etc.  R.  R.  Co.  v. 
Ayres,  56  Ga.  230. 

"Ticoiiic   Water   Co.  v.  Lang,  63 


Me.  480;  Chase  v.  R.  R.  Co.,  38  111 
218;  Evans ville  etc.  R.  R.  Co.  v. 
Shearer,  10  Iiid.  240;  Goflf  v.  Win 
cheater  College,  6  Bush,  443;  Cham 
berlain  v.  R.  R.  Co.,  15  Ohio  St.  225 
New  Albany  etc.  R.  R.  Co.  v.  McCor 
mick,  10  Ind.  499;  71  Am.  Dec.  337 
Keller  j>.  Johnson,  11  Ind.  3.37;  71  Am 
Dec.  355.  A  conditional  disposition  of 
stock  may  be  made  by  the  president 
and  directors,  and  where  suuscribers 
agree  to  take  atock  upon  condition 


744 


745 


STOCKHOLDERS. 


450 


>nment  of 

Q  is  aban- 
frora  the 
the  debts 
ition  does 
ich  it  was 
he  act  of 
[list  sub- 
10  call  is 
company 
subscrip- 
Qieant  to 
recovery,* 
ry  on  the 
,hority  of 
)aid  sub- 
i  consent 


lotel  com- 
1  within  a 
and  void, 
ithin  such 


lent. — A 

idition  to 
i  not  be- 
dition  is 
upon  the 

Co.,  38  111. 

R.  Co.  V. 
oflf  V.  Win- 
4i3;  Cham- 
)hio  St.  225; 
).  I).  McCor- 
1.  Dec.  337; 
337;  71  Am. 
ispositiou  of 
le  president 

subscribers 
a  couditioa 


condition  that  the  company  shall  not  be  organized  or  do 
business  until  all  or  a  certain  amount  of  the  stock  shall 
be  subscribed  for.  In  such  a  case  the  subscription  is  not 
collect olo  until  the  required  amount  of  stock  has  been 
taken;'  so  of  a  subscription  conditioned  that  a  railroad 
shall  be  located  on  a  certain  line  or  within  a  certain  dis- 
tance of  a  particular  place.^  Where  stock  in  a  corpora- 
tion is  subscribed  on  condition  that  the  citizens  of  certain 
towns  shall  take  a  certain  amount,  no  assessment  can  be 
made  until  the  condition  is  complied  with.'  A  precedent 
condition  that  five  dollars  per  share  shall  be  paid  by  sub- 
scribers is  not  satisfied  by  a  subscriber  giving  a  note  for 
his  subscription.* 

The  subscriber  cannot  show  in  defense  that  some  of  the 
persons  who  have  subscribed  to  make  up  the  requisite 
amount  are  noi  responsible,*  or  that  a  formal  subscription 
was  not  made,  provided  the  requisite  amount  was  raised.* 
Where  a  subscription  to  the  funds  of  a  college  is  made 
upon  the  condition  that  a  certain  sum  shall  be  raised, 
the  liability  of  the  subscriber  is  fixed  when  that  sum  is 


that  the  road  shall  be  so  located  as  to 
make  a  designated  town  a  point,  they 
become  unconditional  stockholders 
when  the  read  is  thus  located:  Mc- 
Millan V.  R.  R.  Co.,  15  B.  Mor  ?18; 
61  Am.  Dec.  181. 

'  Philadelphia  etc.  R.  R.  Co.  v.  Hick- 
man, 28  Pa.  St.  318;  Cassv.  R.  R.  Co., 
80  Pa.  St.  31 ;  Brewers'  Co.  v.  Burger, 
17  N.  Y.  Sup.  Ct.  50;  Penobscot  etc. 
R.  R.  Co.  y.  Dunn,  39  Me.  587;  Ridge- 
field  etc.  R.  R.  Co.  V.  Brush,  43  Conn. 
80;  Penobscot  etc.  R.  R.  Co.  v.  White, 
41  Mo.  512;  GO  Am.  Dec.  257;  Cabot 
etc.  Bridge  v.  Chapin,  0  Cush.  50. 

^  Chapman  v.  R.  R.  Co.,  6  Ohio  St. 
119;  Evansville  etc.  R.  R.  Co.  v. 
Shearer,  10  Ind.  244;  O'Neal  v.  King, 
3  Jones,  517;  Jewett  v.  R.  R.  Co., 
10  Ind.  539;  North  Missouri  R.  R. 
Co.  V.  Winkler,  29  Mo.  318;  Mar- 
tin V.  R.  R.  Co.,  8  Fla.  370;  73  Am. 
Dec.  713;  New  ABjany  R.  R.  Co. 
V.  McCormick,  10  Ind.  499;  71  Am. 
Dec.  337;  Rhey  v.  R,  R.  Co.,  27 
Fa.  St.  261;  Cumberlaad  etc.  B.  B. 


Co.  V.  Baab,  9  Watts,  458;  30  Am. 
Dec.  132;  Parker  v.  Thotnas,  19  Ind. 
213;  81  Am.  Dec.  385.  In  an  action 
against  a  delinquent  subscriber  for 
stock,  the  defendant  may  prove  that 
before  he  subscribed  for  any  stock 
the  president  and  one  of  the  directors 
represented  to  him  that  the  road  would 
be  so  located  as  to  run  near  or  through 
his  plantation;  that  he  thereupon  sub- 
scribed for  stock  in  the  company;  and 
that  the  road  was  not  located  accord- 
ing to  said  representations:  Rives  v. 
Plank  Road  Co.,  30  Ala.  92.  A  sub- 
scription to  a  road  is  subject  to  the 
power  of  the  legislature  to  change  its 
location:  Irvin  v.  Turnpike  Co.,  2 
Penr.  &  W.  406;  23  Am.  Doc.  53. 

*  Ticonic  Water  Power  Co.  v.  Lang, 
63  Me.  480. 

♦Boyd  V.  R.  R.  Co.,  90  Pa.  St. 
169. 

°  Penobscot  etc.  R.  R.  Co.  v.  White, 
41  Me.  512. 

^  Springfield  R.  R.  Co.  v.  Sleeper, 
121  Maas.  29. 


450 


CORPOBATIONS, 


746 


raised;  and  a  subsequent  misapplication  of  the  funds  will 
not  relieve  him.^  When  it  is  a  condition  precedent  in  a 
contract  for  the  subscription  to  the  capital  stock  of  a  cor- 
poration that  other  stock,  to  a  given  amount,  shall  have 
been  taken,  that  condition  is  waived  by  the  conduct  of 
the  parties  in  paying  the  first  installment  on  the  sub- 
scription, voting  the  whole  stock  at  an  election  for  officers, 
and  acting  as  officers  in  the  corporation.'*  In  an  action  to 
recover  the  whole  amount  of  a  subscription  payable  in 
installments,  the  company  may  recover  an  installment 
payable  without  any  proviso  or  conditions,  though  it 
should  fail  in  proving  the  right  to  the  other  installments.' 

Illustrations. — A  bridge  company  rebuilt  its  bridge  across 
a  river,  at  a  point  one  mile  from  its  former  location,  without 
the  assent  of  one  who  subscribed  one  hundred  dollars  to  the 
rebuilding  at  the  old  site.  Held,  that  he  was  not  liable  upon 
the  subscription:  Fremont  Ferry  etc.  Co.  v.  Fuhrwan,  8  Neb.  99. 
A  subscribed  in  aid  of  a  railroad  to  be  built,  the  company  in 
consideration  of  the  subscriptions  agreeing  to  deposit  collaterals 
to  secure  them.  After  A  had  paid  some  installments  of  his 
subscription,  the  company  made  such  a  disposition  of  the  col- 
laterals as  to  put  them  beyond  the  control  of  the  subscribers  in 
the  manner  originally  contemplated.  Held,  that  A  was  released 
from  his  obligations:  Reusens  v.  Mexican  Nat.  Construction  Co., 
22  Fed.  Rep.  522.  A  stock  subscription  was  on  condition  that 
the  road  be  located  through  A.  Upon  representations  that  the 
company  was  about  so  to  locate  it,  notes  were  given  for  the 
stock.  Held,  that  the  payment  of  the  notes  was  precedent  to 
building,  and  that  the  intent  of  the  company  at  the  time  the 
note  was  given  not  so  to  locate  was  no  defense,  so  long  as  they 
had  not  located  elsewhere,  nor  otherwise  disabled  themselves 
from  locating  through  A:  Keller  v.  Johnson,  11  Ind.  337;  71 
Am.  Dec.  737.  An  agreement  to  take  shares,  etc.,  and  that  "  as 
soon  as  the  subscriptions  to  the  amount  of  one  hundred  and 
fifty  thousand  dollars  of  the  capital  stock  have  been  secured," 
etc.,  "the  company  shall  be  organized,"  held,  not  to  be  bind- 
ing where  an  organization  was  made  on  only  a  one-hundred-and 
thirty-thousand-dollar  subscription:  Santa  Cruz  R.  R.  Co.  v. 
Schwartz,  53  Cal.  106.    A  contract  of  subscription  to  stock  pro- 

'  Franklin  College  v.  Hurlburt,  28  '  Railroad  Co.  v.  Hatch,  1  Disn.  84. 
Ind.  344;  Topeka  etc.  Co.  v.  Cum-  "  St.  Louis  etc.  R.  R.  Co.  v.  Eakius, 
mings,  3  Kan.  55.  30  Iowa,  279. 


746 

'unds  will 
(lent  in  a 
:  of  a  cor- 
hall  have 
)nduct  of 

the  sub- 
r  officers, 

action  to 
iiyable  in 
stallment 
hough  it 
illments.' 

dge  across 
n,  without 
irs  to  the 
able  ujwn 
8  Neb.  99. 
mipany  in 
collaterals 
nts  of  his 
f  the  col- 
;criber8  in 
8  released 
(ction  Co., 
it  ion  that 

that  the 
n  for  the 
cedent  to 

time  the 
g  as  they 

emselves 

o  o  7  .      T 1 
OOi]       <1 

that  "  as 
idred  and 
secured," 

bo  bind- 
idred-and 
R.  Co.  V. 
lock  pro- 

1  Disn.  84. 
V.  Eakius, 


747 


STOCKHOLDERS. 


§450 


vided  for  the  building  of  the  A  railroad  according  to  the  sur\-ey 
made  by  the  B  railroad,  the  original  route  running  within 
five  hundred  feet  of  M.'s  mill.  This  route  was  changed  so  as  to 
make  it  run  twelve  hundred  feet  from  the  mill.  In  suit  against 
M.  for  the  amount  of  his  subscription,  held,  that  he  might  show 
that  this  alteration  in  the  route  was  as  to  him  and  his  interest 
a  material  variation:  Moore  v.  R.  R.  Co.,  94  Pa.  St.  324.  The 
action  was  for  a  subscription  to  railroad  stock,  which  contained 
the  condition  that  plaintiff  would  "put  the  said  road  under  con- 
tract in  one  year  from  September  1,  1858,"  "with  the  condition 
to  be  built"  to  a  certain  town  "within  twenty  months  from  the 
time  of  letting  such  contract."  Held,  that  this  was  a  condition 
precedent,  and  that  a  completion  of  the  road  upon  the  first  day 
of  September,  1858,  without  letting  the  contract  within  the  time 
limited,  or  with  the  conditions  stipulated,  was  not  a  sufficient 
compliance  therewith  to  entitle  plaintiff  to  recover:  Burlington 
etc.  R.  R.  Co.  V.  Boestler,  15  Iowa,  555.  A  subscription  to  the 
stock  of  a  hotel  company  was  made  on  condition  that  "the  sum 
of  two  hundred  thousand  dollars  be  subscribed  by  the  citizens 
of  Buffalo."  Held,  1.  That  payment  on  each  subscription  was 
a  ratification  thereof;  2.  That  a  subscriber  whose  domicile  was 
in  Batavia,  but  who  was  engaged  in  business  in  Buffalo,  and 
spent  nearly  all  his  time  there,  was  a  citizen  of  Buffalo  within 
the  meaning  of  the  condition ;  3.  That  a  subscription  signed  by 
B.  Spencer,  in  the  name  of  B.  and  S.  M.  Spencer,  was  within 
the  condition,  he  being  a  resident  of  Buffalo,  and  liable  on  his 
individual  subscription,  in  case  there  was  no  firm  by  that  name, 
nor  authority:  UnionHotelCo.v.  Hersee,l'd  N.  Y.  454;  35  Am. 
Rep.  536.  The  charter  of  a  railroad  company  authorized  the 
company  to  organize,  and  proceed  to  construct  the  road,  when 
two  hundred  thousand  doUarn  should  be  subscribed.  The  cor- 
porators made  their  subscriptions  conditional  upon  the  whole 
amount  required  for  completion  of  the  road  being  subscribed. 
Held,  that  this  condition  was  not  inoperative,  as  being  repugnant 
to  the  provision  of  the  charter:  Ridgefield  etc.  R.  R.  Co.  v.  IJrush, 
43  Conn.  86.  A  subscription  was  upon  condition  that,  "'when- 
ever a  sum  sufficient,  in  the  judgment  of  the  stockholders,  shall 
be  subscribed,  there  shall  be  a  meeting  of  them  called,  and  a 
permanent  organization  eflfected."  Held,  not  binding  upon  sub- 
scribers until  a  permanent  organization  had  been  effected,  with 
their  consent,  and  an  expression  of  opinion  obtained  from  the 
stockholders  as  to  the  sufficiency  of  the  amount  subscribed  to 
effect  the  object  proposed:  Goffv.  Winchester  College,  6  Bush, 
443.  The  terms  of  a  subscription  were,  that  a  certain  percentage 
of  the  estimated  cost  of  sections  of  a  railroad  should  be  sub- 
scribed for  by  responsible  persons  before  the  construction  was 
commenced.    Held,  that  if  the  subscriptions  were  obtained  in 


§451 


CORPORATIONS. 


748 


good  faith,  from  persons  apparently  able  to  pay,  the  fact  that 
they  finally  proved  to  be  of  less  value  will  not  render  the  pro- 
ceedings illegal:  Penobscot  R.  R.  Co.  v.  Dummer,  40  Me.  172;  63 
Am.  Dec.  054.  A  note  was  given  for  a  subscription  to  a  railroad, 
conditioned  that  it  should  not  be  payable  until  work  should  be 
commenced  on  the  end  of  the  same  road  south  from  Indian- 
apolis; the  note  was  given  upon  the  representation  of  the 
agents  of  the  company  that  such  work  had  been  commenced, 
when  in  fact  it  had  not.  Held,  that  the  commencement  of  the 
work  at  the  point  named  was  a  condition  precedent  to  the 
right  of  the  company  to  demand  the  subscription;  and  the  note, 
having  been  obtained  upon  the  false  representation  that  this 
condition  had  been  complied  with,  was  void:  Taylor  v.  Fletcher, 
15  Ind.  80.  A  condition  in  a  contract  of  subscription  to  the 
stock  of  a  railroad  company  was  that  the  road  should  bo  located 
and  constructed  along  a  designated  route.  Held,  not  a  condition 
precedent,  requiring  the  actual  construction  and  completion  of 
the  road  before  payment  could  be  required,  but  only  that  when 
the  road  was  located  and  constructed  it  should  occupy  the 
route  designated:  Miller  v.  R.  R.  Co..,  40  Pa.  St.  237;  80*  Am. 
Dec.  570. 


§451.  Subscriptions  upon  Conditions  —  When  Sub- 
scriber Held  Unconditionally. — Where  a  subscriber  acts  as 
a  member,  or  in  any  way  waives  the  condition,  it  will  be  no 
defense  for  him  to  say  that  his  subscription  was  upon  a 
condition  precedent,  or  upon  special  terms.'  The  giving 
of  absolute  notes  for  the  amount  of  a  subscription  does 
not  of  itself  amount  to  a  waiver  of  the  maker's  right  to 
have  the  road  located  as  he  had  stipulated,  before  payment 
of  the  notes  can  be  compelled.''  Nor  does  a  failure  to 
notify  the  company  of  an  intention  to  insist  on  the  per- 
formance  of  the  condition  amount  to  a  waiver.^  It  is 
held  in  some  cases  that,  under  a  charter  authorizing  ab- 
solute subscriptions  for  stock  in  a  corporation  for  the 
construction  of  a  public  highway,  subscriptions  condi- 
tioned on  the  adoption  of  a  particular  locality  or  terminus 


'  Morawetz  on  Corporations,  sec. 
297;  Baviuqton  v.  R.  R.  Co.,  34  Pa. 
St.  3,jS;  Pittalnirg  etc.  R.  R.  Co.  v. 
Bi^gjir,  34  Pa.  St.  455;  Lane  v.  Brain- 
era,  30  Conn.  505. 


»  Parker  v.  Thomas,  19  Ind.  213;  81 
Am.  Dec.  385.  But  see  O'Uonald  c. 
R.  R.  Co.,  14  Ind.  259. 

'  R.  R.  Co.  V.  Boestler,  15  Iowa, 
555. 


748 

e  fact  that 
or  the  pro- 
le. 172;  63 

a  railroad, 
c  should  be 
om  Indian- 
ion  of  the 
ommonced, 
nient  of  the 
lent  to  the 
id  the  note, 
n  that  this 

V.  Fletcher, 
tion  to  the 
1  be  located 
a  condition 
mpletion  of 
f  that  when 
occupy  the 
57;  80  Am. 


rhen    Sub- 

ber  acts  as 
;  will  be  no 
as  upon  a 
rhe  giving 
ption  does 
s  right  to 
e  payment 
failure  to 
)n  the  per- 
er.^  It  is 
)rizing  ab- 
)n  for  the 
3ns  condi- 
V  terminus 

9  Ind.  213;  SI 
e  O'Uonald  i: 

ler,  15  Iowa, 


749 


STOCKHOLDERS. 


§451 


are  void  as  against  public  policy.*  It  has  also  been  held 
that  commissioners  appointed  to  receive  subscriptions  are 
agents  with  limited  powers,  incapable  of  offering  any  other 
terms  to  a  subscriber  than  those  prescribed  by  the  legis- 
lature, and  therefore  that  conditions  attached  by  them  to 
subscriptions  for  stock  not  so  authorized  are  nugatory.' 
A  private  agreement,  that  after  passing  the  examination 
of  the  commissioners  provided  for  by  law%  for  the  purpose 
of  ascertaining  the  fact  of  the  subscription  of  the  proper 
amount  of  capital,  it  should  be  given  up  and  a  lesser  one 
substituted,  is  a  fraud  upon  the  law,  and  the  maker  re- 
mains liable,  though  such  note  be  surrendered  and  de- 
stroyed.^ A  provision  that  seventy-five  per  cent  of  the  cost 
of  a  railroad  shall  be  subscribed  by  responsible  persona 
before  it  can  commence  to  construct  its  road  will  not  in- 
validate assessments  on  stock  subscribed,  because  some  of 
the  subscriptions  necessary  to  make  up  that  amount  turn 
out  to  be  worthless,  if  such  subscriptions  were  obtained  in 
good  faith.*  Parol  evidence  is  not  admissible  to  prove  a 
condition  not  contained  in  the  written  subscription.* 

Illustrations.  —  A  subscription  was  on  condition  that  if 
the  C.  railroad  should  be  permanently  located  and  constructed 
through  L.  "we  will  pay  the  sum  set  opposite  our  names  to 
M.,  as  trustee,  to  be  applied  by  him  only  toward  paying  the 
damages  and  expenses  which  shall  be  incurred  in  acquiring  the 
right  of  way  or  lands  therefor,  and  depot  grounds  in  F.  County." 
Held,  not  to  render  the  completion  of  the  road  a  condition  pre- 
cedent to  the  payment  of  the  money:  Berryman  v.  Cincinnati 
Southern  R'y  Trustees,  14  Bush,  755.  Subscribers  to  the  stock 
of  a  railroad  company  gave  their  notes  for  the  amounts  of  sub- 


^  Butternnta  and  0.  T.  Co.  v.  North, 
1  Hill,  518;  Cumberland  V.  R.  R.  Co.  v. 
Baab,  9  Watts,  458;  .36  Am.  Dec.  132; 
Fort  Edward  etc.  P.  Co.  v.  Payne,  15 
N.  Y.  583.  But  see  Racine  etc.  Bank 
V.  Ay  res,  12  W^ia.  512. 

•^  Bedford  R.  R.  Go.  v.  Browser,  48 
Pa.  St.  29;  Pittsburg  etc.  R.  R.  Co. 
V.  Biggar,  34  Pa.  St.  455;  Bavington 
V.  R.  R.  Co.,  34  Pa.  St.  358. 

^Tuckerman  v.  Brown,  33  N.  Y. 
297;  88  Am.  Dec.  386. 


*  Penobscot  R.  R.  Co.  v.  Dummer, 
40  Me.  172;  63  Am.  Dec.  654. 

»  Thigpen  v.  R.  R.  Co.,  32  Miss.  348; 
Madison  etc.  R.  R.  Co.  lu  Stevens,  6 
Ind.  379;  Cunningham  v.  R.  R.  Co., 
2  Head,  23;  North  Carolina  K  R.  Co. 
V,  Leach,  4  Jones,  'MQ;  .Johnson  n.  R.  R. 
Co.,  9  Fla.  299;  Kennebec  etc.  R.  R.  Co. 
V.  Waters,  34  Me.  369;  Roche  v.  Roan- 
oke C.  Seminary,  56  Ind.  198;  Noble 
V.  Callender,  20  Ohio  St.  199;  Stewaids 
V.  Town,  49  Vt.  29. 


§451 


CORPORATIONS. 


750 


Bcriptions,  payable  when  the  road  should  be  completed,  but  were 
subsequently  induced  to  take  up  these  notes  and  give  new  ones, 
payable  in  four  years,  in  order  to  enable  the  company  to  carry 
out  a  contract  for  the  completion  of  the  road,  and  upon  a  confi- 
dent but  honest  expression  of  opinion  by  its  officers  that  if  they 
would  do  so  the  road  would  be  completed  under  such  contract 
in  less  than  four  years.  Held,  that  the  subscribers  were  liable 
on  the  new  notes,  although  the  contract  was  abandoned  before 
anything  had  been  done  under  it,  and  the  road  never  com- 
pleted :  Four  Mile  Valley  R.  R.  Co.  v.  Bailey,  18  Ohio  St.  208. 
The  charter  of  a  railroad  corporation  provided  that  a  certain 
amount  of  capital  stock  should  be  subscribed  before  any  assess- 
ments should  bo  made.  The  number  of  shares  requisite  to 
make  up  such  amount  was  subscribed,  but  the  subscription 
contained  a  condition  that  interest  should  be  paid  by  the  cor- 
poration on  aH  sums  assessed  and  paid  in,  from  the  time  of  pay- 
ment until  the  railroad  should  be  put  in  operation.  Held,  that 
such  condition  did  not  avoid  the  subscription:  Rutland  etc. 
R.  R.  Co.  V.  Thrall,  35  Vt.  536.  The  defendant  subscribed  for  a 
share  of  stock  in  a  telegraph  line,  there  being  annexed  to  the 
subscription  one  stipulation,  among  others,  by  which  a  com- 
mittee was  appointed  "to  see  that  the  stipulations  are  and  will 
be  complied  with  before  the  subscriptions  are  paid."  Held,  that 
the  action  of  the  committee  was  not  a  condition  precedent  to  a 
recovery  of  the  price  of  the  stock:  Shaffner  v.  Jeffries,  18  Mo. 
512.  Certificates  of  stock  in  a  corporation  were  issued  and  paid 
for  under  a  contract  in  writing  agreeing  to  subscribe  therefor, 
and  reserving  to  the  subscriber  the  right  to  withdraw  the  money 
paid,  and  to  have  the  subscription  canceled.  Held,  that  the 
contract  was  void  as  to  subsequent  subscribers:  Melvin  v.  Lamar 
Ins.  Co.,  80  111.  446;  22  Am.  Rep.  199.  A  subscribed  for  stock 
of  a  corporation,  but  made  his  subscription  payable  upon  certain 
conditions.  He  afterwards  gave  a  note  for  the  amount  of  his 
subscription.  In  the  note  no  mention  was  made  of  the  condi- 
tions. Held,  that  they  were  thereby  waived:  Slipher  v.  Earhart, 
83  Ind.  173.  A  company  was  chartered  for  the  purpose  of  buy- 
ing, selling,  and  leasing  property,  and  also  as  a  homestead 
or  building  association;  and  at  the  time  of  the  entry  of  de- 
fendant's subscription,  it  was  engaged  in  the  prosecution  of  its 
business,  and  the  subscriber  knew  at  the  time  that  its  whole  capi- 
tal stock  had  not  been  taken.  Held,  that  it  might  be  inferred 
that  defendant's  subscription  was  not  made  upon  the  condition 
that  the  company  was  not  to  organize  until  the  whole  number  of 
shares  had  been  taken:  Musgrave  v.  Morrison,  54  Md.  161.  A 
promissory  note,  payable  to  the  treasurer  of  the  Chicago  and 
Canada  Southern  Railway  Company,  was  made  "in  consid- 
eration of  the  construction  of"  the  railroad  through  or  within 


750 


751 


STOCKHOLDERS. 


§452 


d,  but  were 
;  new  ones, 
ly  to  carry 
lon  a  confi- 
hat  if  they 
h  contract 
wore  liable 
ned  before 
lever  corn- 
no  St.  208. 
t  a  certain 
any  assess- 
cquisite  to 
Libscription 
by  the  cor- 
ime  of  pay- 
Ileld,  that 
hitland  etc. 
bribed  for  a 
xed  to  the 
ich  a  com- 
re  and  will 
Held,  that 
cedent  to  a 
ies,  18  Mo. 
d  and  paid 
)e  therefor, 
the  money 
/,  that  the 
n  V.  Lamar 
d  for  stock 
pon  certain 
)unt  of  his 
the  condi- 
V.  Earhart, 
lose  of  buy- 
homestead 
itry  of  de- 
ition  of  its 
rvhole  capi- 
)e  inferred 
condition 
number  of 
d.  161.     A 
icago  and 
in   consid- 
er within 


half  a  mile  of  the  village  of  Dundee,  "within  three  years  after 
this  date,  and  the  building  of  passenger  and  freight  depot"  at 
Dundee,  payable  ''in  thirty  days  after  said  road  and  depot  are 
constructed  as  aforesaid."  The  articles  of  incorporation  of  the 
company  named  Chicago  as  one  of  the  termini.  The  track  was 
laid  through  Dundee,  and  the  depot  put  up;  but  instead  of  ox- 
tending  the  road  to  Chicago,  it  was  connected  with  other  routes 
at  the  point  beyond  Dundee,  so  as  to  form  a  through  line.  Held, 
tliat  the  prouiiso  was  made  to  afford  aid  in  constructing  the 
road,  and  was  intended  to  be  payable  in  case  of  the  completion, 
as  agreed,  nf  the  portion  built,  regardless  of  the  failure  to  extend 
it  to  Chicago  within  three  years,  as  stipulated:  Stoivell  v.  Sfowell, 
4")  Mich.  3G4.  Several  persons  signed  a  paper  reciting  that  as 
A  had  proposed  to  build  a  railroad  from  B  to  C,  in  consideration 
of  tlio  right  of  way  and  three  thousand  dollars  a  mile  local  sub- 
scription, they  promised  to  give  their  notes  to  the  IJ  and  C 
railroad  company  for  the  amounts  set  opposite  their  names. 
The  company  was  not  then  organized,  nor  the  line  of  tlic  road 
fixed.  In  a  suit  on  one  of  the  subscriptions,  hell,  that  the 
plaintiff  jnight  show  that,  owing  to  the  high  lands  near  the  city, 
it  had  not  been  contemplated  by  the  parties  that  the  road  would 
be  built  to  the  corporate  limits  of  B,  but  that  the  line  of  a  pre- 
viously constructed  road  was  to  be  used  for  some  distance,  and 
that  the  nature  of  the  ground  might  be  shown  as  the  reason 
why  a  particular  route  could  not  be  chosen:  Detroit  etc.  K.  R. 
Co.  V.  S tames,  38  Mich.  698. 

§  452.  Subscribtions  Obtained  by  Fraud — When  Void- 
able.—  Subscriptions  for  shares  obtained  by  fraud  are  not 
binding  on  the  subscriber,  but  are  voidable  at  his  elec- 
tion.' In  a  suit  by  a  corporation  against  a  stockholder, 
the  latter  may  set  off  any  sum  fraudulently  obtained  from 
him  as  a  subscription,  unless  there  are  debts  of  the  corpo- 
ration incurred  since  his  subscription  equal  to  said  sum 


*  Vrcelaiiil  v.  Stone  Co.,  29  N.  J. 
E(i.  I'Jt);  Upton  V.  Englehart,  3  Dill. 
4i)i);  Ctutral  R.  R.  Co.  v.  Kisch,  L. 
R.  '2  H.  L.  yt).  Where  one  subscribes 
to  the  capit.il  stock  of  a  foreign  corpo- 
mtion,  induced  l)y  the  fraudulent  rep- 
rc-jcutations  of  an  agent,  held,  that 
upon  discovery  of  the  fraud,  he  might 
rescind  his  contract  and  recover  any 
payments  ho  had  made  to  the  corpo- 
ration: Grangers'  Ins.  Co.  v.  Turner, 
Gl  Ga.  5til.    The  represeatatioua  of 


an  agent  may  be  given  in  evidence  to 
show  the  fraud  by  which  subscriptions 
to  the  stock  of  a  corporation  were  ob- 
tained, if  such  representations  were  a 
part  of  a  scheme  of  fraud,  participated 
in  by  the  officers  of  the  corporation 
authorized  to  manage  its  affairs,  or  it 
the  representations  were  such  as  the 
subscriber  might  reasonably  presume 
the  agent  had  authority  to  make:  Cus- 
tar  V.  Gas  etc.  Co.,  63  i'a.  St.  281. 


452 


CORPORATIONS. 


752 


or  greater.*  Says  Mr.  Morawetz:''  "The  question  whetlier 
or  not  the  contract  of  a  share-holder  bo  voidable  for  false 
representations  must  necessarily  depend  in  each  case  upon 
the  peculiar  circumstances  surrounding  it.  But  it  may  bo 
stated  as  a  general  rule  that  any  fraudulent  representa- 
tion with  regard  to  the  financial  state  of  a  company,'  or 
its  arrangements  for  carrying  out  its  enterprise/  or  with 
regard  to  any  other  fact  which  can  reasonably  be  sup- 
posed to  have  been  material  in  inducing  a  person  to  be- 
come a  share-holder,  will  enable  the  latter  to  avoid  his 
contract.  If  a  person  is  induced  to  take  shares  by  a  false 
representation  that  another  person  has  become  a  share- 
holder,"  or  that  certain  persons  have  agreed  to  act  as 
directors  of  the  company,*  this  will  be  a  ground  for 
avoiding  the  subscription;  but  it  must  appear  in  such 
case  that  the  subscriber  relied  upon  the  statement,  and 
was  induced  thereby  to  take  the  shares."'  But  a  person 
who  has  been  induced  to  subscribe  by  fraud  cannot 
recover  the  amount  paid  until  the  claims  of  creditors 
have  been  satisfied.* 

Illustrations. — The  defendant,  sued  on  his  subscription  for 
stock  in  a  turnpike  company,  answered  that  he  was  illiterate 
and  could  not  read,  and  did  not  hear  the  articles  of  association 
read;  but  a  party  to  them,  interested  in  obtaining  subscriptions, 
induced  him  to  subscribe,  by  his  false  representation  that  the 
articles  did  not  require  a  payment  of  subscription  until  twenty 
thousand  dollars  had  been  subscribed.  Held,  that  these  aver- 
ments set  up  a  suflBcient  ground  of  defense:  Wert  v.  Crawfords- 
ville  etc.  Co.,  19  Ind.  242.  The  governor  of  the  state  was 
authorized  to  subscribe  in  behalf  of  the  state  for  a  certain 
amount  of  stock  in  an  incorporated  turnpike  company,  when 
ten  per  cent  of  the  stock  of  individual  subscribers  should  be 
paid  in.     Held,  that  the  subscription  of  the  governor  for  such 


'  Hamilton  v.  Crangtrs'  Life  and 
Health  Ins.  Co.,  67  Ga.  145. 

■^  Corporations,  sec.  309. 

^  Water  Valley  Mfg.  Co.  v.  Leamfvn, 
53  Miss.  G55;  Waldo  v.  R.  R.  Co.,  14 
Wis.  .')7."i;  Milendy  v.  Kean,  89  HI. 
395;  Bradley  v.  Poole,  98  Mass.  IG9; 
93  Am.  Dec.  144. 


♦  Vreeland  v.  Stone  Co.,  29  N.  J. 
Eq.  190. 

*  Henderson  v.  Lacon,  L.  R.  5  Eq. 
249. 

e  Blake'a  Case,  34  Beav.  637. 
T  Walker  v.  R.  R.  Co.,  34  ^Sliss.  246. 
«  Turner  r.  Ins.  Co.,  65  Ga.  649j  38 
Am.  Rep.  801. 


752 

whether 
for  false 
:;aso  upon 
it  may  bo 
prcsenta- 
pany,'  or 
1/  or  with 
\f  bo  sup- 
sou  to  be- 
avoid  his 
by  a  false 
e  a  share- 
to  act  as 
round   for 
r  in  such 
ment,  and 
b  a  person 
ad   cannot 
■   creditors 


cription  for 
illiterate 
association 
3scription8, 
)n  that  the 
ntil  twenty 

hose  aver- 
Crawfords- 

state   was 
a  certain 
pany,  when 

should  be 
or  for  such 

Co.,  29  N.  J. 

L.  R.  5  Eq. 

iv.  637. 

,  34  ]SIiss.  246. 

135  Ga.  G49;  38 


753 


STOCKHOLDERS. 


§453 


stock,  on  the  false  representation  of  the  directors  that  the  ton 
per  cent  had  been  paid  in,  was  not  binding  on  the  state:  State 
V.  Jefferson  Turnpike  Co.,  3  Humph.  305. 

§  463.  When  not  Voidable. — The  false  representation 
which  will  avoid  a  subscription  must  not  be  a  representa- 
tion as  to  a  matter  of  law;'  or  of  opinion;'  or  of  the  con- 
struction or  effect  of  the  charter;'  or  be  in  the  nature  of  u 
future  promise.^  So  the  false  representation  must  liave 
been  of  a  material  matter;*  and  the  fraud  must  not  be  the 
fault  of  the  subscriber  himself;"  and  the  false  representa- 
tions must  have  been  made  fraudulently;^  and  must  have 
been  believed  or  relied  on  by  the  subscriber.*  A  discharge 
from  a  stock  subscription  on  the  gound  of  fraud  cannot 
be  obtained  by  one  who  was  himself  a  party  to  the  fraud."' 
A  stockholder  cannot  maintain  an  action  to  recover  back 
his  subscription  on  the  mere  ground  of  the  failure  of  the 
company  to  acquire  land  mentioned  in  the  prospectus. 
To  warrant  such  an  action,  he  must  show  some  misrepre- 
sentation or  fraud,  or  such  an  entire  failure  in  the  ob- 
jects and  purposes  of  the  company  as  amounts  to  a  virtual 
dissolution."*  A  contract  to  purchase  shares,  induced  by 
fraudulent  representations  or  concealment,  is  not  void, 
but  only  voidable;  that  is,  it  is  valid  until  disaffirmed. 
And  where  the  rights  of  creditors  are  concerned,  the  con- 
tract must  be  repudiated  promptly  on  discovering  the 
fraud,  or  it  will  be  held  binding  as  to  them."  Where  by 
the  fraud  of  an  agent  of  a  company  a  person  is  induced  to 
subscribe  for  stock  therein,  as  between  the  company  and 
the  person  thus  induced  to  take  the  stock,  the  same  prin- 


»  Parker  v,  Thomas,  19  Ind.  213;  81 
Am.  Doc.  3S.">. 

^  Bish  V.  Bradford,  17  Ind.  490. 

'  Ellison  V.  R.  R.  Co.,  36  Miss.  572; 
New  Albany  R.  R.  Co.  v.  Fields,  10 
lad.  187. 

«  New  Albany  R.  R.  Co.  v.  Fields, 
10  Ind.  187. 

*  Pulsford  V.  Richards,  17  Beav.  96; 
Andrews  v.  R.  R.  Co.,  U  Ind.  169. 
VoL.L-48 


•  Hallows  V.  Femie,  L.  R.  3  Ch.  477. 
'  Morawetz    on    Corporations,    sec. 

308. 

»  Parker  v.  Thomas,  19  Ind.  213;  81 
Am.  Dec.  385. 

*  Southern  Plaak  Road  Co.  b.  Hixon, 
5  Ind.  166. 

'•  Kelsey  v.  Northern  Light  Oil  Co.,, 
54  Barb.  HI. 
"  Farrar  v.  Walker,  3  DUl.  506. 


§453 


CORPORATIONS. 


754 


ciplcs  apply  as  would  apply  to  like  contracts  between  in- 
dividuals. The  company  cannot  retain  any  benefit  which 
it  has  obtained  through  the  fraud  of  its  agent,  and  it  is  or- 
dinarily no  answer  to  the  claim  of  a  person  to  be  relieved 
against  a  contract  procured  from  him  by  fraud  to  show 
that  by  more  inquiry  ho  could  have  learned  the  truth.' 
Representations  by  the  agent  of  a  corpora'  ion  as  to  the 
non-assessibility  of  its  stock,  beyond  a  certain  percentage 
of  its  value,  constitute  uj  defense  to  an  action  against 
the  holder  of  the  stock  to  enforce  payment  of  the  entire 
amount  subscribed,  where  he  has  failed  to  use  due  diili- 
gence  to  ascertain  the  truth  or  falsity  of  such  representa- 
tions.'^ 

The  following  have  been  held  not  sufficient  to  avoid 
the  contract:  Representations  by  the  solicting  agent  that 
"the  company  had  stock  enough  to  complete  the  road, 
and  would  do  it  in  two  years";'  a  false  representation 
by  the  soliciting  agent  of  a  railroad  company,  that  the 
contractors  could  construct  and  equip  it  without  any 
advance  from  the  company;^  fraudulent  representations 
by  an  officer  of  a  corporation  at  a  public  meeting,  in  pres- 
ence of  a  majority  of  the  directors,  but  not  in  pursuance 
of  any  authority  from  their  board;*  false  representations 
by  the  agent  of  a  railroad  corporation,  soliciting  subscrip- 
tions for  stock  from  persons  living  along  the  contem- 
plated route,  as  to  the  intended  location,  and  the  time 
within  which  it  will  be  completed  to  a  particular  place, 
unless  known  by  the  agent  to  be  false,  and  made  by  him 
with  intent  to  deceive;*  false  representetions  that  the 
subscriber  will  not  be  called  on  to  pay  anything  until  the 
road  is  laid  out  in  his  county;'  representations  made  by 
officers  of  a  corporation,  to  one  dealing  with  it,  that  the 

'  Upton  V.  Englehart,  3  Dill.  496.  *  Montgomery  Southern  R.  R.  Co. 

»  Upton  V.  Tribilcock,  91  U.  S.  45.  v.  Matthews,  77  Ala.  337;  54  Am.  Rep. 

'  Hardy  v.  Merriweather,  14  Ind.  203.  60. 

♦  Andrews  v.  R.  R.  Co.,  14  Ind.  169.  '  Clem  v.  R.  R.  Co.,  9  Ind.  488;  68 

<^  Buffalo  etc.  R.  R.  Co.  v.  Dudley,  Am.  Dec.  653. 
14  N.  Y.  336. 


754 

tween  in- 
;fit  which 
d  it  is  or- 
e  relieved 
1  to  show 
he  truth.' 
as  to  the 
•ercentage 
n  against 
the  entire 
due  dili- 
epresenta- 

t  to  avoid 
agent  that 
the  road, 
esentation 
,%  that  the 
thout   any 
sentations 
g,  in  pres- 
)ursuance 
sentations 
f  subscrip- 
contem- 
the  time 
liar  place, 
de  by  him 
that   the 
until  the 
made  by 
,  that  the 

rn  R.  R.  Co. 
54  Am.  Rep. 

Ind.  488;  68 


755 


STOCKHOLDBRS. 


§453 


corporation  is  a  legally  organized  body,  when  in  fact  it  was 
irregularly  organized,  when  it  appears  that  articles  of  in- 
corporation had  actually  been  drawn  up  and  signed,  and 
officers  of  the  organization  elected,  and  that  the  officers 
making  the  representations  did  not  know  that  the  corpo- 
ration was  illegal  and  unauthorized;'  representations  to 
subscribers  to  stock  in  railroad  company,  by  the  commis- 
sioners appointed  to  receive  stock  subscriptions,  as  to  the 
future  location  of  the  road,  when  the  commissioners  by 
the  terms  of  the  charter  have  nothing  to  do  with  the 
location.'' 

Illustrattons.  —  A  false  representation  was  made  by  an  agent 
of  a  railroad,  soliciting  stock  subscriptions,  that  the  company 
already  had  enough  subscriptions  to  finish  the  road  in  a  speci- 
fied time,  and  sought  others  from  persons  living  on  the  line  of 
the  road  only  as  evidence  of  frendliness.  Held,  to  bear  merely 
on  matters  of  expectation  and  opinion,  and  not  to  suffice  to 
avoid  the  subscription:  Bish  v.  Bradford,  17  Ind.  490;  Brownlee 
v.  R.  R.  Co.,  18  Ind.  68;  Parker  v.  Thomas,  19  Ind.  213;  81 
Am.  Dec.  385.  Stockholders  of  an  insurance  company  paid 
part  of  their  subscription  in  cash,  and  according  to  the  char- 
ter gave  notes  for  the  rest.  Held,  that  it  was  no  defense  to  a 
creditor's  bill  to  collect  the  notes  that  the  agent  who  obtained 
the  subscription  misrepresented  the  condition  of  the  company: 
Ogilvie  v.  Knox  Ins.  Co.,  22  How.  380.  A  bank  was  fraudu- 
lently organized  under  a  lawful  charter,  by  parties  who  induced 
defendant  to  subscribe  for  a  portion  of  the  stock,  represent- 
ing to  him  that  his  subscription  would  be  merely  nominal,  and 
that  he  would  not  be  required  to  pay  for  the  stock.  The  bank 
was  organized,  issued  a  large  amount  of  bills,  and  soon  after 
failed,  and  went  into  the  hands  of  receivers  for  the  benefit  of 
its  creditors.  In  a  suit  brought  by  the  receivers  in  the  name 
of  the  bank  against  the  defendant,  upon  his  subscription,  held, 
that  he  could  not  avail  himself,  in  defense  of  the  fraudulent 
character  of  the  bank,  of  the  misrepresentations  under  which 
he  had  been  induced  to  subscribe  for  the  stock.  He  with  his 
associates  constituted  the  bank,  and  he  therefore  shared  with 
them  in  the  fraud  of  the  bank  on  the  public:  lAtchJield  Bank  v. 
Church,  29  Conn.  137. 

>  Mitchell  V.  Deeds,  49  111.  416;  95  <  Wight  v.  R.  R.  Co.,  16  B.  Mon. 
Am.  Dec.  621.  4;  63  Am.  Dec.  622. 


§§  454,  455 


CORPORATIONS. 


756 


§  464.  Laches  of  Subscriber. — Bat  a  person  who  was 
induced  by  fraud  to  purchase  shares  cannot  avoid  his 
contract  if  after  notice  of  the  fraud  he  derives  any  benefit 
from  the  shares,  or  acts  as  a  stockholder.*  Where  a  sub- 
hiriber  to  the  capital  stock  of  a  railroad  company  sought 
to  avoid  his  subscription  on  the  ground  of  tho  false  rep- 
resentations of  the  company's  soliciting  agent,  as  to  the 
persons  who  had  subscribed,  and  seven  years  had  elapsed 
after  tho  subscription  before  suit  was  brought,  and  no 
excuse  was  shown  for  delay,  it  was  held  that  tho  presump- 
tion  was  against  the  subsicriber's  right  to  avail  liimsclf  of 
these  fac's  until  he  had  accounted  lor  his  delay .^ 

§  456.    Stockholder  cannot  Rescind  Gontract.— As  a 

general  rule,  a  stockholder  has  no  power  to  rescind  his 
contract  at  will,  and  to  dissolve  his  connection  with  the 
corporation.'  A  subscriber  for  stock  cannot  withdraw  his 
subscription  without  the  consent  of  his  co-subscribers.* 
So  a  subscriber  to  the  capital  stock  of  a  private  corpora- 
tion, in  process  of  organization,  can  neither  withdraw  nor 
be  released  without  the  consent  of  all  the  subscribers. 
The  board  of  directors  has  no  general  power  in  that  mat- 
ter.' The  promise  of  each  subscriber  to  the  joint  capital 
stock  of  a  company  is  a  good  consideration  for  the  prom- 
ise of  the  other  subscribers,  the  object  of  the  enterprise 
being  tho  advancement  of  the  private  interests  of  all;  and 
after  the  act  of  incorporation  has  been  obtained,  none 
can  withdraw  without  the  coiisont  of  the  others,  whether 
the  work  has  been  undertaken  or  not.*  One  who  is  ap- 
pointed to  receive  subscriptions  to  corporate  stock  at  a 


*  Ogilvie  V.  Knox  Ins.  Co.,  22  How. 
380;  Chubb  v.  Upton,  95  U.  S.  605; 
Parks  V.  R.  R.  Co.,  23  lud.  5C7;  Ash- 
ley's Case,  L.  R.  9  £q.  363;  City  Bank 
V.  Bartlett,  71  Ga.  797. 

»  Dynes  v.  Shaffer,  19  Ind.  163. 

*  United  Society  v.  Eagle  Bank,  7 
Conn.  457;  Fishop's  Fund  v.  Eagle 
Bank,  7  Conn.  476,  BordentowuT.  Co. 


V.  Imlay,  4  N.  J.  L.  28.5;  Lake  Ontario 
R.  R.  Co.  V.  Mason,  16  N.  Y.  451. 

*  Johnson  v.  Wabash  etc.  Co.,  16 
Ind.  389. 

^  Hughes  V.  Antietam  Mfg.  Co.,  34 
Md.  316. 

•  Twin  Creek  and  Colemansville 
Turnpike  Road  Co.  v,  Lancaster,  79 
Ky.  552. 


756 

who  was 
void  his 
y  bonofit 
re  a  siib- 
y  sougljt 
false  rep- 
as  to  the 
1  elapsed 
,  and  no 
presump- 
imsclf  of 


t. — As  a 
jcind  his 
with  the 
id  raw  his 
>scribers.* 
I  corpora- 
draw  nor 
pscribers. 
hat  mat- 
it  capital 
le  proin- 
nterprise 
all;  and 
ed,  none 
whether 


10  13  ap- 
ock  at  a 

ake  Ontario 
Y.  451. 
tc.  Co.,   16 

Ifg.  Co.,  34 

>lemaiisville 
kQcaster,  79 


767 


STOCKHOLDERS. 


§455 


meeting  of  the  corporators,  and  who  thereupon  subscribes 
himself,  and  takes  the  subscriptions  of  others,  cannot 
afterward  release  himself  by  erasing  his  name  from  the 
subscription  paper  before  turning  it  over  to  the  corpora- 
tion.' A  plea  by  a  8ubs<  riber  to  the  stock  of  an  incorpo- 
rated company,  that  ho  had  been  released  from  his  liability 
on  his  subscription  by  a  resolution  of  the  board  of  direc- 
tors of  the  company,  must  aver  that  there  was  a  consider- 
ation to  support  the  resolution,  and  also  that  the  company, 
at  the  time  of  the  averred  release,  was  not  in  debt,  as  the 
corporation  could  not  make  such  release  to  the  injury  of 
its  creditors.*  Says  Mr.  Morawetz:'  "  A  stockholder  in  a 
corporation  can  escape  from  the  obligation  of  his  con- 
tract only  by  one  of  the  following  methods:  1.  By  a 
transfer  of  his  shares,  and  an  acceptance  of  the  transfer 
on  the  part  of  the  corporation,  thus  affecting  a  complete 
novation;  2.  By  a  forfeiture  and  sale  under  authority  ex- 
pressly conferred  on  the  company  by  its  charter;  3.  By 
expiration  of  the  charter  according  to  its  own  limitations; 
4.  By  forfeiture  of  the  franchises  and  dissolution  of  the 
company  at  the  suit  of  the  state;  5.  By  act  of  the  major- 
ity in  winding  up  the  business  of  the  company  and  sur- 
rendering its  charter;  6.  By  act  of  the  share-holder  where 
permission  to  withdraw  is  expressly  conferred  by  the 
charter;  7.  By  unanimous  consent  of  the  members  of  the 
company."  The  requirement  of  the  charter  that  a  cer- 
tain per  cent  of  cost  shall  be  subscribed  before  a  rail- 
road shall  commence  the  construction  of  any  section 
of  its  road  does  not  afiFect  the  organization  of  the  com- 
pany, and  non-compliance  therewith  will  not  defeat  an 
action  to  recover  stock  assessments  against  a  subscriber.* 
A  subscription  to  capital  stock,  by  giving  bonds  and 
mortgage  in  payment  in  lieu  of  coin,  and  issuance  of  a 

^  Cheraw  etc.  R.  B.  Co.  v.  White,  *  Monwetz   on   Corporations,   sec 

10  S.  C.  156.  311. 

'  Zirkel  v.  Joliet  Opera  House  Co.,  *  Penobscot  R.  R.  Co.  v.  \Mute,  41 

79  lU.  334.  Me.  512;  G6  Am.  Dec.  257. 


§456 


corpobatHons. 


758 


certificate  of  stock  thereon,  creates  a  liability  on  such 
bonds  and  mortgage;  and  if  upon  them,  as  a  portion  of 
its  capital,  the  corporation  embarks  in  business,  though 
in  violation  of  the  express  provision  of  the  charter  that 
the  capital  stock  must  all  be  paid  in  before  so  doing,  the 
obligor  may  defend  an  action  on  such  securities,  and 
therein  contest  their  validity,  but  he  cannot  invoke  the 
aid  of  a  court  of  equity  to  interfere  with  and  restrain 
suits  brought  upon  the  bonds  in  a  court  of  law  for  the 
purpose  of  aiding  him  to  ovoid  their  payment.*  An 
original  subscriber  to  stock  of  a  railroad  company  cannot, 
at  law,  interpose  as  a  defense  to  an  action  againsft  him  for 
calls  upon  his  stock,  that  said  company  has  accepted 
subsequent  legislative  changes  of  its  ciiarter,  when  such 
changes  consist  only  of  an  increase  of  corporate  powers, 
or  of  a  different  organization  of  the  corporate  body,  leav- 
ing the  corporation  with  lawful  power  to  execute  what 
may  be  considered  as  substantially  the  original  work.* 

Illustrations.  —  The  by-laws  of  a  stock  company  provided 
that  a  member  might  withdraw  on  giving  a  certain  notice,  the 
refunding  not  to  exceed  one  eighth  of  the  capital  paid  in.  Held, 
that  after  such  notice,  etc.,  the  person  no  longer  occupied  the 
position  of  a  member  of  the  corporation,  except  for  the  purpose 
of  receiving  his  money,  but  the  relation  of  debtor  and  creditor 
supervened  between  him  and  the  corporation.  As  such  cred- 
itor, he  would  be  entitled  to  demand  the  money  advanced  on 
his  share  to  the  company,  not  a  dividend  upon  the  funds  of 
the  corporation:  Gaehle'a  Piano  Mfg.  Co.  v.  Berg,  45  Md.  113. 

§  456.  Violation  of  Charter  No  Ground  for  RescisFion. 
— That  the  charter  has  been  violated  by  the  cor^ioration 
is  no  ground  for  rescission  of  contract;  the  stockholder 
cannot  set  that  up  as  a  defense  to  performing  his  contract.^ 

^  Yard  v.  Ins.  Co.,  10  N.  J.  Eq.  480;  a  corporation,  organized  by  the  per- 

04  Am.  Dec.  467.  mission  of  the  chancery  court,  sues  a 

^  Pacific  R.  R.  Co.  v.  Hughes,  22  subscriber  to  its  stock  upon  his  sub- 
Mo.  291;  64  Am.  Dec.  265.  ecription,   the  latter,  who  has  dealt 

^  Mississippi  R.  R.  Co.  v.  Cross,  20  with  it  as  a  corporation,  cannot  deny 

Ark.   443;   Hannibal  Plank   Road  v.  the   validity    of  the    proceeding    by 

Menefee,  25  Mo.  547;  East  etc.  Hotel  which  the  name  of  the  corporation 

Co.  V.  West,  13  La.  Aou.  545.    Wliere  waa  changed,  aUbough  the  aubacrip- 


758 


759 


STOCKHOLDERS. 


§457 


on  such 
jortion  of 
s,  though 
arter  that 
loing,  the 
ities,  and 
nvoke  the 
I  restrain 
w  for  the 
ent.*  An 
ly  cannot, 
si  him  for 

accepted 
hen  such 
te  powers, 
ody,  leav- 
cute  what 
work.* 

y  provided 
notice,  the 
in.  Held, 
3upied  the 
tie  purpose 
id  creditor 
such  cred- 
vanced  on 
funds  of 
Md.  113. 

escisaion. 

r^oration 
Dckholder 
contract.* 

by  the  per- 
sourt,  sues  a 
pon  hia  sub- 
o  has  dealt 
cannot  deny 
)ceeding    by 

corporation 
he  aabscrip- 


lUegality  in  the  election  of  directors  is  no  defense  to  an 
action  on  a  stock  subscription.* 

Illustrations.  — The  defendants  gave  their  note  to  a  bank  in 
payment  of  stock,  and  became  stockholders.  Held,  that  they 
could  not  claim,  as  a  defense  to  an  action  on  the  note  that  the 
bank  improperly  received  the  note  in  payment  of  the  stock, 
instead  of  requiring  the  defendants  to  pay  the  money:  Finnell 
V.  Sandford,  17  B.  Mon.  748. 

§  457.  Forfeiture  of  Shares  for  Non-payment  of  Assess- 
ments. — The  remedy  against  a  stockholder  for  failure  to 
pay  assessments  is  an  action  at  law  in  the  name  of  the 
corporation.  The  latter  has  no  lien  on  the  shares  of 
stock,  and  cannot  forfeit  them.*  A  statute  giving  a  cor- 
poration power  "to  make  by-laws  not  inconsistent  with  any 
existing  law,  for  the  management  of  its  property,  and  the 
regulations  of  its  affairs,  and  the  transfer  of  stock,"  does 
not  authorize  a  by-law  forfeiting  stock  for  non-payment  of 
calls.'  The  power  to  forfeit  and  sell  shares  for  failure  to  pay 
assessments  is,  however,  frequently  given  in  the  charter, 
and  may  then  be  exercised.'*  But  in  exercising  this  power, 
the  formalities  required  by  the  charter  must  be  strictly  ob- 
served.* When  a  corporation  has  provided,under  the  terms 
of  its  charter,  for  forfeiting  stock  partially  paid  up,  this 
dissolves  the  connection  of  the  stockholders,  when  shares 
are  forfeited  by  the  corporation,  and  a  creditor  cannot 
charge  them  with  the  amount  unpaid.®  Where  the  share 
of  a  defaulting  stockholder  in  a  railroad  company  is  by  the 
charter  made  "  liable  to  forfeiture,  and  the  company  may 


lion  recognizes  the  old  name  of  the 
corporation:  Greene  villa  etc.  R.  R. 
Co.  V.  Johnson,  8  Baxt.  332. 

'  Johnson  v.  R.  R.  Co.,  11  Ind. 
280. 

■'  Williams  v.  Lowe,  4  Neb.  398; 
Sargent  r.  Franklin  Ins.  Co.,  8  Pick. 
90;  19  Am.  De..  306;  In  re  Long 
Island  R.  R.  Co.,  19  Wend.  37;  32 
Am.  Dec.  429. 

"  In  re  Long  Island  R.  R.  Co.,  19 
Wend.  37;  32  Am.  Dec.  429. 


*  Morawetz  on  Corporations,  sec. 
317. 

*  Germantown  R.  R.  Co.  v.  Fitler, 
60  Pa.  St.  124;  100  Am.  Dec.  54(5; 
Lewey's  Island  R.  R.  Co.  v.  Bolton,  48 
Me.  451 ;  77  Am.  Dec.  236;  Hughes  i: 
AntietamMfg.  Co.,  .34  Md.  317;  East- 
ern Plank  Rruid  v.  Vaugh.an,  20  Barb. 
157;  Mitchfell  w.  Vermont  Copper  Co., 
40  N.  Y.  Sup.  Ct.  400;  York  etc.  R. 
R.  Co.  V.  Ritchie,  40  Me.  425. 

«  Allen  V.  R.  R.  Co.,  11  Ala.  437. 


§457 


CORPORATIONS. 


760 


declare  the  same  forfeited  and  vested  in  the  company," 
the  option  to  forfeit  is  with  the  company,  and  not  with 
the  stockholder/  A  general  resolution  of  a  railroad  com- 
pany forfeiting  stock  for  non-payment  of  installments 
must  declare  to  the  stockholder  that  they  claim  to  forfeit 
his  specific  stock,  otherwise  it  will  not  be  valid.^  A  cor- 
poration without  power  to  declare  stock  forfeited  for  non- 
payment of  subscriptions  may,  after  failing  to  collect  the 
full  amount  by  suit,  collect  the  rest  by  a  sale  of  the  stock.' 
A  corporation  will  not  be  permitted  to  enforce  payment 
of  stock  for  which  its  agents  obtained  subscriptions,  on 
conditions  which  it  refuses  to  comply  with.*  Under  a 
provision  in  a  charter  providing  that  if  any  subscriber 
shall  neglect  to  pay  his  assessments,  the  directors  may 
order  the  treasurer  to  sell  his  shares  at  public  auction, 
w^hen  the  party  makes  an  express  promise  to  pay  the  as- 
sessments, he  is  answerable  to  the  corporation  upon  such 
promise  for  all  legal  assessments,  and  may  be  compelled 
to  its  performance  by  an  action  at  law  before  resorting  to 
a  sale  of  the  shares.  If,  however,  he  only  agrees  to  take 
a  specified  number  of  shares,  without  promising  expressly 
to  pay  assessments,  the  shares  must  first  be  sold  to 
pay  the  assessments,  before  an  action  at  law  can  be 
m.aintained.*  A  resolution  of  directors  distributing 
shares  of  authorized  capital  stock  remaining  untaken 
at  the  time  of  incorporation  among  all  the  stockholders 
who  are  not  in  arrear  on  the  shares  already  taken  by 
them,  and  excluding  those  who  are  in  arrear,  is  an  un- 
lawful imposition  of  a  penalty  on  those  in  arrear,  and  a 


'  Railroad  Co.  v.  Rodriquez,  10 
Rich.  278. 

*  Johnson  v.  R.  R.  Co.,  40  How. 
Pr.  193. 

»  Chase  y.  R.  R.  Co.,  5  Lea,  415. 
If  at  the  time  a  thirteenth  and  a  four- 
teenth assessment  were  levied  the  cor- 
poration had  no  funds,  and  said  assess- 
ments were  needed  for  legitimate  pur- 
po»es,  sales  of  delinquent  stock  made 


thereunder  held  not  void,  for  the  rea- 
son that  the  trustees  had  previously 
misappropriated  the  corporation  fnnda: 
Marshall  v.  Golden  Fleece  etc.  Mining 
Co.,  16  Nev.  156. 

*  Turnpike  Co.  «.  Churchill,  6  T.  B. 
Mon.  427. 

^  New  Hampshire  Cent.  R.  R.  Co.  v. 
Johnson.  30  M.  H.  390;  64  Am.  Dec. 
300. 


760 

jompany," 
I  not  with 
[road  com- 
stallments 
1  to  forfeit 
1.''    A  cor- 
d  for  non- 
collect  the 
the  stock.' 
e  payment 
iptions,  on 
Under  a 
subscriber 
!ctors  may 
ic  auction, 
aay  the  as- 
upon  such 
compelled 
Bsorting  to 
>es  to  take 
expressly 
sold  to 
can   be 
stributing 
untaken 
>ckholders 
taken  by 
is  an  un- 
3ar,  and  a 

for  the  rea- 
(i  previously 
»rationfiiuda: 

etc.  Miaing 

BhiU,  6  T.  B. 

R.  R.  Co.  V. 
'A  Am.  Dec. 


761 


STOCKHOLDERS. 


§457 


violation  of  the  equal  rights  of  a  corporator  who  was 
ready  and  offered  to  take  Ids  proportion  of  the  new 
shares.' 

But  the  power  to  forfeit  is  cumulative,  and  does  not 
take  away  the  common-law  remedy  of  an  action  against 
the  defaulting  stockholder.'*  No  notice  is  necessary  be- 
fore suit  brought  upon  a  subscription  after  the  contract  of 
subscription  becomes  complete  and  the  subscriber  be- 
comes a  stockholder.'  No  tender  of  the  certificate  of 
stock  is  necessary  before  suit  is  brought  upon  the  sub- 
scription. Certificates  of  stock  are  simply  evidence  of 
stock,  and  are  not  indispensable.*  It  has  been  held  that 
the  stockholder  has  an  equity  of  redemption  in  the  for- 
feited shares.® 

Illustrations. — The  by-law  of  a  corporation  provided  for 
notice  to  be  given  for  sales  of  shares  for  non-payment  of  assess- 
ments, by  advertisement,  designating  the  time  and  place  thereof, 
and  the  shares  to  be  sold.  Held,  that  any  description  sufficing 
to  show  clearly  what  shares  were  intended  to  be  the  subject  of 
sale  is  sufficient:  York  etc.  R.  R.  Co.  \.  Pratt,  40  ^le.  447.  A  rail- 
road charter  authorized  the  sale  of  the  stock  of  delinquent  sub- 
scribers, but  required  notice  of  the  assessment  thirty  days  before 
tlic  order  of  the  directors  for  the  sale  of  the  shares,  that  the  sale 
should  be  by  public  auction  at  the  post-office  in  C,  and  that  the 
treasurer  should  give  to  the  subscriber  a  notice  in  hand,  signed 
by  the  treasurer,  or  by  a  director  in  his  behalf  Held,  1.  That 
a  notice  of  the  assessment  thirty  days  before  the  sale  was  insuf- 
ficient; 2.  That  the  sale  must  be  by  public  auction  at  the  post- 
office  in  C;  3.  That  a  notice  to  the  subscriber  in  hand  not 


1  Reese  t'.  Bank,  31  Pa.  St.  78;  72 
Am.  Dec.  727. 

'  Hughes  V.  Ajitietam  Mfg.  Co.,  34 
Md.  317;  Piscataqua  Ferry  Co.  r. 
Jones,  39  N.  H.  491;  New  Hamp- 
shire R.  R.  Co.  V.  Johnson,  30  N.  H. 
390;  64  Am.  Dec.  300;  Klein  v.  R.  R. 
Co.,  13  111.  514;  Northern  R.  R.  Co. 
r.  Miller,  10  Barb.  2(iO;  Worcester 
Turnpike  Co.  t-.  Willard,  5  Mass.  80; 
4  Am.  Dec.  .39;  Instone  v.  Bridge  Co., 
2  Bibb,  576;  5  Am.  Dec.  638;  Goshen 
Turnpike  Co.  v.  Hurtin,  9  Johns.  217; 
6  Am.  Dec.  273;  Selma  etc.  R.  R.  Co. 
V.  Tipton,  5  Ala.  787;  39  Am.  Deo. 


344;  Connecticut  etc.  R.  R.  Co.  v, 
Bailey,  24  Vt.  465;  58  Am.  Dec.  181; 
Kirksey  v.  Florida  etc.  Co.,  7  Fla.  23; 
68  Am.  Dec.  426.  Where  a  stock- 
holder has  forfeited  his  stock,  no  de- 
cree can  be  rendered  against  him  for 
any  liability  upon  it:  Lexington  R.  R. 
Co.  V.  Briilges,  7  B.  Mon.  556;  46  Am. 
Dec.  528. 

'  New  Albany  etc.  R.  R.  Co.  v.  Mc- 
Cormick,  lOInd.  499;  71  Am.  Dec.  337. 

*  New  Albany  etc.  R.  R.  Co.  v.  Mc- 
Cormick,  10  Ind.  499;  71  Am.  Dec. 
337. 

■^  Walker  V.  Ogden,  1  Biss.  287. 


458 


CORPORATIONS. 


762 


signed  by  the  treasurer  or  a  director  was  insufficient:  Leweyh 
etc.  R.  R.  Co.  V.  Bolton,  48  Me.  451;  77  Am.  Dec.  236;  York  etc. 
R.  R.  Co.  V.  Ritchie,  40  Me.  425.  The  charter  of  a  railroad  com- 
pany provided  that  if  any  stockholder  should  omit  for  the  space 
of  six  months  to  pay  any  installments  on  his  shares  which  might 
bp  called  for,  the  managers  of  the  company  might  declare  such 
shares  forfeited.  The  defendant,  who  was  the  owner  of  a  cer- 
tain number  of  shares  in  the  company,  paid  two  installments  on 
his  shares  when  called  for.  The  company  then  made  a  general 
assignment  for  the  benefit  of  its  creditors,  and  a  call  for  a  third 
installment  was  made  by  the  managers,  without  either  the  ap- 
proval or  disapproval  of  the  assignee.  Held,  that  the  proper 
time  according  to  the  charter  having  elapsed,  the  managers 
had  the  authority  to  declare  the  defendant's  shares  forfeited, 
and  a  court  of  equity  would  not  grant  relief:  Germantown  etc. 
R.  R.  Co.  V.  Fithr,  60  Pa.  St.  124;  100  Am.  Dec.  546. 

§  458.  Right  to  Transfer  Shares. — A  share-holder  in 
an  ordinary  trading  or  business  corporation  may  transfer 
his  shares  at  will,  unless  restricted  by  the  charter  or  gen- 
eral law.*  But  the  right  to  transfer  ceases  at  the  dissolu- 
tion of  the  corporation.''  A  corporation  may  maintain 
an  action  against  a  person  who  presents  a  forged  power 
of  attorney  to  transfer  stock,  upon  the  faith  of  which  tho 
corporation  issues  to  such  person  a  new  certificate  of 
stock,  although  such  person  acted  in  good  faith.''  The 
assignees  of  stock  certificates  in  a  corporation  are  not 
share-holders  by  virtue  of  the  assignment,  when  a  trans- 
fer upon  the  books  of  the  company  is  required,  and  in  a 
suit  by  such  assignees  against  the  corporation,  evidence 
is  admissible  to  show  tlmt  the  assignment  was  merely  by 
way  of  pledge.* 

Illustrations.  —  Articles  of  a  corporation  limited  each 
stockliolder  to  an  ownership  of  one  hundred  shares.  Held,  that 
as  this  was  not  recjuired  by  the  laws  of  the  state,  it  was  a  mere 
voluntary  proposal,  and  that  a  transfer  of  more  than  that  num- 
ber of  shares  to  one  share-holder  was  valid:  O'Brien  v.  Cum- 
mings,  13  Mo.  App.  197. 

^  Morawetz  on   Corporations,    sec.  '  Boston  etc.  R.  R.  Co.  v.  Richard- 

321 ;  Stebbins  v.  Ins.  Co.,  3  Paige,  350.  eon,  135  Mass.  473. 

"  James  v.  Woodrufif,  10  Paige,  540;  *  Becher  v.  Wella  Flouriag  Mill  Co., 

2  Denio,  574.  1  McCrary,  62. 


762 


763 


STOCKHOLDERS. 


§459 


nt:  Lewey^s 
J;  York  etc. 
ilroad  com- 
r  the  space 
hich  might 
Qclare  such 
er  of  a  cer- 
illments  on 
e  a  general 

for  a  third 
her  the  ap- 

the  proper 

managers 

!8  forfeited, 

\antown  etc. 


j-holder  in 
ay  transfer 
ter  or  gen- 
he  dissolu- 

maintain 
ged  power 

which  the 
rtificate  of 
ith."  The 
m  are  not 

n  a  trans- 
and  in  a 

,  evidence 

merely  by 

nited  each 
Held,  that 

was  a  mere 
that  num- 

en  V.  Cum- 

o.  V.  Richard- 
riag  Mill  Co., 


§  459.  When  Stockholder  Remains  Liable  notwith- 
standing Transfer. — The  transfer  of  shares  to  an  insolvent, 
or  to  a  person  unable  to  perform  the  obligations  of  a 
stockliolder,  is  not  allowed.*  A  transfer  made  to  an  infant, 
or  other  person  incapable  of  contracting,  leaves  the  trans- 
ferrer liable  as  though  no  transfer  had  been  made."  But 
the  infant  transferee  may,  after  attaining  his  majority, 
as  in  case  of  any  other  contract  made  by  him,  ratify  the 
contract,  in  which  case  he  will  succeed  to  the  liability  of 
the  transferrer.'  Transfers  to  insolvents,  or  other  persons 
incapable  of  responding  to  creditors,  made  while  the  com- 
pany is  in  failing  circumstances,  or  insolvent,  with  the 
intent  on  the  part  of  the  transferrer  of  escaping  liability 
as  holder  of  the  shares,  are,  in  the  view  of  the  American 
couits,  void,  because  in  fraud  of  the  right  of  the  company; 
and  the  transferrer  remains  liable  as  though  no  such  trans- 
fer had  been  made.*  Transfers  to  the  company  itself  of 
unpaid  shares  are  in  general  void,  and  leave  the  transferrer 
liable  as  a  share-holder.*  But  valid  forfeitures  of  shares 
for  non-payment  of  calls  made  by  the  directors  while  the 
company  is  a  going  concern,  and  not  with  a  view  of  en- 
abling the  stockholder  to  escape  liability,  are  not  void; 
such  forfeitures  terminate  fully  the  liability  of  the  stock- 
holder, so  that  neither   the  corporation'  nor  its  crcdi- 


*  Chouteaii  Spring  v.  Harris,  20  Mo. 
382;  Muskingum  Tp.  Co.  v  Ward,  13 
Ohio,  120;  42  Am.  Dec.  191. 

'^  Capper's  Case,  L.  R.  3  Ch.  458; 
Roman  v.  Fry,  5  J.  J.  Marsh.  6.34; 
Castleman  v.  Holmes,  4  J.  J.  Marsh.  7. 

'Lumsden's  Case,  L.  R.  4  Ch.  31; 
Ebbett's  Case,  L.  R.  5  Ch.  302;  Baker's 
Case,  L.  R.  7  Ch.  115;  Maguire's  Case, 
3  De  Gex  &  S.  31;  Mitchell's  Case,  L. 
R.  9  Eq.  363;  Wilson's  Case,  L.  R.  8 
Eq.  240. 

*  Nathan  v.  Whitlock,  3  Edw.  Ch. 
215;  affirmed  on  appeal,  9  Paige,  152; 
Provident  Savings  Inst.  v.  Juck.son 
Place  Skating  Rink,  52  Mo.  557;  Mc- 
Claren  v.  Franc  iscas,  43  Mo.  452; 
Miller  v.  Great  Republic  lus.  Co.,  50 


Mo.  55;  Marcy  v.  Clark,  17  Mass.  330; 
Veiller  r.  Brown,  18  Hun,  571. 

6  Zulueta's  Claim,  L.  R.  5  Ch.  444; 
reversing  L.  R.  9  Eq.  270;  Ex  parte 
Credit  Foncier  and  Moljilicr  of  Eng- 
land, L.  R.  7  Ch.  161;  Morgan's  Case,  1 
De  Gex  &  S.  750;  1  Macn.  &  G.  225;  1 
Hall  &  T.  320;  Matter  of  Ruciprocity 
Bank,  22  N.  Y.  18;  Jolmson  v.  Lafflin, 
17  Alb.  L.  J.  14(5;  Tiioinpson's  Nat. 
Bank  Cases,  331;  6  Cunt.  L.  J.  124; 
Currier  v.  Lebanon  Slate  Co.,  56  N.  H. 
262;  contrn,  Verplanck  v.  Mercantile 
Ins.  Co.,  1  Edw.  Ch.  84;  Hartridge  r. 
Rockwell,  R.  M.  Charlt.  260;  GiUet  v. 
Moody,  3  N.  Y.  479. 

«  Small  V.  Herkimer  Mfg.  Co.,  2  N. 
Y.  330;  overruling  21  Wend.  273,  and 


§460 


CORPORATIONS. 


764 


tors '  can  afterwards  maintain  an  action  against  him  for 
any  impaid  installments  due  on  account  of  such  shares. 

§  460.  Effect  of  Transfer  of  Shares.  The  transfer  of 
shares  of  stock  in  a  corporation  works  a  complete  nova- 
tion. The  transferrer  ceases  to  be  a  member  of  the  cor- 
poration, and  is  discharged  from  all  further  liability.' 
The  transferee  takes  his  place,  and  becomes  entitled  to  all 
the  privileges  of  membership  and  all  the  future  profits; 
and  ho  likewise  assumes  all  the  obligations  of  the  former 
stockholder.'  The  transferee  of  stock  in  an  incorporated 
company  is  not  liable  for  an  unpaid  subscription  thereon.* 
One  w^  ''s  shares  of  the  capital  stock  of  a  corporation 
before  v  ae  of  certificates,  agreeing  to  give  the  buyer 
a  certificate  when  he  gets  it,  is  not  bound,  as  between 
the  ^uycr  and  hi'nself,  to  pay  an  assessment  laid  upon 
the  shares  subsequrntl/  to  the  sale,  and  before  the  issue 
of  certificates.*  On  a  sale  of  shares  of  corporate  stock  there 
is  no  implied  warranty  that  the  stock  has  not  been  fraudu- 
lently issued  by  the  officers  in  excess  of  the  amount  au- 
thorized by  the  charter.'  One  cannot,  by  purchase,  ac- 
quire a  title  to  a  seat  in  the  stock  exchange,  freed  from 
the  debts  of  a  former  owner  to  members  of  the  board.' 


2  Hill,  127;  Andover  etc.  Tnmpike 
Co.  V.  Gould,  G  Mass.  40;  4  Am.  Dec. 
80;  Franklin  Glass  Co.  v.  White,  14 
Mass.  2S(i;  Chester  Glass  Co.  v.  Dewey, 
16  Mass.  94;  8  Am.  Dec.  128;  Ripley 
t'.  Sampson,  10  Pick.  371;  Cutler  v. 
Middlesex  Factory,  14  Pick.  483;  Me- 
chanics' Foundry  and  Machine  Co.  r. 
Hall,  121  Mass.  272;  Ashton  v.  Bur- 
bank,  2  Dill.  435;  King's  Case,  L.  R. 
2  Ch.  714,  719,  731;  Knight's  Case,  L. 
R.  2  Ch.  321. 

1  Allen  V.  R.  R.  Co.,  11  Ala.  450; 
Mills  V.  Stewart,  41  N.  Y.  384  (Hunt, 
C.  J.,  and  Woodruff,  J.,  dissenting); 
affirming  G2  Barb.  444;  Macauly  v. 
Robinson,  18  La.  Ann.  G19. 

'  Idliam  V,  Buckingham,  49  K.  Y. 
216;  Cowles  v.  Cromwell,  25  Barb.  413; 
Cole  V.  Ryan,  52  Barb.  169;  Chouteau 
Spring  V.  Harris,  20  Mo.  382;  Miller 


V.  Ins.  Co.,  50  Mo.   65;   Johnson  v. 
Laflin,  6  Dill.  G5. 

»  March  v.  R.  R.  Co.,  43  N.  H.  515; 
Burroughs  v.  R.  R.  Co.,  C7  N.  C.  376; 
12  Am.  Rep.  Gil;  Bend  v.  Susque- 
hanna Bridge  Co.,  6  Har.  &  J.  128;  14 
Am.  Dec.  261;  Hall  v.  United  States 
Ins.  Co.,  5  Gill,  484;  Merrimac  Min- 
ing Co.  V.  Levy,  04  Pa.  St.  227;  93 
Am.  Dec.  G97;  Same  v.  Bagley,  14 
Mich.  501;  Maun  v.  Cnrrie,  2  Barb. 
294;  Hartford  R.  R.  Co.  v.  Boorman, 
12  Conn.  539;  Webster  v.  Upton,  91 
U.  S.  65. 

*  Messersmith  v.  Sharon  Sav.  Bank, 
96  Pa.  St.  440. 

'  Brigham  v.  Mead,  10  Allen,  245. 

•  People's  Bank  v.  Kurtz,  99  Pa.  St. 
344;  44  Am.  Rep.  112. 

'  Thompson  r.  Adams,  12  Phila. 
484. 


mum 


wm 


764 

him  for 
shares. 

rausfer  of 
ete  nova- 
f  the  cor- 
liability.' 
tied  to  all 
■e  profits; 
tie  former 
orporated 
.  thereon.* 
rporation 
the  buver 
3  between 
laid  upon 
the  issue 
tock  there 
3n  fraudu- 
aount  au- 
chase,  ac- 
reed  from 
)oard.' 

Johnson  v. 

N.  H.  515; 
>7  N.  C.  376; 
r.  Siisque- 
&  J.  128;  14 
Initeil  States 
rrimac  Min- 
St.  227;  93 
Bagley,  14 
io,  2  Barb. 
V.  Boorman, 
Upton,  91 

Sav.  Bank, 

i^Uen,  245. 
z,  99  Pa.  St. 

12   Fhila. 


765 


STOCKHOLDERS. 


§461 


iLLUSTRATTOira. — A  was  the  holder  of  shares  as  collateral 
security  for  a  debt,  without  a  transfer  thereof  to  him  on  the 
books  of  the  company.  Held,  not  to  be  the  legal  or  equita- 
ble owner  of  the  stock,  and  therefore  not  liable  as  a  stockholder: 
Henkle  v.  Salem  Mfg.  Co.,  39  Ohio  St.  547.  One  sold  stock  to 
A,  and  to  B  the  right  to  the  interest  due  upon  the  stock.  Held, 
that  the  right  to  interest  was  an  incident  to  the  shares,  and  de- 
pended upon  the  title  to  them,  and  that  B  could  not  maintain 
an  action  against  the  company:  Manning  v.  Quicksilver  Minina 
Co.,  24  Hun,  360.  T.  transferred  two  thousand  shares  of  stock 
to  F.,  a  niece  of  his  wife,  on  the  books  of  a  corporation,  but  re- 
tained the  certificates  in  his  possession;  and  after  his  death, 
they  were  found  in  an  envelope  with  his  own  name  and  that 
of  F.  indorsed  thereon.  F.  had  no  knowledge  of  the  transfer; 
she  lived  in  the  family  of  T.,  and  was  in  all  respects  treated 
and  regarded  as  his  daughter.  Held,  that  the  transfer  on  the 
books  of  the  corporation  vested  in  F.  the  legal  title:  Robertas 
Appealy  85  Pa.  St.  84. 

§  461.  Formalities  Required  by  Charter  in  Transfer 
must  be  Observed.  —  The  formalities  required  by  the 
charter  in  the  transfer  of  shares  must  be  followed,  or  the 
transfer  will  not  be  effectual.*  Thus  where  it  is  required 
that  the  transfer  be  made  on  the  stock-books  of  the  com- 
pany, this  must  be  done,  or  the  legal  title  will  not  pass.' 
Where  the  by-laws  of  a  corporation  require  that  stock 
shall  be  transferred  on  the  books  of  the  company,  a 
transfer  by  assignment  and  delivery  only  will  not  be 
effective,  against  a  subsequent  judgment  creditor  of  the 
transferrer,*  or  an  attaching  creditor  without  notice.*  The 
liability  of  a  subscriber  to  stock  is  not  discharged  by  an 
informal  ex  parte  transfer  of  the  shares  in  writing,  not 
entered  on  the  books  of  the  corporation  or  recognized  by 
it,  accompanied  with  a  private  agreement  of  the  trans- 
feree that  the  transferrer  should  not  be  liable  for  anything 


^  Black  V.  Zacharie,  3  How.  483; 
Union  Bank  v.  Laird,  2  Wheat.  390. 

^  Lippitt  V.  Paper  Co.,  15  R.  I.  141; 
2  Am.  St.  Rep.  886;  Marlborough  Mfg. 
Co.  V.  Smith,  2  Conn.  579;  Brown  v. 
Adams,  5  Bias.  181;  Topeka  Mfg.  Co. 


V.  Bear  River  Co.,  5  Cal.  186;  63  Am. 
Dec.  117;  In  re  Murphy,  51  Wia. 
525. 

»  People's  Bank  v.  Gridley,  9  Cent. 
L.  J.  249. 

*  Fort  Madison  Lumber  Co.  v.  Ba- 


V.  Hale,  39  Kan.  23;  as  in  California    tavian  Bank,  71  Iowa,  270;  60  Am. 
aad  other  states  by  statute:  Weston    Bep.  780. 


§461 


CORPORATIONS. 


766 


unpaid  on  the  shares  so  transferred.*  Shares  in  a  bank, 
whose  charter  provides  that  they  shall  "be  transferable 
only  at  its  banking  house  and  on  its  books,"  cannot  be 
effectually  transferred,  as  against  a  creditor  of  the  vendor, 
who  attaches  them  without  notice  of  any  transfer,  by  a 
delivery  of  the  certificates  thereof,  together  with  an  as- 
signment and  blank  power  of  attorney  from  the  vendor 
to  the  vendee,  even  if  notice  of  such  transfer  be  given  to 
the  bank  before  the  attachment.''  A  provision  in  the  by- 
laws of  a  corporation,  requiring  transfers  of  its  capital 
stock  to  be  made  upon  its  books,  may  be  waived  by  the 
company,  and  if  waived  at  the  request  of  a  purchaser  of 
the  stock,  or  with  his  assent,  he  becomes  a  stockholder, 
and  directly  liable  for  future  assessments.'  The  secre- 
tary of  a  corporation  cannot  inquire  into  the  motives  of 
one  who  demands  that  his  shares  be  transferred.* 

Illustrations. — A  by-law  of  a  corporation  provided  that 
no  shares  of  its  stock  shall  be  transferred  on  its  books  un- 
til the  certificate  has  been  surrendered  to  its  president  or 
shown  to  be  lost.  Held,  to  be  binding  on  all  its  stockholders 
and  their  heirs:  State  v.  R.  R.  Co.,  30  La.  Ann.,  pt.  1,  308.  A 
received  from  a  bank  a  certificate  of  ten  shares  of  its  stock, 
expressed  to  be  "transferable  at  the  bank,"  and  afterwards 
transferred  it  to  plaintiff,  who  asked  of  the  bank,  but  was  re- 
fused, a  transfer  of  the  stock  on  its  books,  the  bank  having 
transferred,  previous  to  any  knowledge  of  plaintiff's  claim,  the 
stock  to  one  who  had  bought  it  at  a  sale  on  execution.  Held, 
that  the  stock,  according  to  the  terms  of  the  certificate,  was 
transferable  only  at  the  bank,  and  that  plaintiff,  not  having 
notified  the  bank  of  his  claim  previous  to  the  sale  on  execution, 
had  no  action  against  the  bank:  Williams  v.  Mechanics*  Bank, 
5  Blatchf  59.  The  act  incorporating  a  turnpike  company 
provided  that  the  shares  of  stock  should  be  transferable  only 
on  the  books  of  the  company,  in  such  manner  as  the  com- 
pany should  by  their  by-laws  direct;  and  a  by-law  of  the 
company  provided  that  the  board  of  directors  should  prescribe 
the  form  of  transfer  to  be  registered  by  the  clerk  on  the  books 
of  the  company,  and  that  no  transfer  should  be  valid  unless  so 

'Bell's  Appeal,  115  Pa.  St.  88;  2  *  Upton  v.  Burnham,  3  Bias. 
Am.  St.  Rep.  532.  431. 

'  Fisher  v.  Essex  Bank,  5  Gray,  373.        *  In  re  Klaus,  67  Wis.  401. 


766 


767 


STOCKHOLDERS. 


§462 


a  a  bank, 
ansferable 
cannot  be 
he  vendor, 
isfer,  by  a 
ith  an  as- 
he  vendor 
le  given  to 
in  the  by- 
its  capital 
^ed  by  the 
irchaser  of 
ockholder, 
The  secre- 
motives  of 
d.* 

jvided  that 

I  books  un- 

)resident  or 

tockholders 

.  1,  308.     A 

►f  its  stock, 

afterwards 

but  was  re- 

ank  having 

claim,  the 

ion.     Held, 

ificate,  was 

not  having 

execution, 

mics^  Bank, 

company 

ierable  only 

8  the  com- 

aw  of  the 

d  prescribe 

the  books 

d  unless  so 

m,     3     Bias. 
401. 


made  and  registered.  Held,  that  a  written  assignment  of  stock, 
made  in  pais  in  the  form  prescribed  by  such  by-law,  and  sea- 
sonably registered  at  length  by  the  clerk  on  tlic  books  of  tho 
conjpany,  was  a  transfer  on  the  books  of  tho  company  within  tho 
meaning  of  the  charter,  and  conveyed  the  legal  title:  Northroj) 
V.  Curtis,  5  Conn.  246;  Richmondville  Mfg.  Co.  v.  Pmll,  9  Conn. 
487;  Bridgeport  Bank  v.  R.  R.  Co.,  30  Conn.  231.  M.  delivered 
to  tiie  complainants  certificates  of  stock  in  a  corporation,  ac- 
companied by  an  irrevocable  power  of  attorney  for  their  trans- 
fer, as  collateral  security  for  his  notes  and  renewals  of  them. 
The  corporate  charter  declared  tho  stock  personal  property,  and 
"transferable  on  the  books,"  and  that  "books  of  transfer  of 
stock  should  be  kept,  and  should  be  evidence  of  the  ownership 
of  said  stock  in  all  elections,"  etc.,  by  tho  stoekholders.  Held, 
that  this  transfer  to  complainants  was  effectual  as  against  the 
attachment  levied  upon  the  stock  thereafter  l)y  a  creditor  of  M.: 
Broadway  Bank  v.  McElrath,  13  N.  J.  Eq.  24.  In  the  charter 
of  a  corporation  it  was  provided  that  the  stock  might  bo  "trans- 
ferred on  the  books  of  the  company."  The  company  was  em- 
powered "to  regulate  the  transfer  of  stock  "  by  by-laws;  and  in 
certain  cases  to  make  assessments  on  stockholders,  for  raising 
funds  for  purposes  of  improvement,  or  purchasing  lands  in  such 
amount  as  they  may  deem  proper.  Held,  that  tho  company 
could  not  make  an  assessment  on  any  one  who  had  ceased  to 
be  a  member  by  transferring  his  stock;  that  tho  power  'to  reg- 
ulate the  transfer  of  stock  "  did  not  include  the  power  to  pre- 
vent transfers,  nor  to  prescribe  to  whom  the  owner  may  sell,  or 
to  whom  not,  or  on  what  terms;  and  that  an  assignnient  "on 
the  books  of  the  company"  changed  the  ownership,  without 
obtaining  a  new  certificate,  and  an  assignment  on  a  separate 
paper,  notice  being  given  to  the  company,  was  valid  against 
them:  Chouteau  Spring  Co.  v.  Harris,  20  Mo.  382. 

§  462.  Equitable  Assignments. — Yet  an  assignment  not 
in  accordance  with  the  rules  of  the  corporation  will  con- 
stitute an  equitable  assignment,  and  the  interests  of  the  as- 
signee will  be  protected  by  the  courts.^  The  provisions  as 
to  registration  are  simply  for  the  protection  of  the  corpora- 
tion, and  as  between  the  parties  the  assignment  is  good.^ 


^  Morawetz  on  Corporations,  sec. 
326;  Parrott  v.  Byers,  40  Cal.  614; 
Black  V.  Zacharie,  3  How.  483;  U.  S. 
V.  Vaughan,  3  Binn.  394;  5  Am.  Dec. 
375;  Bank  v.  Smalley,  2  Cow.  770; 
14  Am.  Dec.  526. 

'  McNeU  V.  Bank,  46  N.  Y.  331;  7 


Am.  Rep.  341;  Commercial  Bank  v. 
Kortright,  22  Wend.  348;  34  Am. 
Dec.  317;  Duke  v.  Navigation  Co.,  10 
Ala.  82;  44  Am.  Dec.  472;  Farmers' 
etc.  Bank  V.  Wasson,  48  Iowa,  .S.36;  30 
Am.  Rep.  398;  Baldwin  v.  Cautield, 
26  Minn.  43. 


J  462 


CORPORATIONS. 


768 


Until  actual  transfer,  the  title  of  the  purchaser  of  stock  is 
merely  equitable,  and  persons  dealing  with  him  take  the 
risk  that  the  equitable  title  is  such  that  he  can  compel  a 
transfer  of  the  legal  title.*  Equity  will  protect  the  claim 
of  the  holder  of  a  certificate  of  stock,  although  the  trans- 
fer was  not  made  to  him  in  the  manner  prescribed  by  the 
by-laws  and  charter  of  the  corporation,  and  will  compel 
the  original  owner  thereof  to  pay  a  note  given  by  him  for 
the  stock,  in  order  to  provide  means  for  its  redemption.* 
A  certificate  of  stock  assigned  to  secure  a  loan,  but  not 
transferred  on  the  books  of  the  corporation,  vests  a  title 
in  the  assignee  that  the  chancery  court  will  protect  against 
one  attaching  the  stock,  in  a  suit  against  the  assignor,  with 
knowledge  of  facts  sufficient  to  put  him  on  inquiry  re- 
garding the  equitable  ownership.'  The  fact  that  the 
stock  of  a  corporation  is  only  transferable  on  the  books  of 
the  company  does  not  prevent  a  stockholder  from  mak- 
ing a  valid  pledge  of  his  stock  by  delivering  certificates 
thereof  to  his  creditor.*  A  transfer  of  stock  by  ticket, 
entry  on  the  books,  and  surrender  of  the  certificate,  gives 
to  the  transferee,  as  between  himself  and  the  corporation, 
a  complete  title  to  the  stock,  although  no  certificate  was 
issued  to  him  in  lieu  of  the  one  canceled.*  Precedence 
will  be  given  to  an  unrecorded  transfer  of  the  stock  of  a 
bank  which  has  passed  no  by-law  on  the  subject,  over  a 
subsequent  attachment  by  a  creditor  of  the  assignor.* 
Where  a  vendor  of  stock  has  made  efforts  to  get  the  as- 
signment perfected  on  the  transfer-books  of  the  corpora- 
tion, and  on  failure  to  accomplish  this  has  made  an  effort 
to  make  the  assignments  as  notorious  as  possible,  using 
not  only  due  diligence,  but  all  possible  diligence,  his  re- 
tention of  possession  is  exempted  from  the  condemnation 
of  the  law,  and  a  perfect  equitable  title  vests  in  his  vendees, 


»  Wood  V.  Maitland,  10  Phila.  84. 
'  Home  Stock  lus.  Co.  v.  Sherwood, 
72  Mo.  461. 
»  Oheever  v.  Meyer,  62  Vt.  66. 


*  Blouia  V.  Hart,  30  La.  Ann.,  pt. 
1,  714. 

*  Bank  v.  GiflFord,  47  Iowa,  575. 

'  Scott  V.  Bank,  15  Fed.  Rep.  494. 


768 


709 


STOCKHOLDERS. 


§485 


stock  is 
take  the 
iompel  a 
lie  claim 
le  trans- 
d  by  the 
.  compel 
'  him  for 
imption.'' 
,  but  not 
jts  a  title 
;t  against 
nor,  with 
quiry  re- 
that  the 
I  books  of 
om  mak- 
ortificates 
jy  ticket, 
ate,  gives 
poration, 
cate  was 
ecedence 
Itock  of  a 
3t,  over  a 
issignor." 
tt  the  as- 
corpora- 
an  effort 
kle,  using 
le,  his  re- 
pmnation 
I  vendees, 

Ann.,  pt. 

ira,  575. 
Rep.  494. 


which  will  be  protected  as  against  subsequent  attaching 
creditors  of  the  vendor.* 

Illustrations. — The  president  of  a  corporation  sold  a  num- 
ber of  shares  of  stock  in  the  corporation,  giving  the  purchuHcr 
a  certificate  providing  that  the  sliares  were  transferable  "only 
on  the  books  of  the  corporation,  on  the  surrender  of  this  certifi- 
cate." After  the  president  had  ceased  to  act  as  such,  the  sliiires, 
not  having  been  transferred  on  the  books  of  the  corporation, 
were  attached  in  a  suit  against  him  by  the  company,  us  his 
property.  Ileldj  that  the  company  were  chargeable,  under  the 
circumstances,  through  their  president,  with  notice  of  the  sale 
of  the  shares  by  him,  and  th  t,  in  the  absence  of  fraud  on  the 
part  of  the  purchaser,  the  attachment  did  not  affect  the  title  of 
the  latter:  Scripture  v.  Soapstone  Co.,  50  N.  II.  571.  A  legal 
owner  of  a  certificate  of  city  stock,  transferable  by  its  terms  only 
at  the  city  treasurer's  office,  by  appearance  in  person,  or  by  at- 
torney, indorsed  the  certificate  in  blank,  and  delivered  it  to  an- 
other person,  who  hypothecated  it  to  a  bank.  The  owner  died, 
and  the  certificate,  by  virtue  of  a  transfer  written  over  his  name 
by  the  cashier,  was  transferred  to  the  bank  on  the  books  of  the 
city  treasurer.  Held,  that  the  indorsement  and  delivery  was 
an  equitable  assignment,  and  the  transfer  proper;  and  that  the 
terms  of  the  certificate  as  to  transfer  were  to  protect  the  corpo- 
ration itself  and  purchasers  without  notice:  Fraser  v.  Charles- 
ton, 11  S.  C.  486.  B.  transferred,  on  the  books  of  a  corporation, 
his  shares  to  G.  as  collateral  security.  Afterwards  the  neces- 
sity for  the  security  being  at  an  end,  G.,  at  B.'s  request,  in- 
dorsed and  transferred  the  certificate  to  D.,  a  creditor  of  B. 
Before  any  record  of  this  transfer  had  been  made  on  the  corpo- 
ration books,  another  creditor  of  B.  attached  the  shares  as  B.'s 
property.  Held,  that  the  attachment  could  not  be  maintained: 
Beckwith  v.  Burrough,  13  R.  I.  294.  A  stockholder  transferred 
his  stock  in  good  faith,  but  did  not  cause  the  transfer  to  be 
made  upon  the  books  of  the  company,  as  required  by  the  stat- 
ute of  incorporation.  The  company  had  no  transfer-book,  and 
the  certificate  required  to  be  filed  and  recorded  in  the  town 
clerk's  oflice  was  not  signed  by  the  officers  of  the  company,  " 
required  by  its  by-laws,  but  was  recorded  by  the  direction  uf 
the  company,  who  acquiesced  and  recognized  the  transferee  as 
the  owner  of  the  stock.  Held,  that  the  original  stockholder  was 
not  liable  to  pay  calls  upon  the  stock  after  the  transfer:  hham 
V.  Buckingham,  49  N.  Y.  216. 

§  463.    Assignment  of  Shares  by  Indorsement  of  Certi- 
ficate.— Shares  of  stock  are  assignable  by  indorsement 

I  Colt  V.  Ives,  31  Coua.  25;  81  Am.  Dec.  161. 
Vol.  L— 49 


§4C4 


CORPORATIONS. 


770 


of  tho  certificate'  Tho  indorsomont  need  not  be  under 
seal.''  And  where  tlio  holder  signs  an  assignment  and 
a  power  of  attorney  to  execute  tho  transfer  on  the  stock- 
books,  with  tho  name  of  the  transferee  left  blank,  tho  cer- 
tificate will  pass  from  hand  to  hand,  and  tho  last  holder 
may  fill  up  the  blanks  with  his  own  name,  and  complete 
the  transfer  on  tho  books  of  tho  company." 


§  464.  Effect  of  Assignment  of  Oertificate  by  Indorse- 
ment— Rights  of  Purchaser. — Shares  of  stock  have  tho 
attributes  of  negotiable  paper.  The  holder  of  a  certificate 
indorsed  in  blank  gives  a  good  title  by  delivery,  and  the 
purchaser  does  not  take  subject  to  his  real  title.*  One 
who  takes  in  good  faith  and  for  valuable  consideration  a 
transfer  of  shares  in  the  capital  stock  of  a  corporation  is 
not  bound  to  look  behind  tho  certificate  assigned  him,  or 
to  examine  the  books  of  the  corporation  to  ascertain  the 
validity  of  assignments."  Certificates  of  stock  are  assign- 
able, and  pass  by  indorsement  as  bills  of  exchange  and 
promissory  notes  pass,  and  holders  of  such  certificates  are 
prima  facie  presumed  to  be  tho  bona  fide  owners,  and  an 
innocent  purchaser  thereof  for  value  will  hold  them 
against  the  true  owner  where  tho  latter  has  placed  it 
in  the  power  of  the  assignor  to  perpetrate  a  fraud  upon 
the  innocent  assignee.*  In  New  York,  New  Jersey,  Lou- 
isiana, and  South  Carolina  it  is  held  that  a  transfer  by 
the  delivery  of  the  certificates  is  good  against  an  attach- 
ing creditor  of  the  transferrer,  when  the  attachment  is 


*  Morawetz  on  Corporations,  sec. 
328. 

''  Atkinson  v.  Atkinson,  8  Allen,  15. 

»  Kortright  v.  Bank,  20  Wend.  91; 
22  Wend  348;  34  Am.  Dec.  317;  New 
York  etc.  R.  R.  Co.  v.  Schuyler,  34 
N.  Y.  30;  McNeil  v.  Bank,  40  N.  Y. 
325;  7  Am.  Rep.  341;  Holhrook  v. 
Zinc  Co.,  57  N.  Y.  661;  Weaver  v. 
Barden,  49  N.  Y.  286;  Leitch  v.  Wells, 
48  N.  Y.  586;  Winter  r.  Belmont  Min- 
ing Co.,  53  Cal.  48;  First  Nat.  Bank 


V.  Gifford,  47  Iowa,  575;  Fraser  v. 
Charleston,  11  S.  C.  486;  Matthews  v. 
Bank,  I  Holmes,  396. 

♦  McNeil  V.  Nat.  Bank,  46  N.  Y. 
325;  7  Am.  Rep.  341 ;  Winter  v.  Bel- 
mont Mining  Co.,  53  Cal.  428;  Moodie 
V.  Bank,  11  Phda.  366. 

*  Mills  r.Townshend,  109  Mass.  115. 
•Supply  Ditch  Co.   v.   Elliott,    10 

Col.  327;  3  Am.  St.  Rep.  586.  But 
see  Young  v.  Iron  Co.,  85  Tenn.  189; 
4  Am.  St.  Rep.  752. 


770 


771 


STOCKnOLDERS. 


4G5 


)  unfler 
int  nn<l 
c  stock- 
tho  cer- 
,  lioUler 
omplete 


Indorse- 
Ill  ve  the 
ortificute 
and  the 
e."     One 
eration  a 
(ration  is 
I  him,  or 
rtain  the 
re  assign- 
ange  and 
icates  are 
and  an 
d   them 
jlaced  it 
lud  upon 
sey,  Lou- 
ansfer  by 
m  attach- 
iment  is 

5;  Fraser  v. 
Matthews  v. 

__,  46  N.  Y. 
inter  v.  Bel- 
428;  Mooclie 


made  after  such  transfer,  but  prior  to  any  transfer  harinj; 
been  made  and  entered  upon  the  books  of  the  company.' 
On  the  other  hand,  in  Massachusetts,  Maine,  California, 
Connecticut,  Vermont,  Tennessee,  Illinois,  New  Hamp- 
shire, and  Pennsylvania  the  transferee  is  protected 
only  when  the  transfer  is  made  on  the  books  of  the 
corporation,"  A  conveyance  of  shares  in  a  corporation 
is  not  within  the  recording  acts,  and  a  record  does  not 
charge  with  constructive  notice.'  Stocks  are  articles  of 
commerce,  passing  from  Imnd  to  hand  like  commercial 
paper,  and  the  doctrine  of  constructive  notice  by  lis  pen- 
dens is  not  applicable  to  them.''  In  a  certificate  of  stock 
issued  to  A  "in  trust,"  these  words  impose  upon  any 
transferee  the  duty  of  ascertaining  A's  authority  to 
hypothecate  the  stock.*  On  the  sale  of  stock  the  ven- 
dor does  not  warrant  that  the  corporation  is  a  corpora- 
tion dejure.^ 

§  46S.    Lien  of  Oorporation  on  Shares. —  A  corporation 
has  no  lien  on  the  shares  of  its  members  for  assessments 


09  Mass.  115. 
Elliott,  10 
r)86.  But 
15  Tenn.  189; 


*  Broadway  Bank  v.  McEIrath,  13 
N.  J.  Equ  24;  Hunterdon  Co.  Bank  v. 
Nassau  Bank,  17  N.  J.  Eq.  496;  Mc- 
Neil V.  Tenth  National  Bank,  46  N. 
Y.  325;  7  Am.  Rep.  341;  N.  Y. 
etc  R.  R.  Co.  V.  Schuyler,  34  N.  Y. 
30;  Commercial  Bank  of  Buffalo  v. 
Kortright,  22  Wend.  348;  34  Am. 
Dec.  317;  Bluin  v.  Hart,  30  La.  Ann. 
714;  State  Bank  of  South  Carolina  v. 
Cox,  11  Rich.  Eq.  344;  78  Am.  Dec. 
458.  In  Broadway  Bank  v,  McEIrath, 
13  N.  J.  Eq.  28,  the  court  says:  "To 
require  a  transfer  of  the  stock  to  the 
lender  as  security  for  the  loan  against 
the  right  of  attaching  or  execution 
creditors  will  at  once  destroy  the 
value  of  the  security,  or  compel  the 
borrower  to  divest  himself  of  his  char- 
acter as  corporator,  to  forfeit  his  con- 
trol of  the  business  of  the  corporation, 
of  his  right  to  dividends,  and  of  all  his 
other  ri^ts  as  a  stockholder  in  the 
corporation.  Why  should  the  owner 
of  stocks  be  deprived  of  the  privilege 
of  mortgaging  or  pledging  his  stock 


for  the  secifrity  of  a  loan,  without 
stripping  himself  of  all  his  rights  of 
ownership,  more  than  the  owner  of  any 
other  property  ?  "  And  sou  Merchants' 
Bank  27.  Richards,  6  Mo.  App.  454. 

"  Fisher  v.  Essex  Bank,  6  (Iray,  373; 
1  American  Railway  Cases,  127;  Shaw 
V.  Spencer,  100  Mass.  382;  1  Am.  Rep. 
115;  Williams  v.  Mechanics'  Bank 
etc.,  5  Blatchf.  59;  Brown  v.  Adams, 
5  Biss.  181 ;  People's  Bank  v.  Gridley, 
9  Cent.  L.  J.  249;  Bank  of  Commerce's 
Appeal,  73  Pa.  St.  59;  Naglee  v.  Pa- 
cific Wharf  Co.,  20  Cal.  529;  Sliip- 
man  v.  .^tna  Ins.  Co.,  29  Conn.  245; 
State  Ins.  Co.  v.  Sax,  2  Tenn.  Ch.  507; 
Sabin  v.  Bank  of  Woodstock,  21  Vt. 
353;  Pinkerton  v.  R.  R.  Co.,  42  N.  H. 
424;  Skowhegan  Bank  v.  Cutlur,  49 
Me.  315.  But  see  Cormick  v.  Rich- 
ards, 3  Lea,  1. 

3  Spalding  v.  Paine,  81  Ky.  416. 

♦  Leitch  V.  Wells,  48  N.  Y.  585. 

*  Budd  V.  Monroe,  18  Hun,  316. 
'Barter  v.  Eltzrotb,  111  Ind.  159. 


8  465 


CORPOltATIONS. 


772 


m 


or  other  debts  due  it,  and  hence  has  not  a  right  to  refuse 
to  permit  a  transfer  of  shares  to  be  executed  upon  the 
stock-book  because  the  holder  is  indebted  to  the  com- 
pany.^ But  this  lien  may  be  given  to  the  corporation  by 
its  charter  or  articles  of  association,^  or  by  its  by-laws,"'  or 
by  the  usage  of  the  company  known  to  the  stockholders.^ 
A  power  to  make  by-laws  to  regulate  the  management  of 
the  business  of  an  association  is  sufficient  to  justify  a  by- 
law creating  a  lien  on  the  stock."  Where  the  charter  pro- 
vides that  transfers  of  stock  shall  be  made  only  according 
to  the  by-laws  of  the  corporation,  and  a  by-law  is  adopted 
prohibiting  any  transfer  by  a  stockholder  liable  for  any  in- 
debtedness to  the  company,  such  indebtedness  by  a  firm 
of  which  a  stockholder  is  a  member  is  a  lien  on  his  stock." 
The  by-law  of  a  bank  forbidding  the  transfer  of  stock 
where  the  owner  is  indebted  to  the  bank  is  valid,  although 
inconsistent  with  the  general  law  of  the  state  governing 
the  transfer  of  property;  and  in  case  of  the  salj  under 
execution  of  shares  of  stock,  the  puchaser  cannot  recovar 
the  shares  in  an  action  of  trover  against  the  bank,  till 
such  indebtedness  be  satisfied.^  Dividends  due  when  no- 
tice of  the  assignment  was  received  may  be  retained  as 
security  for  the  indebtednesss  of  the  assignor  to  the  com- 
pany.* The  provision  in  the  charter  of  a  bank,  giving 
the  bank  a  specific  lien  upon  the  stock  of  a  share-holder 


>  Heart  v.  State  Bank,  2  Dev.  Eq. 
Ill;  Williams  v.  Lowe,  4  Neb.  398; 
VansanJs  i'.  Middlesex  Co.  Bank,  26 
Conn.  ]  14;  Neale  v.  Jannfiy,  2  Cranch 
C.  C.  188;  Farmers' etc.  Bank  v.  Was- 
8on,  48  Iowa,  340;  Sargent  v.  Ins.  Co., 
8  Pick.  90;  19  Am.  Dec.  306;  Massa- 
chusetts etc.  Co.  V.  Hooker,  7  Cush. 
183;  Driscoll  v.  Manufacturing  Co., 
59  N.  Y.  102;  Steamship  etc.  Co.  v. 
Heron,  52  Pa.  St.  280;  Dana  u  Brown, 
1  J.  J.  Alarah.  304;  People  v.  Crock- 
ett, 9  C;il.  112;  Fitzhugh  v.  Bank,  3 
T.  B.  Mon.  126;  16  Am.  Due.  90. 

2  Brent  v.  Bank,  10  Pet.  .596;  Grant 
V,  Bank,  15  Serg.  &  R.  140;  German 
Security  B:uik  v,  Je£ferson,  10  Bush, 


326;   Arnold  v.  Bank,  27  Barb.  424; 
Leggett  V.  Bank,  24  N.  Y.  283. 

*  Vansandst'.Middlesexetc.  Bank,  "6 
Conn.  144;  Perpetual  Ins.  Co.  v.  Good- 
fellow,  9  Mo.  )  *9;  Mechanics'  Bank  r. 
Merchants'  Bank,  45  Mo.  51.'];  100 
Am.  Dec.  388;  seelu  re  Dunkersou,  4 
Biss.  227. 

*  Morgan  v.  Bank,  8  Serg.  &  R.  71^; 
11  Am.  Dec.  575. 

''  Lockwooil  V.  Mechanics'  National 
Bank,  9  R.  I.  308. 

«  Gcyer  v.  Ins.  Co.,  3  Pittsb.  41. 

^  Mechanics'  Bank  v.  Merchants' 
Bank,  45  Mo.  513;  100  Am.  Deo.  .S!yS. 

*  Sargent  v.  Franklin  Ins.  Co.,  8 
Pick.  90;  19  Am.  Dec.  307. 


mm 


772 

ht  to  refuse 
i  upon  the 
,0  the  coin- 
poratioii  by 
by-laws,''  or 
ockholders.^ 
lagement  of 
ustify  a  by- 
charter  pro- 
y  according 
;v  is  adopted 
e  for  any  in- 
3S  by  a  firm 
n  his  stock." 
fer  of  stock 
id,  although 
B  governing 
!  salj  under 
mot  recovsr 
[le  bank,  till 
lie  when  no- 
retained  as 
to  the  com- 
ank,  giving 
hare-holder 

27  Barb.  424; 

.  Y.  283. 

sex  etc.  Bank,  26 

Ills.  Co.  V.  Oootl- 

chanicb'  Bank  i: 

Mo.   5ir.;    100 
re  Uuukersou,  4 

i  Serg.  &  R.  73; 

lauica'  National 

Si'ittsb.  41. 

V.  Merchants' 
)  Atn.  Dec.  ."^SS. 
in   lus.    Co.,  8 

307. 


773 


STOCKHOLDERS. 


§465 


for  debts  due  to  the  bank,  does  not  by  implication  give  a 
lien  upon  dividends  accruing  after  the  death  of  the  share- 
holder.^ The  corporation  may  waive  its  lien,''  as,  for  ex- 
ample, by  permitting  the  transfer,^  or  by  representing  to 
the  transferee  that  the  shares  were  unencumbered.* 

Illustrations. — A  stockholder  of  a  corporation  died  insol- 
vent and  indebted  to  the  corporation,  and  subsequently  the 
directors,  by  resolution,  prohibited  the  transfer  of  stock  by  any 
debtor  of  the  company  until  the  debt  should  be  paid  or  secured. 
The  stockholder's  administratrix  afterward  sold  the  stock  to  a 
person  who  was  ignorant  of  the  indebtedness,  and  of  the  resolu- 
tion. Held,  that  the  corporation  had  no  right  to  refuse  to  trans- 
fer the  stock  to  the  purchaser:  Steartiship  Dock  Co.  v.  Heron,  52 
Pa.  St.  280.  A  corporation  had,  by  its  charter,  a  lien  upon  the 
shares  of  stockholders  for  debts  due  from  them  to  the  corpora- 
tion. A ,  a  stockholder,  caused  his  stock  to  be  transferred  on 
the  bv.oxv3  of  the  corporation,  which  was  the  only  manner  in 
which  an  assignment  could  be  made,  to  a  fictitious  name,which 
was  known  to  the  ofi&cers  of  the  corporation.  A  afterwards 
caused  the  stock  to  be  transferred  to  the  plaintiff,  by  a  person 
represented  by  him  to  be  the  holder,  as  security  for  a  debt  due 
the  plaintiff  from  A;  but  no  money  was  paid  on  the  transfer. 
Held,  that  the  lien  of  the  corporation  upon  the  stock,  for  a  debt 
due  from  A,  was  not  thereby  divested:  Stebbins  v.  Phoenix  Fire 
Ins.  Co.,  3  Paige,  350.  The  president  of  a  bank,  who  was  a 
surety  upon  the  note  of  an  insolvent  stockholder  to  a  third  per- 
son, took  an  assignment  of  his  stock  for  indemnity.  The  stock- 
holder was  also  indebted  to  the  bank.  Held,  that  in  the  absence 
of  fraud  or  concealment,  the  president  had  the  right  to  such 
security  as  between  himself  and  the  bank,  and  the  bank  had  no 
equitable  right  thereto:  Farmers'  etc.  Bank  of  Lineville  v.  Was- 
ifO/(,  48  Iowa,  336;  30  Am.  Rep.  398.  A  banking  association 
had  not,  before  it  obtained  its  charter,  a  lien  on  the  stock  of  its 
stockholders.  Held,  that  the  lien  given  by  the  charter  could 
not  overreach  a  prior  assignment  of  stock  so  as  to  preclude  its 
transfer:  Neale  v.  Janney,  2  Cranch  C.  C.  188.  A,  owning  shares 
in  a  bank,  transfers  them  to  B,  and  the  bank  issues  a  new  cer- 
tificate to  B,  the  terms  of  the  certificate  making  the  shares 
"transferable  after  the  holder  pays  all  his  liabilities  to  said 
bank."  Held,  a  waiver  of  the  lien  of  the  bank  upon  such  shares 
for  payments  due  from  A:   Hill  v.  Pine  River  Bank,  45  N.  H. 


»  Brent  v.  Bank,  10  Pet.  595. 
^  Morawctz    ou    Corporatioiw,   sec 
330;  Nat.  Bank  v.  Bank,  105  U.  S.  217. 


»  Hill  V.  Bank,  45  N.  H.  300. 
*  Moore  v.  Bank,  52  Mo.  Stt  7, 


466 


COBPORATIONS. 


774 


300.  A  bank,  empowered  to  make  "all  needful  rules  and  by- 
laws for  the  ....  mode  and  manner  of  transferring  its  stock," 
enacted  a  by-law  that  the  stock  should  be  assignable  only  on 
its  books,  and  no  transfer  should  be  made  by  any  stockholder 
indebted  to  it,  and  that  the  certificates  of  stock  should  contain 
notice  of  this  provision.  A  certificate  of  stock  was  issued  to  C, 
reciting  that  the  shares  were  "transferable  at  the  office,  in  per- 
son or  by  attorney."  C.  pledged  the  certificate  to  P.  as  collat- 
eral security,  by  an  assignment  indorsed  thereon,  appointing 
him  attorney  to  demand  and  obtain  a  transfer  on  the  books. 
The  bank  refused  P.'s  demand  for  a  transfer,  on  the  ground 
that  C.  owed  it  more  than  the  value  of  the  stock,  and  that  it 
had  a  lien  on  ihe  stock  therefor.  P.  had  no  actual  notice  of 
this  claim  at  :he  time  of  the  assignment.  Held,  that  P.  was  en- 
titled to  the  transfer:  Bank  of  Holly  Springs  v.  Pinson,  58  Miss. 
421;  38  Am.  Rep.  330.  A  statute  gives  to  corporations  at  "all 
times"  a  lien  on  members'  stock  for  "all"  the  debts  due  from 
them  to  the  corporation.  Held,  that  the  lien  attaches  whether 
the  debt  accrued  before  or  after  a  member's  acquisition  of  stock : 
Schmidt  v.  Hennepin  County  Barrel  Co.,  35  Minn.  511.  A  cer- 
tificate of  bank  stock  declared  that  the  holder  "is  entitled  to 

sbares  of  stock,  transferable  only  at  the  bank,  etc.,  on 

surrender  of  this  certificate."  Held,  not  to  waive  the  lien 
given  to  the  bank  by  its  charter,  providing  that  "all  debts  actu- 
ally due  to  the  company  by  a  stockholder  offering  to  transfer 
must  be  discharged  before  such  transfer  shall  be  made":  Reese 
V.  Bank,  14  Md.  271;  74  Am.  Dec.  536. 

§  466.  Remedies  against  Corporation  for  Refusing  to 
Allow  Transfer. — Where  the  corporation  wrongfully  re- 
fuses to  allow  the  transfer  on  its  books,  the  legal  holder  or 
the  assignee  may  resort  to  a  court  of  equity  and  obtain 
relief  compelling  the  company  to  make  the  transfer.*    It 


*  Morawetz  on  Corporations,  sees. 
337,405.  A  bill  in  equity  will  lie  to  com- 
pel the  delivery  of  certificates  of  stock 
to  one  who  has  already  the  equitable 
title  to  such  stock,  although  a  suit  at 
law  might  also  be  sustained  thoiefor: 
Hill  V.  Rockingham  Bank,  44  N.  H. 
667.  A  stockholder  may  compel  the 
company  to  transfer  his  stock  upon  its 
books.  Sucli  an  action  is  purely  one 
of  equitable  cognizance,  and  the  de- 
fendant cannot  demand  a  trial  by 
1'ury:  Cushman  v.  Thayer  Mfg.  Co.,  7 
)aly,  330.  Where  the  articles  or  by- 
laws of  an  association,  formed  with  a 
view  of  being  incorporated,  provide 


that  the  shares  are  "transferable  on 
the  books,"  nevertheless  an  assignee 
may  sue  the  corporation,  when  formed, 
for  refusing  to  issue  certificate.^  of 
stock,  although  the  assignment  was 
not  made  on  the  bookis:  Baltimore 
etc.  R.  R.  Co.  V.  Sewell,  35  Md. 
238;  6  Am.  Rep.  402.  An  assignee  uf 
stock  in  a  railroad  company,  oa  whieli 
an  installment  remains  unpaid  by  the 
original  subscriber,  may,  upon  prop- 
erly tendering  the  same,  with  interest, 
maintain  an  action  in  equity  to  conipol 
the  company  to  issue  to  him  a  stoik 
certificate:  Iron  R.  R.  Co.  v.  Frink,  41 
Ohio  St.  321;  52  Am.  Rep.  84. 


774 

lies  and  by- 
g  its  stock," 
ible  only  on 

stockholder 
ould  contain 
issued  to  C, 
)ffice,  in  per- 

P.  as  collat- 
,  appointing 
u  the  books. 

the  ground 
,  and  that  it 
ual  noiice  of 
at  P.  was  cn- 
ison,  58  Miss, 
itions  at  "all 
bts  due  from 
ches  whether 
tion  of  stock : 

511.  A  cer- 
is  entitled  to 
ank,  etc.,  on 
live  the  lien 
,11  debts  actu- 
g  to  transfer 
nade":  Reese 


Refusing  to 

ongfully  re- 

:al  holder  or 

and  obtain 

ransfer.*     It 

'transferable  on 
esa  an  assignee 
n,  when  formed, 

certiticate.4  of 
assignment  was 
loks:  Baltimore 
3ewell,    35   Md. 

An  aasigucc  of 
ipany,  on  which 
13  unpaid  by  the 
lay,  upon  prop- 
e,  witu  interest, 
quity  to  compel 
to  him  a  stock 
Co.  V.  Frink,  41 
Kep.  6/L 


775 


STOCKHOLDERS. 


466 


has  also  been  held  that  mandamus  will  lie  to  compel  the 
officers  of  a  corporation  to  make  a  transfer  on  its  books,^ 
and  it  is  likewise  held  that  the  assignee  may  treat  the 
refusal  to  transfer  as  a  conversion,  and  sue  the  company 
for  the  value  of  the  shares.^  Where  a  corporation  unrea- 
sonably refuses  to  transfer  shares  of  stock,  unless  under  a 
decree  of  court,  costs  will  be  decreed  against  it.'  A  cor- 
poration cannot  be  compelled  to  make  a  transfer  upon  its 
books  of  stock  which  has  been  issued  in  violation  of  the 
charter,  even  though  all  the  stockholders  may  have  con- 
sented to  the  issue.*  On  failure  to  transfer  stock  at  the 
request  of  a  pledgee,  a  bank  is  not  liable  for  subsequent 
depreciation  of  the  stock.® 

It  is  no  defense  to  an  action  of  this  kind  that  the  pres- 
ident was  sick  and  unable  to  sign  a  new  certificate,  the 
refusal  not  being  put  at  the  time  on  that  ground,  nor  that 
the  purchaser  did  not  leave  the  old  certificate  at  the  time 
he  made  the  transfer.*  The  holder  of  a  certilicate  of  stock 
may  maintain  an  action  for  damages  against  one  who, 
having  assigned  the  certificate,  causes  the  corporation  to 
refuse  to  transfer  the  stock  on  its  books,  by  presenting  to 
the  corporation  an  affidavit  that  he  had  lost  the  certificate, 
and  procuring  a  new  certificate  to  be  issued  in  its  stead 


'  Green  Mount,  etc.  Tp.  Co.  v.  Bulla, 
45  Ind.  1;  Townsend  v.  Mclver,  2 
S.  C.  25;  Campbell  v.  Morgan,  4  111. 
App.  105;  Cooper  v.  Canal  Co.,  2 
Murph.  195;  People  ».  Crockett,  9  Cal. 
112.  Contra,  Baker  v.  Marshall,  15 
Minn.  177;  State  v.  Rombaucr,  46  Mo. 
155;  Wiy.dnson  v.  Bank,  3  R.  I.  22; 
American  Asylum  v.  Phoenix  Bank,  4 
Conn.  172;  State  v.  Gruerrcro,  12 
Nov.  105;  Stackpole  v.  3eymour,  127 
Mass.  104;  Ex  par's  Fireman's  Ins. 
Co.,  6  Hii'l,  243;  Kimball  v.  Union 
Water  Co.,  44  Cal.  173;  13  Am.  Rep. 
157. 

'^  Commercial  Bank  v.  Kortright,  20 
Wend.  90;  22  Wend.  348;  34  Am. 
Dec.  318;  Scripture  i\  Company,  50 
N.  H.  571;  Protection  Ins.  Co.  v.  Os- 
good, 93  111.  09;  Merchants'  Nat.  Bank 
V.  Richards,  G  Mo.  App.  461;  Uelm  v. 


Swiggett,  12  Ind.  194;  Pinkerton  v. 
R.  R.  Co.,  42  N.  H.  424;  Bank 
V.  McNeil,  10  Bush,  54;  Comean 
V.  Guild  etc.  Oil  Co.,  3  Daly,  2! 8; 
Baltimore  etc.  R.  R.  Co.  v.  Seweil,  35 
Md.  238;  German  BuikUug  Ass'n  v. 
Seadmeyer,  50  Pa.  St.  07;  Morgan  v. 
Bank,  8  Serg.  &  R.  73;  1 1  Am.  Dec. 
575;  Sargent  v.  Franklin  las.  Co.,  8 
Pick.  9J;  19  Am.  Dec.  300;  Ramsey 
V.  R.  R.  Co.,  7  Abb.  Pr.,  N.  S.,  )83; 
Carroll  v.  Mullanphv  Savings  Bank,  8 
Mo.  App.  249;  Bond  v.  Ins.  Co.,  99 
Mass.  605;  97  Am.  Dec.  49. 
3  lasigi  V.  R.  R.  Co.,  129  INIass.  46. 

*  People  V.  Sterling  Mfg.  Co  ,  82  111. 
457.- 

*  Davton  Bank  v.  Merchants'  Bank, 
37  Ohio  St.  208. 

*  Bond  V.  Mount  Hope  Iron  Co.,  99 
Mass.  505;  97  Am.  Dec.  49. 


§46'i 


CORPORATIONS. 


776 


upon  executing  a  bond  "  to  save  said  company  harmless 
from  all  loss  or  damage  by  reason  of  said  second  issue  of 
stock,  and  from  any  liability  on  account  of  said  certificates, 
and  of  stock  described  in  said  affidavit."  * 

Illustrations. — By  the  terms  of  a  stock  certificate  it  was 
transferable  on  the  books  of  the  corporation  only  upon  its 
production.  B,  the  owner  of  such  certificate,  transferred  it  to 
A.  No  transfer  was  made  on  the  books.  After  B's  death,  his 
administrator  represented  that  the  certificate  was  lost,  and  the 
corporation  thereupon  issued  a  new  one  to  him,  made  a  transfer 
on  its  books,  and  paid  to  him  dividends.  Held,  that  notwith- 
standing A  could  compel  the  issue  of  a  certificate  to  himself, 
but  that  the  dividends  were  properly  paid  to  B.'s  administrator, 
as  no  rule  required  the  production  of  a  certificate  upon  making 
a  demand  for  dividends:  Brisbane  v.  R.  R.  Co.,  94  N.  Y.  204. 
The  purchaser,  at  a  sheriff" 's  sale  on  execution  of  stock  in  a 
corporation  whose  charter  gave  it  a  pre-emption  right  to  its 
stock,  filed  a  bill  in  equity  against  the  corporation  to  compel  a 
transfer  of  the  purchased  stock,  without  first  demanding  such 
transfer.  Held,  no  reason  for  dismissing  the  bill:  Barrows  v. 
National  Rubber  Co.,  12  R.  I,  173.  C.'s  husband,  without 
consideration,  executed  in  blank  an  assignment  and  power  of 
attorney  indorsed  on  a  certificate  of  shares  of  stock  of  a  man- 
ufacturing corporation,  and  delivered  the  same  to  her.  He 
afterwards,  for  a  valuable  consideration,  executed  an  assignment 
of  the  stock  to  B.,  and  caused  a  transfer  to  be  made  to  B.  on 
the  corporation's  books,  B.,  who  was  an  officer  thereof,  knowing 
of  the  assignment  to  C.  By  the  terms  of  the  certificate,  the 
stock  was  only  transferable  upon  the  books  on  surrender  of 
the  certificate.  Held,  that,  it  being  the  corporation's  duty  to 
resist  any  transfer  without  such  surrender,  the  transfer  to  B. 
was  no  valid  excuse  for  the  corporation's  refusing  C.'s  demand 
for  a  transfer.  The  fact  that  the  assignment  to  C,  was  without 
consideration  was  immaterial.  Such  demand  need  not  be  made 
by  the  one  whoso  name  was  inserted  as  attorney:  Cxishman  v. 
Thayer  Mfg.  Jewelry  Co.,  76  N.  Y.  665;  32  Am.  Rep.  315. 

§  467.  Liability  of  Corporation  for  Making  or  Permit- 
ting Unauthorized  Transfers. — "The  officers  of  the  com- 
pany are  the  custodians  of  its  stock-books,  and  it  is  their 
duty  to  see  that  all  transfers  of  shares  are  properly  made, 
either  by  the  stockholders  themselves  or  persons  having 

>  Grecnleaf  v.  Ladington,  15  Wis.  658;  82  Am.  Dec.  698. 


776 


777 


STOCKHOLDERS. 


§467 


mrmless 

issue  of 

tificates, 

te  it  was 
upon  its 
rred  it  to 
leath,  his 
,  and  the 
a,  transfer 
;  notwith- 
>  himself, 
nistrator, 
n  making 
L  Y.  204. 
took  in  a 
;ht  to  its 
compel  a 
ling  such 
Narrows  v. 
,   without 

power  of 
Df  a  man- 

her.  Ho 
isignment 
I  to  B.  on 
,  knowing 

icate,  the 
Irender  of 
duty  to 

fer  to  B. 
demand 
Is  without 

be  made 

shman  V. 

15. 

Permit- 

the  corn- 
is  their 

^y  made, 
having 


authority  from  them.     If  upon  the  presentation  of  a  cer- 
tificate for  transfer  they    re  at  all  doubtful  of  the  identity 
of  the  party  offering  it  with  its  owner,  or  if  not  satisfied  of 
the  genuineness  of  a  power  of  attorney  produced,  they  can 
require  the  identity  of  the  party  in  the  one  case,  and  the 
genuineness  of  the  document  in  the  other,  to  be  satisfacto- 
rily established  before  allowing  the  transfer  to  be  made."* 
Therefore  if  the  shares  are  transferred  upon  the  stock- 
book  upon  a  forged  indorsement,  or  a  forged  power  of 
attorney,  the  real  owner  is  not  divested  of  his  right  as  a 
stockholder.*     So  a  transfer  of  stock   by  a  corporation 
upon  its  books  in  the  absence  of  the  original  certificate 
is  mir^e  at  its  peril,  and  the  real  owner  of  the  stock,  evi- 
denced by  such  certificate,  loses  nothing  thereby."'     A  cor- 
poration permitting  stock  held  by  trustees  to  be  transferred 
without  authority  from  the  will  creating  the  trust,  or  from 
the  court  having  jurisdiction  thereof,  under  circumstances 
making  the  corporation  chargeable  with  knowledge,  will 
be  compelled  to  make  good  the  loss  to  the  trust  estate,  by 
the  conversion  to  their  own  use  by  the  trustees  of  the 
proceeds  of  the  stock  so  transferred.*    A  corporation  which 
has  issued  a  certificate  of  stock  to  a  person  as  trustee,  and 
has  notice  of  the  name  of  the  '-estui,  but  on  the  trustee's 
wrongful  transfer  of  the  certificate  issues  a  new  one  with- 
out making  inquiry,  is  liable  to  the  rightful  owner  thereby 
injured,  without  proof  of  collusion  between  the  trustees 
and  itself.^     A  bank  whose  certificates  of  stock  entitle  the 
stockholder  upon  their  face  to  so  many  shares,  which  are 


*  Telegraph  Co.  v.  Davenport,  97 
U.  S.  371.  A  corporatioa  must  pro- 
tect its  share-holders  from  unauthor- 
ized tran^ifers  of  their  stock  upon  its 
books  so  far  as  the  exercise  of  proper 
diligence  and  care  will  enable  it  to  do 
so;  and  must  respond  to  them  in  dam- 
ages for  any  injury  sustained  by  them 
from  its  failure  to  exercise  such  care 
and  diligence:  Caulkins  v.  Gaslight 
Co.,  85  Tean.  683;  4  Am.  St.  Rep. 
780. 


»Tcl.  Co.  V.  Davenport,  97  U.  S. 
369;  Machinists'  Nat.  Bank  v.  Field, 
12G  Mass.  345;  Pollock  v.  Nat.  Bank, 
7  N.  Y.  274;  57  Am.  Dec.  521;  Sewall 
V.  Boston  Water  Power  Co.,  4  Allen, 
277;  81  Am.  Dec.  701. 

»  Supply  Ditch  Co.  v.  Elliott,  10  Col. 
327;  3  Am.  St.  Rep.  586. 

♦  Stewart  v.  Firemen's  Ins.  Co.,  53 
Md.  564. 

*  Loring  v.  Salisbury  Mills,  125  Mass. 
138. 


§467 


CORPORATIONS. 


778 


transferable  on  the  books  by  attorney  or  in  person,  when 
the  certificates  are  surrendered,  but  not  otherwise,  and 
wliich  allows  a  stockholder  to  transf:r  his  stock  on  the 
books  of  the  bank  without  producing  and  surrendering 
his  certificates,  is  liable  to  a  bona  fide  tranferee  for  value 
of  the  same  stock,  who  produces  the  certificates  with  a 
properly  executed  power  of  attorney  to  transfer.  The 
fact  that  the  bank  has  received  no  notice  of  the  latter 
transfer  is  immaterial.* 

Illustrations. — Plaintiff  took  in  the  regular  course  of  busi- 
ness an  assignment  of  stock  in  the  defendant  insurance  com- 
pany as  security  for  a  loan,  presented  the  certificates  to  tlie 
company,  and  received  new  certificates  in  lieu  thereof  The 
assignment  turned  out  to  be  a  forgery.  Held,  that  the  plaintiff, 
and  not  the  insurance  company,  must  sustain  the  loss:  Broivn 
V.  Fire  Ins.  Co.,  42  Md.  384;  20  Am.  Rep.  90.  The  infant  plain- 
tiffs owned  stock  in  the  defendant  corporation  standing  in  the 
name  of  "P.,  guardian."  The  guardian  placed  the  certificate 
with  a  blank  indorsement  in  the  hands  of  D.,  his  counsel,  for 
purposes  connected  with  his  trust.  D.  procured  an  order  of  court 
permitting  a  sale  and  reinvestment,  and  then  hypothecated  the 
certificate  to  the  S.  bank  as  security  for  a  loan  for  his  per- 
sonal use.  H.,  who  was  president  of  the  bank,  and  also  of  the 
defendant,  with  another  purchased  the  stock  from  the  bank,  and 
had  it  transferred  by  the  defendant  to  the  purchasers.  Ileld, 
that  the  defendant  was  chargeable  with  knowledge  of  the  trust 
and  its  beneficiaries,  and  liable  to  respond  to  the  plaintiffs  for 
the  stock:  Webb  v.  Graniteville  Mfg.  Co.,  11  S.  C.  396;  32  Am. 
Rep.  479.  Certificates  of  the  capital  stock  of  a  corporation  taken 
without  the  owner's  knowledge,  and  with  a  forged  power  of  at- 
torney delivered  for  sale  to  auctioneers,  were  sold  by  them  at 
auction,  and  delivered,  together  with  a  new  certificate  in  their 
own  name,  which  they  had  received  from  the  corporation,  to  the 
purchaser;  the  purchaser  presented  the  certificate  to  the  corpo- 
ration, which  thereupon  issued  to  him  a  new  certificate  in  his 
own  name.  Held,  in  a  suit  by  the  owner  against  the  corpora- 
tion and  purchaser,  that  the  owner  was  entithd  to  a  new  certifi- 
cate from  the  corporation,  and  to  the  dividends,  but  not  to  a 
decree  against  the  purchaser,  and  that  the  rights  between  the 
corporation  and  the  purchaser  must  be  settled  in  a  suit  between 
them:  Pratt  v.  Taunton  Copper  Company,  123  Mass.  110;  2.5  Am. 
Rep.  37.     The  signatures  to  powers  of  attorney  for  transfer  were 

1  Bank  v.  Lanier,  11  Wall.  369. 


■mm 


779 


STOCKHOLDERS. 


468 


ourse  of  husi- 


genuine,  but  at  the  time  of  the  transfer  were  thirteen  years  old. 
IIcUl,  that  the  corporation  was  put  on  inquiry,  and  was  bound 
first  to  ascertain  if  the  powers  had  been  revoked:  Pennsylvania 
R.  R.  Co.'s  Appeal,  86  Pa.  St.  80.  Certain  stock  stood  on  the 
books  of  a  corporation  in  the  names  of  two  persons,  "  executors  of 
A."  It  was  then  transferred  on  the  books  to  f  B,  guardiiin,"  and 
a  certificate  issued  in  B's  name.  B  was  the  guardian  of  the 
minor  children  of  A.  B  indorsed  the  certificate  and  intrusted  it 
to  C,  his  attorney.  C,  by  a  petition  in  B's  name,  procured  an 
order  from  a  circuit  judge  for  the  sale  of  the  stock  and  reinvest- 
ment of  the  money.  C  then  hypothecated  the  stock  to  a  bank 
for  money  for  his  own  use.  C  failed  to  redeem,  and  the  stock 
was  sold,  the  bank  purchasing,  and  afterwards  transferring  it  to 
its  president,  E,  also  president  of  the  corporation,  and  to  F.  In 
an  action  by  the  wards,  held,  that  the  books  of  the  corporation, 
the  certificate  of  stock,  and  order  of  the  judge  were  sufficient  to 
put  E  on  inquiry,  and  charge  him  with  a  knowledge  of  the  trust 
and  conversion;  that  his  knowledge  in  the  matter  was  the  knowl- 
edge of  the  corporation  of  which  he  was  president,  and  that  the 
corporation,  as  well  as  B,  the  guardian,  was  liable:  Webb  v. 
Graniteville  Mfg.  Co.,  11  S.  C.  396. 


§  468.  Status  of  Shares  as  Property.— Shares  in  a 
corporation  are  not  real  property  even  where  the  corpo- 
ration owns  real  estate.^  They  are  not  an  "  interest  in 
land"  within  the  statute  of  frauds,''  but  stock  in  an  in- 
corporated company  is  "property"  within  the  meaning 
of  the  Kentucky  code.^  They  are  not  subject  to  dower.* 
On  the  death  of  the  owner,  they  pass  to  the  executor,  and 
not  to  the  heir.®  They  are  generally  by  statute  declared 
to  be  personal  property."  They  are  "goods,  wares,  and 
merchandise,"  within  the  statute  of  frauds.'  A  share  of 
the  capital  stock  gives  the  right  to  partake,  according 
to  the  amount  put  into  the  fund,  of  the  surplus  profits  of 
the  corporation,  and  ultimately,  on  the  dissolution  of  it, 


»  Edwards  v.  Hall,  6  De  Gex,  M.  & 
G.  74. 

'  Bradley  v.  Holdsworth,  3  Mees.  & 
W.  422. 

^  Field  V.  MoatmoUin,  5  Bush,  455. 
■    *  Johns  V.  Johns,  1  Ohio  St.  350. 

^Hutchins  v.  Bank,  12  Met.  426. 
Contra,  Welles  v.  Cowles,  2  Conu.  567. 


«  Mohawk  etc.  R.  R.  Co.  v.  Clute,  4 
Paige,  384;  Kuhn  v.  McAllister,  1 
Utah,  273;  Griffith  v.  Watson,  19 
Kan.  23;  Union  Bank  v.  State,  9 
Yerg.  490;  Bank  v.  Waltham,  10  Met. 
334. 

T  Flue  V.  Hornaby,  2  Mo.  App.  61. 


g§  469-471 


CORPORATIONS. 


780 


of  80  much  of  the  fund  thus  created  as  remains  unim- 
paired, and  is  not  liable  for  debts  of  the  corporation.' 

§  469.  What  are  Profits.— By  "profits"  is  meant  the 
excess  of  receipts  over  expenditures,  or  the  net  earnings.' 
Profits  for  the  year  mean  the  surplus  receipts,  after  pay- 
ing expenses  and  restoring  the  capital  to  the  position  it 
was  in  on  the  first  day  of  the  year.' 

§  470.  Dividends  and  Interest  can  only  be  Paid  out  of 
Profits. — Dividends  can  only  be  paid  out  of  profits,  and 
cannot  bo  taken  out  of  the  capital,*  and  interest  on  shares 
must  be  paid  from  the  same  source."  A  corpora  ion  has 
no  power  to  contract  for  the  payment  of  interest  or  divi- 
dends on  its  capital  stock,  in  excess  of  the  earnings  of  the 
company."  The  action  of  directors  in  declaring  a  divi- 
dend with  a  knowledge  that  there  are  no  profits  is  ille- 
gal.' 

§  471.    Distribution  of  Profits — Discretion  of  Directors. 

—  It  is  generally  in  the  discretion  of  the  directors  whether 
profits  shall  be  distributed  in  dividends,  or  shall  be  al- 


I  Burrall  v.  R.  R.  Co.,  75  N.  Y. 
211. 

'^  la  Barry  v.  Merchants'  Exchange 
Co.,  1  Sand.  Ch.  307,  the  court  say: 
"The  capital  stock  of  a  corporation  is 
like  tliat  of  a  copartnership  or  joint- 
stock  company,  the  amount  which  the 
partners  or  associates  put  in  as  their 
stake  in  the  concern.  To  this  they 
add  upon  the  credit  of  the  company 
from  the  means  and  resources  of 
others,  to  such  extent  as  their  pru- 
dence or  the  confidence  of  such  other 
persons  will  permit.  Such  additions 
create  a  debt;  they  do  not  form  capital. 
And  if  successful  in  their  career,  the 
surplus  over  and  above  their  capital 
and  debts  becomes  profits,  and  is 
either  divided  among  the  partners  and 
associates,  or  used  still  further  to  ex- 
tend their  operations."  In  St.  John 
V.  R.  R.  Co.,  10  Blatohf.  271,  22  Wall. 
136,  Blatchford,  J.,  said:  "Net  earn- 
ings are  properly  the  gross  receipts. 


less  the  expenses  of  operating  the  road 
to  earn  such  receipts.  Interest  on 
debts  is  paid  out  of  wliat  thus  remains, 
that  is,  out  of  the  net  earnings.  Many 
other  liabilities  are  paid  out  of  the  net 
earnings.  When  all  liabilities  are 
paid,  cither  out  of  the  gross  receipts 
or  out  of  the  net  earnings,  the  re- 
mainder is  the  profits  of  tlie  share- 
holders to  go  towards  dividends,  which 
in  that  way  are  paid  out  of  the  net 
earnings":  Connolly  v.  Davidson,  15 
Minn.  519;  Eyster  v.  Centennial  Board, 
94  U.  S.  500. 

»  Hazeltine  v.  R.  R.  Co.,  79  Me. 
411;  1  Am.  St.  Rep.  330. 

*  Morawetz  on  Corporations,  sec. 
344. 

*  Rutland  R.  R.  Co.  v.  Thrall,  35  Vt. 
543. 

»  Pittsburg  etc.  R  R.  Co.  v.  AUe- 
gheuy  County,  63  Pa,  St.  126. 

1  Slaj'deu  v.  Coal  Co.,  25  Mo.  App. 
439. 


781 


STOCKHOLDERS. 


§472 


lowed  to  accumulate  for  future  use.'  But  the  directors 
must  not  abuse  this  discretion.  They  cannot  willfully 
withhold  profits,  or  apply  them  to  purposes  not  authorized 
by  the  charter.''  Dividends  declared  by  the  directors  and 
received  by  the  stockholders  may  be  reclaimed  by  the 
directors,  if  illegally  declared  under  a  misapprehension  of 
the  right  to  declare  them;  and  if  there  bean  assignment 
by  the  corporation  to  a  trustee,  such  right  to  reclaim 
dividends  improperly  declared  and  paid  passes  to  the 
assignee,  if  the  terms  of  the  assignment  are  sufficiently 
comprehensive  to  embrace  them.'  A  corporation  owning 
property  may  increase  either  income  or  capital  out  of 
money  in  its  hands,  according  to  the  discretion  of  its 
directors;  and  courts  will  not  go  behind  their  action,  and 
attempt  to  ascertain  how  they  came  by  the  funds  out  of 
which  they  declare  either  cash  or  stock  dividends.* 


§472.  Stock  Dividends.  —  The  corporation  may,  in- 
stead of  distributing  the  profits  in  the  form  of  dividends, 
issue  new  stock  and  distribute  it  amoui;  the  stockholders.^ 
There  is  nothing  in  the  law,  nor  public  policy,  prohibit- 
ing the  issue  of  scrip  dividends  to  represent  the  surplus 
earnings  of  a  corporation.'  A  stock  dividend  belongs 
to  the  holders  of  the  stock  at  the  time  of  the  declaration 
of  the  dividend,  without  regard  to  the  source  from  which, 
or  the  time  during  which,  the  funds  divided  were  acquired 


^  Morawetz  on  Corporations,  sec. 
348;  King  v.  R.  R.  Co.,  29  N.  J.  L.  82. 

*  Beers  v.  Bridgeport  Co.,  42  Conn. 
17;  Pratt  v.  Pratt,  33  Conn.  44G;  Scott 
V.  Eagle  Fire  Ins.  Co.,  7  Paige,  203. 

'  Lexington  etc.  Ins.  Co.  v.  Page, 
17  B.  Mon.  412. 

*  Minot  V.  Paine,  99  Mass.  101;  96 
Am.  Dec.  705. 

'  Morawet?!  on  Corporations,  sec. 
349. 

*  Williams  v.  Western  Union  Tel. 
Co.,  61  How.  Pr.  216.  Its  charter, 
and  the  statute  prohibition  against 
declaring  dividends  except  from  sur- 


plus profits,  and  against  a  division  of 
capital  stock,  without  consent  from 
the  legislature,  make  the  action  of  the 
Western  Union  Telegraph  Company, 
of  January,  1881,  in  declaring  and  dis- 
tributing a  stock  dividend,  ultra  vires 
and  void;  and  the  court  will  so  ad- 
judge at  the  instance  of  a  stockholder, 
who,  but  for  the  fact  that  the  public 
have  an  interest,  would  be  held  to 
have  precluded  himself  of  the  right  to 
complain  by  acquiescence  in  the  action 
of  the  company:  Williams  v.  Western 
Union  Tel.  Co.,  48  N.  Y.  Sup.  Ct. 
349. 


§§  473,  474 


CORPORATIONS. 


782 


by  the  corporation.*  Whether  the  distribution  by  a  cor- 
poration of  its  earnings  among  its  stockholders  is  an 
apportionment  of  stock  or  a  division  of  profits  depends 
upon  the  substance  and  intent  of  the  action  of  the  corpo- 
ration, as  shown  by  its  votes.''  Cash  dividends,  however 
large,  are  to  be  regarded  as  income,  and  stock  dividends, 
however  made,  as  capital.  A  cash  dividend  is  an  income 
from  capital,  and  a  stock  dividend  is  an  accretion  to  cap- 
ital.' 


§473.  Issuing  New  Stock  —  Increasing  the  Capital 
Stock. — Where  the  corporation  increases  its  capital  by 
issuing  and  selling  new  shares,  every  old  stockholder  has 
a  first  right  to  them  in  proportion  to  the  number  of  shares 
held  by  him."* 

§  474.  Payment  of  Dividends. — The  share-holder  has 
no  rights  to  profits  until  a  dividend  has  been  declared  or 
is  wrongfully  withheld.®  But  when  a  dividend  has  been 
declared,  each  stockholder  has  a  right  to  be  paid  his 
share,  which  he  may  recover  by  assumpsit  against  the 
corporation,"  or  equity  will  compel  payment.'  Mandamus 
is  not  a  proper  remedy.  Directors  who  have  failed  to 
declare  dividends  at  the  charter  time  cannot  declare  one 
extending  over  the  period  of  their  failure."  Unpaid  divi- 
dends of  a  joint-stock  company  are  assets,  and  liable  for 
the  debts  of  the  company.®  Dividends  are  to  be  consid- 
ered as  divided  and  paid  over  to  the  stockholders  of  an 
insurance  company  when  the  stockholders  have  received 


'  Jermain  v.  R.  K.  Co.,  91  N.  Y. 
483. 

« Rand  v.  Hubbell,  115  Mass.  461; 
15  Am.  Rep.  121. 

'  Minot  V.  Paine,  99  Mass.  101;  96 
Am.  Dec.  705. 

*Eidman  v.  Brown,  58  HI.  444, 
Contra  as  to  old  stock  which  has  come 
back  into  the  hands  of  the  corporation. 
This  may  be  sold  on  the  market:  Page 
V.  Smith,  48  Vt.  290. 


'  Morawetz  on  Corporations,  sec.351. 

•  King  V.  R.  R.  Co.,  29  N.  J.  L.  82, 
504;  Kane  v.  Bloodgood,  7  Johns.  Ch. 
90;  Jackson  v.  Plankroad  Co.,  31  N. 
J.  L.  277;  Westchester  R.  R.  Co.  ». 
Jackson,  77  Pa.  St.  321. 

'  Beers  v.  Bridgeport  Spring  Co.,  42 
Conn.  17;  Le  Roy  v.  Globe  Ins.  Co.,  2 
Edw.  Ch.  657. 

«  Gordon  r.  R.  R.  Co.,  78  Vt.  501. 

»  Curry  v.  Woodward,  44  Ala.  305. 


783 


STOCKHOLDERS. 


§474 


the  same  in  money,  or  in  credits  on  stock-notes  in  posses- 
sion of  the  company.*  A  stockholder  who  alleges  that  his 
right  to  participate  in  a  dividend  declared  by  the  corpo- 
ration has  been  wrongfully  denied  by  it  cannot  maintain 
an  action  in  the  first  instance  for  money  had  and  received 
against  another  stockholder  who  has  participated  in  such 
dividend.'*  The  acceptance  by  a  stockholder  of  a  dividend 
upon  his  stock  can  be  no  ratification  of  the  illegal  conduct 
of  the  directors.'  The  sale  of  shares  gives  the  purchaser 
the  right  to  dividends  already  declared,  but  not  payable 
until  after  the  transfer  of  the  stock,*  Where  a  contract 
is  made  for  the  sale  of  stock,  on  which  a  dividend  has  been 
declared,  payable  upon  a  day  subsequent  to  the  agreed  time 
for  delivery  of  the  stock,  such  dividend  does  not  pass  to 
the  buyer.^  Unless  the  resolution  declaring  the  dividend 
otherwise  directs  the  officers,  they  must  pay  the  dividend 
to  the  persona  holding  stock  on  the  books  of  the  com- 
pany at  the  date  when  the  dividend  is  declared.*  Funds 
of  a  corporation  are  to  be  distributed  among  those  who 
are  its  stockholders  at  the  time  when  the  dividend  is  de- 
clared, no  matter  when  such  funds  accrued.'  Dividends 
are  personalty,  and  do  not  go  to  the  heir.®  Extraordi- 
nary dividends  belong  to  the  person  holding  a  life  inter- 
est in  the  stock,  upon  which  such  dividends  are  earned." 
Increase  of  capital  of  corporation  should  be  kept  for  re- 
mainderman, and  an  increase  of  income  should  be  paid 
to  the  tenant  for  life."  Where  the  property  of  a  corpora- 
tion consists  wholly  of  real  estate,  and  a  part  of  it  is  taken 
by  right  of  eminent  domain,  the  compensation  therefor, 
if  distributed  as  a  dividend  to  the  share-holders,  belongs 

Ins.  Co.  V.  Lott,  45 


*  Citizens*  etc, 
Ala.  185. 

*  Peckham  v.  Van  Wagenen,  83  N. 
Y.  40;  38  Am.  Rep.  392. 

»  Hilles  V.   Parriah,   14  N.   J.  Eq. 
380. 

*  Burroughs  v.   R.  R.  Co.,  67  N. 
C.  376;  12  Am.  Rep.  611. 

^  Spoar  V.  Hart,  3  Robt.  420. 


'  Jones  V.  Railroad  Co.,   17   How. 
Pr.  529;  27  Barb.  353. 

•  Goodwin  v.  Hardy,  57  Me.  143;  99 
Am.  Dec.  758. 

«  Welles  V.  Cowles,  4  Conn.  182;  10 
Am.  Dec.  115. 

•  WoodniflF's  Estete,  1  Tuck.  58. 

>•  Minot  V.  Paine,  99  Mass.  101;  96 
Am.  Dec.  705. 


8  474 


CORPORATIONS. 


784 


to  the  capital,  and  not  to  the  income  of  a  trust  fund  in- 
vested in  the  shares.'  Where  a  corporation  makes  a 
dividend  of  the  proceeds  of  a  sale  of  part  of  its  original 
franchise  and  property,  it  will  be  regarded,  as  betweeti  u 
life  tenant  and  a  remainderman  of  part  of  the  stock,  as 
capital,  and  not  as  income.''  When  a  corporation  de- 
clares a  dividend  on  its  stock  payable  in  money,  tlio 
stockholder  at  the  time,  whether  a  life  tenant  or  remain- 
derman, is  entitled  to  it,  irrespective  of  its  source,  amount, 
or  the  length  of  time  in  which  it  was  earned."  If  a  fund 
held  in  trust  to  pay  the  income  to  one  until  his  death, 
and  then  convey  the  capital  to  another,  includes  shares  in 
the  stock  of  a  corporation,  shares  of  additional  stock  dis- 
tributed to  the  trustee  as  a  lawful  dividend  thereon  accrues 
as  capital,  although  they  represent  net  earnings  of  the 
corporation.''  A  stockholder  in  a  corporation  has  an  in- 
terest, in  proportion  to  the  amount  of  his  stock,  in  all  tlio 
corporate  property,  and  has  a  right  to  share  in  any  sur- 
plus of  profits  arising  from  its  use  and  employment  in  tlio 
business  of  the  company;  and  this  right  does  not  depend 
upon  the  time  when  ho  becomes  a  stockholder,  but  attaclies 
whenever  ho  acquires  the  stock,  and  entitles  him  to  all  sub- 
sequent dividends.*  When  an  administrator  illegally  dis- 
poses of  stocks  at  private  sale,  and  the  same  are,  by  direction 
of  the  administrator,  transferred  on  the  books  of  the  com- 
pany, and  it  is  not  known  to  the  heir  who  is  the  holder 
thereof,  the  company  is  a  proper  party  defendant  to  a  bill 
filed  to  discover  the  owner  of  the  stock,  and  praying  a 
retransfer  of  the  same  and  an  account  of  the  dividends." 
Dividends  on  stock  correspond  to  the  hire  of  prop*  ty. 
The  purchaser  of  railroad  stock  from  an  admin'  ,,r  at 
an  unauthorized  private  sale  is  liable  in  equit^        the  dis- 

101    .10 


'  Heard  v.  Eldredge,  109  Mads.  258; 
12  Am.  Rep.  687. 

•■i  Vinton's  Appeal,  99  Pa.  St.  434; 
44  Am.  Rep.  116. 

'  Richardaon  v.  Richardson,  75  Me. 
570;  46  Am.  Rep.  428. 


*  Minot  V.  Paine,  99  iMaiM. 
Am.  Dec.  705. 

•Jones    V.   R.   R.   Co.,   57    Ts. 
196. 

*  Southwestern  etc.   R.   R.  Co. 
Tbomaaon,  40  Ga.  408. 


V. 


785 


STOCKHOLDERS. 


§474 


tributeos  of  tho  estate  to  which  the  stock  belonged  for  all 
(luinuges  resulting  directly  from  the  conversion,  including, 
besides  tho  value  of  the  shares,  tho  consequent  loss  of 
dividends,  with  interest  thereon.  The  dividends  to  he 
treated  as  lost  are  all  those  innocently  paid  by  tho  corpo- 
ration after  tho  illegal  purchase  and  up  to  the  time  of  the 
decree,  whether  paid  to  the  purchaser  himself  or  to  those 
holding  under  him,  immediately  or  remotely,  by  regular 
transfer.'  Dividends  already  paid  to  the  stockholders  can- 
not bo  reached  by  creditors  of  tho  corporation."  A  corpo- 
ration which  has  issued  negotiable  certificates  for  an  extra 
dividend,  making  them  payable  at  a  time  fixed  therein,  or 
sooner  at  its  option,  and  elects  to  redeem  them  sooner, 
cannot  refuse  to  pay  a  stockholder  tho  amount  of  a  lost 
certificate.  It  may  protect  itself  by  exacting  indemnity, 
as  in  case  o'lost  commercial  paper.' 

As  a  rule,  dividends  cannot  bo  apportioned,  but  must  be 
paid  to  the  owner  of  tho  share  at  tho  time  tho  dividend 
is  declared.''  But  in  an  early  case  in  South  Carolina,, 
where  a  person  entitled  for  life  to  dividends  on  bank 
stock,  payable  half-yearly,  died  just  before  a  semi-annual 
dividend  was  declared,  it  was  held  that  the  dividend 
should  bo  apportioned,  and  a  part  paid  to  his  executor.'^ 

Illustrations. — L.  contracted,  previous  to  July  3d,  to  sell 
shares  of  stock  in  a  corporation  to  li.  at  B.'s  option,  to  be  ac- 
cepted by  July  16th.  On  tho  last-named  day  tlio  shares  were 
transferred  to  B.  On  July  3d  a  dividend  ci  the  stoek  was  de- 
clared, payable  August  1st.  Held,  that  the  dividend  belonged 
to  L.:  Bright  v.  Lord,  51  Ind.  272;  ID  Am.  Rep.  732.  The  di- 
rectors of  a  joint-stock  corporation  voted  "to  declare  a  dividend 
of  seventy  per  cent  upon  the  capital  stock,  the  amount  to  be 
placed  pro  rata  to  the  credit  of  each  stockholder,  and  made  pay- 
able without  interest  at  such  time  as  may  bo  directed  by  the 
board."    The  dividend  was  based  upon  profits  actually  received. 


*  Nutting  V.  Thomasson,  57  Ga.  418. 
^  Reid  V.  Eatontoii  Mfg.  Co.,  40  Ga. 

98;  2  Am.  Rep.  502. 

»  Butler  V.  Gkn  Cove  Starch  Co.,  18 
Huu.     7. 

*  Guodwia  v.  Hardy,  57  Me.   145; 

Vol.  I. -60 


March  v.  R.  R.  Co.,  43  N.  H.  520; 
i.  GO  N.  Y.  Hoi; 
Hyatt  V.  Allen,  50  N.  Y.  553;  15  Au». 


Brundago  v.  Brundage.  00  N.  Y.  u.j1; 

Ulen,  50  N. 

Rep.  449. 


''  Ek  parte  Rutledge,  1   Harp.  Eij. 
65;  14  Am.  Dec.  mi. 


§474 


CORPORATIONS. 


786 


Held,  that  the  corporation  thereby  became  indebted  to  each 
stockholder  for  the  amount  of  his  share  of  the  dividend,  pay- 
able within  a  reasonable  time,  and  that  on  the  refusal  of  the 
corporation,  the  stockholder  could  enforce  payment  by  the  aid 
of  a  court  of  equity:  Beers  v.  Bridgeport  Spring  Co.,  43  Conn. 
17.     A  testator  bequeathed  the  "income,  profit,  and  products" 
of  certain  stock  in  a  corporation  to  a  person  for  life,  remainder 
over.     Afterward  the  corporation  increased  its  capital  stock,  al- 
lowing each  stockholder  the  option  to  take  at  par  as  many  new 
shares  as  he  held  of  the  old.     The  trustees  under  the  will  sold 
part  of  their  "options"  to  take  the  new  shares,  and  with  the 
proceeds  bought  new  shares.     Held,  that  the  new  shares  were 
capital,  and   went   to  the   remainderman:    Moss's  Appeal,  83 
Pa.  St.  264;    24   Am.  Rep.   164.     On  the  sixth  of  iMarch  A 
i-..ade  a  written  proposal  to  B  to  convey  to  him  all  his  right 
and  title  in  certain  shares  in  a  turnpike,  at  five  dollars  per 
share,  provided  B  gave  security  for  the  price  by  the  24th  of 
March      After  this  A  received  a  dividend  on  the  shares,  and  B, 
not  knowing  that  the  dividend  had  been  received,  on  the  eigh- 
teenth of  March  gave  security  for  the  price,  and  took  a  convey- 
ance of  all  the  interest  A  then  had  in  the  shares.     Held,  that 
the  dividend  received  by  A  belonged  to  B,  and  that  B  could 
recover  it  in  an  action  for  money  had  and  received:   Harris 
V.  Stevens,  7   N.  H.  454.     The  directors  of  a  corporation  de- 
clared two  dividends,  the  one  payable  on   the  day  the  same 
was  declared  and  the  other  at  the  option  of  their  agent.     Held, 
that  although  no  day  was  definitely  named  for  the  payment  of 
the  second  dividend,  and  no  time  fixed  for  closing  or  opening 
books,  to  determine  who  otherwise  would  be  entitled,  stock- 
holders who  were  such  on  the  day  the  dividend  was  declared 
are  the  persons  who  should  receive  it:  Hill  v.  Newichawav'^^h, 
Co.,  48  How.  Pr.  427.     A  assigned  to  B  a  stock  certificate  ccri- 
taining  a  statement  that  ftock  was  transferable  only  upon  the 
books  of  the  corporation.     B  fai.'^-i.  to  obtain  such  transfer.     A 
died.     Held,  that  the  corporation,  having  paid  dividends  to  A's 
administrator,  could  not  be  held  liable  to  B  for  their  amount, 
no  presentation  of  a  certificate  being  necessary  upon  a  demand 
for  dividends  by  the  owner  of  record  of  the  stock  or  his  personal 
representative:  Brisbane  v.  R.  R.  Co.,  25  Hun,  438.     A  railroad 
company,  having  declared  a  dividend  upon  its  stock,  deposited 
a  sufficient  sum  with  bankers  expressly  to  pay  such  dividend, 
but  before  the  whole  amount  so  deposited  was  paid  out,  with- 
drew the  remainder  and  subsequently  became  insolvent,  and  a 
receiver  was  appointed.  Held,  that  the  fund  so  deposited  should 
be  regarded  as  specially  appropriated  for  the  payment  of  the 
dividend,  and  that  the  stockholders  acquired  in  equity  a  lien 
upon  such  fund,  to  the  extent  of  the  amoant  to  which  they  were 


786 


787 


STOCKHOLDERS. 


§475 


I  to  each 
end,  pay- 
lal  of  the 
)y  the  aid 
42  Conn, 
products" 
remainder 

stcck,  al- 
[iiany  new 
I  will  sold 
I  with  the 
»ares  were 
ippeal,  83 

March  A 

I  liis  right 
loUars  per 
le  24th  of 
res,  and  B, 

II  the  eigh- 
:  a  convev- 

Ilcld,  that 
it  B  could 
3d ;   Harris 
oration  de- 
r  the  same 
int.     Held, 
ayment  of 
or  opening 
led,  stock- 
s  declared 
\.chaivav'''k, 
jificate  COM- 
upon  the 
•ansfer.     A 
nds  to  A's 
lir  amount, 
a  demand 
is  personal 
A  railroad 
.,  deposited 
dividend, 
out,  with- 
'cnt,  and  a 
ted  should 
ent  of  the 
iity  a  lien 
they  were 


respectively  entitled,  and  that  the  lien  followed  the  fund  in  the 
hands  of  the  receiver:  Matter  of  Le  Blanc,  4  Abb.  N.  C.  221. 

§475.    Right  to  Examine  Books— Other  Rights. —  A 

stockholder  has  a  right  to  examine  the  books  of  the  cor- 
poration/ and  the  court  will  compel  by  mandamus  the 
ctficers  of  the  corporation  to  accord  this  right  to  the  stock- 
holder,* or  to  those  entitled  to  see  or  use  them.  And  this 
will  include  the  agent,  solicitor,  counsel,  or  expert  of  the 
party  asking  therefor,'  or  a  share-holder  who  is  also  the 
solicitor  of  opposing  litigants.^  It  has  been  held  that 
the  fact  that  a  stockholder  has  been  refused  pern^ '  =sion 
to  examine  the  books  of  the  corporation  with  the  <-ssist- 
ance  of  an  expert,  his  bill  charging  no  fraud  or  miscon- 
duct on  the  part  of  the  directors,  but  merely  alleging  that 
the  reason  for  his  examination  is  to  discover  whether  he 
has  been  defrauded  by  the  directors  in  the  distribution 
of  the  assets,  presents  no  ground  of  equitable  jurisdic- 
tion; his  remedy  is  at  law  by  mandamus.^ 


*  Field  on  Corporations,  sec.  168; 
Angel  and  Ames  on  Corporations,  sec. 
6S1,  682:  Field  v.  R.  R.  Co.,  18  Fed. 
Rep.  471;  People  v.  Throop,  12  Wend. 
183;  Sinclair  v.  Gray,  9  Fla.  71. 

»  People  V.  Throop,  12  Wend.  183; 
People  V.  Mott,  1  How.  Pr.  247;  Peo- 
ple V.  Pacific  Mail  Steam.  Co.,  50  Barb. 
280;  Sage  v.  R.  R.  Co.,  70  N.  Y.  220; 
State  V.  Goll,  32  N.  J.  L.  285;  St. 
Luke's  Church  v.  Slack,  7  Cush.  226; 
Cora.  V.  Phoenix  Iron  Co.,  105  Pa.  St. 
Ill;  51  Am.  Rep.  184;  Cockburn  v. 
Union  Bank,  13  La.  Ann.  289. 

3  Hide  V.  Holmes,  2  Molloy,  372; 
Blai."  V.  Massey.  L.  R.  6  I.  R.  Eq. 
623;  ooint-Stock  Discount  Co.'s  Case, 
36  L.  J.  Eq.  150;  Bonnardet  v.  Taylor, 
1  Johns.  &  H.  383;  Attorney-General 
V.  Whitwood,  40  L.  J.  Ch.  Div.  592; 
Lindsay  v.  Gladstone,  L.  R.  9  Eq. 
132;  Williams  v.  Prince  of  Wales  Ins. 
Co.,  23  Beav.  358;  StoL^".  v.  Bienville 
Co.,  28  La.  Ann.  204;  Ballin  v.  Ferst, 
55  Ga.  546. 

<  Reg.  V.  Wilts  Co.,  29  L.  T.,  N.  S., 
922;  Kingsford  v.  R.  R.  Co.,  16  Com. 
B.,  N.  S.,  761. 


*  Stettauer  v.  New  York  etc.  Con- 
struction Co.,  42  N.  J.  Eq.  46.  In  a 
note  to  this  case  Mr.  Stewart  says: 
"  An  inspection  will  not  be  allowed  to 
gratify  mere  idle  curiosity :  People  v. 
Walker,  9  Mich.  328;  nor  because 
some  of  the  books  are  necessarily  kept 
in  another  state,  where  the  main  office 
is,  in  violation  of  a  statute  of  Connuc- 
ticut:  Pratt  v.  Meridan  Co.,  35  Conn. 
36.  See  Sykes's  Case,  10  Beav.  162; 
Ervin  v.  R.  R.  Co.,  22  Hun,  566; 
Cain  t>.  PuUen,  34  La.  Ann.  511;  nor 
to  fish  out  a  defense:  Birmingham 
Co.  V.  White,  1  Q.  B.  282;  Imperial 
Gas  Co.  V.  Clarke,  7  Bing.  95.  See 
Hoyt  V.  Am.  Ex.  Bank,  1  Duer,  652; 
Shoe  and  Leather  Ass'n  v.  Bailey,  17 
Junes  &  S.  385;  nor  upon  an  allega- 
tion of  belief  that  the  company's  afiFairs 
are  being  conducted  impropsrly,  and 
the  officers  unduly  chosen,  and  alleg- 
ing mismanagement  in  some  particu- 
lars not  affecting  petitioners,  nor  then 
in  dispute:  Rex  v.  Merchant  Tailors' 
Co.,  2  Barn.  &  Adol.  115;  nor  to  fur- 
nish materials  to  the  other  side  for  a 
new  trial:   Pratt  v.  Goswell,  9  Com. 


§475 


CORPORATIONS. 


788 


Where  the  property  of  a  corporation  is  sold  on  execu- 
tion against  it,  a  stockholder  may  buy  it  for  his  individ- 
ual benefit,  and  he  will  not  be  bound  to  account  for  it  to 
the  other  stockholders,  although  it  was  bid  in  by  him  at  a 
j)iice  much  below  its  value,  if  there  was  no  fraud  in  the 
sale/  Where  one  of  the  owners  of  a  ferry,  in  his  lifetime, 
refused  to  take  the  value  of  his  interest  in  the  ferry  in  the 
stock  of  a  bridge  company  to  erect  a  bridge  in  the  same 
place,  as  authorized  by  the  act  of  incorporation  of  the 
bridge  company,  such  refusal  being  after  the  requisite 
amount  of  stock  had  been  subscribed,  and  the  bridge 
erected,  his  heirs  could  not,  after  his  death,  come  in  as 
stockholders,  but  were  concluded  by  the  refusal  of  their 
ancestor.^  One  claiming  to  be  a  share-holder  of  a  cor- 
poration, but  not  recognized  as  such  in  the  payment  of 
a  dividend,  cannot  maintain  an  action  against  a  recog- 


B.,  N.  S.,  706;  nor  to  ascertain  whether 
petitioner  would  better  accept,  with 
the  other  share-hohlera,  what  was  of- 
fered her  for  her  hoLling  in  an  old 
company,  which  was  being  wound  up, 
rather  than  proceed  with  an  arbitra- 
tion; Glaniorgansliire  Banking  Co., 
L.  R.  28  Ch.  Div.  620;  nor  to  estab- 
lish a  justification  in  an  action  against 
the  petitioner  for  libel,  imputing  in- 
solvency to  the  company;  Metropoli- 
tan Co.  V.  Hawkins,  4  Hurl.  &  N.  146. 
See  Finlay  v.  Lindsay,  7  I.  R.  C.  L.  1 ; 
Collins  V.  Yates,  27  L.  J.  Ex.  150; 
Opdyke  v.  Marble,  44  Barb.  64;  nor 
to  examine  all  the  books  of  the  com- 

Eauy  for  the  preceding  fifty  years, 
ecause  petitioner  alleges  that  he  is 
dissatisfied  with  the  mauagement  of 
the  company  and  with  the  accounts, 
and  on  other  grounds:  Reg.  v.  Grand 
Canal,  1  Irish  Law  Rep.  327;  nor 
where  the  petition  does  not  specify 
the  particular  books  asked  for,  and 
the  object  of  the  petitioner  in  making 
the  application  to  the  officers,  and 
also  to  the  court:  Reg.  v.  London  and 
St.  Catherine's  Docks  Co.,  44  L.  J. 
Q.  B.  4.  See  Hunt  v.  Hewitt,  7  Ex. 
236;  Pepper  n.  Chambers,  7  Ex.  226; 
Now  England  Iron  Co.  v.  N.  Y^.  Loaa 
Co.,  55  How.  Pr.  351;  Central  R.  R. 


V.  R.  R.  Co.,  53  How.  Pr.  45;  Com- 
missioners V.  Lemly,  85  N.  C.  341; 
Walker  ?•.  Granite  Bank,  44  Barb.  39; 
nor  whether  certain  allegations  in  the 
applicant's  affidavit  are  true;  nor 
whether  he  has  documents  in  his  pos- 
session relating  to  the  matters  in  issue: 
Rayner  v.  Alnusen,  15  Jur.  1060.  The 
court  may  control  the  manner  of  the 
examination:  Williams  v.  Prince  of 
Wales  Ins.  Co.,  23  Beav.  338.  An 
appeal  was  held  to  lie  from  an  order 
granting  a  party  leave  to  inspect  and 
examine  the  books  of  a  corporation, 
the  appellant:  Thompson  v.  R.  R. 
Co.,  9  Abb.  Pr.,  N.  S.,  212;  Lanca- 
shire Co.  V.  Greatorex,  14  L.  T.,  N.  S., 
290;  Cummer  v.  Kent,  33  Mich.  351; 
Commissioners  v.  Lemly,  85  N  C.  341. 
See  Saxby  v.  Easterbrook,  L.  R.  7 
Ex.  207;  Bustros  v.  White,  L.  R.  1  Q. 
B.  D.  423;  Clyde  v.  Rogers,  24  Hun, 
145;  McCargo  v.  Crutcher,  27  Ala. 
171;  Sage's  Case,  70  N.  Y.  221.  As 
to  the  costs  of  an  inspection,  see  Hill 
V.  Philp,  7  Ex.  232;  Davey  r.  I'eiu- 
berton,  11  Com.  B.,  N.  S.,  629;  Gard- 
ner V.  Dangerfiehl,  5  Beav.  389. " 

'  Mickles  z\  Rochester  City  Bank, 
11  Paige,  118. 

'^  White  V.  Florence  Bridge  Co.,  4 
Ala.  464. 


788 


789 


STOCKHOLDERS. 


§475 


on  execu- 

3  individ- 

t  for  it  to 

him  at  a 

ud  in  the 

5  lifetime, 

rry  in  the 

the  same 

)n  of  the 

requisite 

le  bridge 

me  in  as 

1  of  their 

of  a  cor- 

lyment  of 

,  a  recog- 

Pr.  45;  Com- 

i   N.    (J.   341; 

,  44  Barb.  39; 

atious  in  the 

3    true;     nor 

ta  in  his  poa- 

tters  in  issue: 

r.  lOGO.    The 

lannur  of  the 

V.    Prince   of 

IV.   338.     An 

oni  an  order 

inspect  and 

corporation, 

n    V.    R.    R. 

212;    Lanca- 

L.  T.,N.  S., 

Mich.  3J1; 

85  N  C.  341. 

[)k,  L.    R.   7 

e,  L.  R.  1  Q. 

era,  24  Hun, 

ler,   27   Ala. 

Y.  221.     As 

ion,  see  Hill 

vey  V.   I'ein- 

,  G20;  Gard- 

389." 

City  Bank, 

ridge  Co.,  4 


nized  share-holder  for  a  part  of  the  dividend;  he  can  only 
enforce  recognition  by  an  action  against  the  corporation 
itself/ 

Illustrations.  — A  petition  alleged  that  the  petitioner  held  a 
large  amount  of  the  stock  of  a  corporation,  that  notwithstanding 
its  prosperous  business,  no  dividend  had  been  declared  for  nine 
years,  and  charged  malfeasance  of  the  president  and  two  of  the 
directors,  by  which  the  principal  part  of  the  company's  business 
had  been  diverted  for  their  personal  benefit,  and  its  funds  mis- 
appropriated. It  further  alleged  that  he  had,  at  a  stockholders' 
meeting,  and  at  other  times,  asked  for  information  touching  the 
corporation's  transactions,  which  request  had  invariably  been 
refused,  and  that  he  proposed  to  file  a  bill  in  equity  against  the 
corporation  and  its  officers,  for  which  purpose  it  was  necessary 
that  he  should  see  the  books  and  papers  in  order  to  state  the 
facts  correctly.  Held,  that  a  mandamus  would  issue  for  the  pro- 
duction of  such  books  and  papers  as  contained  information  upon 
the  subjects  specified  in  the  petition:  Commonwealth  v.  Phanix 
Ins.  Co.,  105  Pa.  St.  Ill;  51  Am.  Rep.  184.  The  petition  averred 
that  a  public  notice  had  been  issued  to  attend  a  stockliolder.s' 
meeting,  "to  vote  upon  the  reduction  of  the  capital  stock,  and 
upon  other  matters,"  and  that  the  directors  had  concealed  from 
him  the  true  condition  of  the  company's  affairs,  without  a 
knowledge  of  which  he  could  not  vote  understandingly.  Held, 
that  he  was  entitled  to  the  inspection:  State  v.  Bienville  Co.,  28 
La.  Ann.  204.  A  corporation  was  required  by  charter  (in  ad- 
dition to  general  provisions  of  the  statute  upon  the  subject^  to 
cause  a  book  to  be  kept  containing  the  names  and  residences 
of  all  stockholders,  the  number  of  shares  held  by  each  respect- 
ively, etc.,  such  book  to  be  at  all  reasonable  times  open  for 
inspection  of  creditors  and  stockholders.  The  corporation  kept 
no  book  precisely  answering  ii  the  requirement  of  the  charter; 
it  kept,  however,  a  trartsfer-K>(tok,  a  register  of  certificates  of 
stock,  and  a  stock  ledger.  On  application  by  a  stockholder  for 
an  opportunity  to  inspect  the  book  prescribed  to  be  kept  by  the 
cliarter,  the  officers  of  the  corporation  offered  an  inspection  of 
the  transfer-book  and  register,  but  refused  to  permit  the  stock 
ledger  to  be  examined.  Held,  that  the  stockholder  was  entitled 
to  an  inspection  of  the  stock  ledger,  that  being,  of  all  the  books 
kept  by  the  company,  the  one  which  most  nearly  fulfilled  the 
requisites  of  the  charter  provision.  The  circumstance  that  it 
contained  more  facts  than  the  charter  required  to  be  stated 
formed  no  excuse  for  refusing  to  furnish  it,  so  long  as  the  com- 

»  Peckham  v.  Van  Wagenen,  45  N.  Y.  Sup.  Ct.  328. 


§476 


CORPORATIONS. 


790 


pany  neglected  to  keep  such  a  book  as  wafl  required :  People  v. 
Pacific  Mail  Steamship  Co.,  3  Abb.  Pr.,  N.  S.,  364;  34  How.  Pr. 
193.  A  statute  requires  corporations,  under  a  penalty,  to  keep 
the  stock-book  and  ledger  open  every  day  except  Sunday  and 
the  Fourth  of  July,  for  the  inspection  of  stockholders  and  credi- 
tors. A  stockholder  applied  to  examine  the  books,  and  was  told 
that  they  were  locked  up  in  the  safe,  and  that  the  clerk  in 
charge,  who  alone  knew  the  combination,  was  not  in  town,  but 
would  return  in  a  day  or  two,  when  the  examination  could  be 
had.  Held,  no  refusal  to  exhibit  the  books  had  been  proved: 
Kelsey  v.  Pfaudler  Process  Fermentation  Co.,  41  Hun,  20. 

§  476.  Stockholders'  Meetings — Notice  of  Time  and 
Place  Essential. — Every  stockholder  is  entitled  to  reason- 
able notice  of  the  time  and  place  of  holding  a  corpoation 
meeting.^  But  if  the  charter  or  by-laws  fix  the  time  and 
place,  no  additional  notice  is  necessary.''  If  no  method  of 
giving  notice  is  provided  by  the  charter  or  by-laws, 
personal  notice  must  be  given.*  If  the  charter  or  by- 
laws prescribe  the  manner  of  giving  notice,  that  mode 
must  be  followed.*  Where  the  charter  of  a  corporation 
declares  that  two  weeks'  published  notice  shall  be 
given  of  the  annual  meetings  for  the  election  of  man- 
agers, managers  elected  after  a  notice  of  two  days  only 
given  are  not  elected  according  to  law,  and  no  by-law  can 
render  nugatory  the  mandatory  provision  of  the  charter.® 
An  authority  given  in  a  charter  of  incorporation,  in  gen- 
eral terms,  to  certain  persons,  to  call  the  first  meeting  of 
the  corporators,  does  not  authorize  them  to  call  such 
meeting  at  a  place  without  the  state  whose  legislature 
granted  the  charter.*    The  statute  relative  to  the  observ- 


1  People  V.  Batchelor,  22  N.  Y.  134; 
In  re  Long  Island  R.  R.  Co.,  19  Wend. 
37;  32  Am.  Dec.  429;  Stow  v.  Wyse, 
7  Conn.  214;  18  Am.  Dec.  99;  Shelby 
R.  R.  Co.  V.  R.  R.  Co.,  12  Bush, 
62. 

•^  People  V.  Batchelor,  22  N.  Y.  128; 
San  Buenaventura  Mfg.  Co.  v.  Vaa- 
aault,  50  Cal.  534;  Warner  v.  Mower, 
11  Vt.  385;  Sampson  v.  Corporation, 
36  Me.  78;  Atlantic  Ina.  Co.  v.  San- 
ders, 36  N.  H.  262. 


»  Stow  V.  Wyse,  9  Conn.  214;  18 
Am.  Dec.  99;  Harding  v.  Vande- 
water,  40  Cal.  77;  People  v.  Batche- 
lor, 22  N.  Y.  128;  State  v.  Ferguson, 
31  N.  J.  L.  107;  People  Ins.  Co.  v. 
Weatcott,  14  Gray,  440;  Wiggin  r. 
Baptist  Church,  8  Met.  301. 

*  Shelby  etc.  R.  R.  Co.  v.  R.  R.  Co., 
12  Bush,  62. 

*  United  Stitcs  v.  McKelden,  Mc- 
Ar.  &  Mackey,  162. 

*  MUler  V.  Ewer,  27  Me.  509. 


790 


791 


STOCKHOLDERS. 


§477 


People  V. 
How.  Pr. 
f,  to  keep 
nday  and 
md  credi- 
l  was  told 

clerk  in 
town,  but 

could  be 
n  proved: 
>0. 

ime  and 

3  reason- 
»rpoation 
time  and 
lethod  of 
by-laws, 
jr  or  by- 
lat  mode 
rpcration 
shall    be 
of  man- 
ays  only 
•law  can 
charter.* 
in  gen- 
eeting  of 
;all   such 
gislature 
observ- 

m.  214;  18 
V.  Vantle- 
V.  Batuhe- 
'.  Ferguson, 
Ins.  Co.  V. 
Wiggin  r. 

"r.  R.  Co., 

'elclen,  Mc- 

509. 


ance  of  Sunday  does  not  apply  to  the  proceedings  of  busi- 
ness meetings  of  societies  held  on  that  day.  The  holding 
of  business  meet'ng?  of  a  benevolent  society,  or  transact- 
ing i.s  business  on  Sunday,  is  not  forbidden  as  illegal.* 

Illustrations.  —  The  charter  of  a  Texas  corporation  pur- 
ported to  authorize  it  to  transact  business  at  Paris,  France. 
Held,  that  the  corporation  could  not  hold  stockholders'  meetings 
outside  of  Texas,  and  that  directors  elected  at  a  meeting  held 
at  Paris  were  not  directors  even  de  facto,  and  that  their  acts  were 
a  nullity:  Franco-Texan  Land  Co.  v.  Laicjle,  59  Tex.  339.  Tlie 
notice  of  the  time  of  holding  an  election  of  directors  was  for 
twelve  o'clock,  m.  Held,  that  a  meeting  called  to  order,  under 
such  notice,  and  organized  about  fifteen  minutes  before  twelve 
o'clock  was  a  surprise  and  fraud  upon  many  of  the  stockhold- 
ers, and  as  against  such  of  them  as  did  not  participate  in  the 
meeting,  was  irregular  and  void.  Such  irregularity  could  not 
be  cured  by  a  reorganization  of  the  meeting  at  twelve  o'clock, 
where  such  meeting  was,  in  fact  and  in  legal  effect,  but  a  con- 
tinuation of  the  first  meeting:  People  v.  R.  R.  Co.,  bb  Barb.  344; 
7  Abb.  Pr.,  N.  S.,  265;  38  How.  Pr.  228.  Notice  was  sent  by  mail 
to  a  director  of  a  corporation,  from  the  town  of  A,  on  the  twentieth 
of  the  month,  of  a  meeting  of  the  directors  to  be  held  there  on 
the  twenty-third.  Held,  sufficient,  as  it  appeared  that  a  person 
leaving  A  on  the  morning  of  one  day  could  go  to  B,  where  said 
notice  was  sent,  and  get  back  by  the  evening  of  the  next:  Covert 
V.  Rogers,  38  Mich.  363.  The  stockholders  of  a  corporation  were 
notified  that  the  annual  meeting  for  the  election  of  directors 
would  be  held  at  a  certain  hour  of  the  day  fixed  by  the  charter, 
and  the  corporation  was  restrained  from  holding  an  election  on 
that  day,  in  consequence  of  which  no  meeting  was  held  until 
several  hours  after  the  time  fixed  in  the  notice,  when  a  small 
number  of  stockholders,  without  the  knowledge  of  the  others, 
met,  organized,  and  adjourned  until  the  next  day,  at  which 
time  an  election  was  held  by  a  minority  of  the  stockholders, 
without  notice  to  others  who  were  in  tlie  vicinity  for  the  pur- 
poses of  the  meeting,  and  might  have  been  readily  notified. . 
Held,  that  such  election  was  invalid,  whether  the  restraining 
order  did  or  did  not  bind  the  stockholders:  Slate  v.  Bonnell, 
35  Ohio  St.  10. 

§477.      Who    may   Call    Meetings.  —  A    meeting    of 
stockholders  can   be  called  only  by  some  person  having 

*  People  V.  Young  Men's  etc.  Soc.,  Go  Barb.  357. 


§478 


CORPORATIONS. 


792 


authority  to  do  so.*  But  the  want  of  authority  of  the 
person  calling  it  is  waived  by  the  stockholders  attend- 
ing it.''  The  call  for  the  original  meeting  of  corporators 
to  elect  directors  need  not  be  bv  a  formal  order  of  those 
authorized  to  make  the  call;  it  is  sufficient  that  it  is 
made  by  their  direction.'  Where  the  charter  of  a  corpo- 
ration requirefi  annual  meetings  for  the  election  of  direc- 
tors, the  directors  cannot,  by  a  by-law,  so  change  the 
time  of  the  annual  election  as  to  continue  themselves  in 
office  more  than  a  year,  against  the  wishes  of  the  holders 
of  a  majority  of  the  stock.*  It  is  not  necessary  that  a 
demand  for  an  annual  election  of  trustees  of  a  corporation 
should  be  made  upon  the  board  of  trustees  when  in  ses- 
sion; a  demand  upon  each  individual  trustee  of  the  cor- 
poration is  sufficient.®  Where  the  by-laws  of  a  corporation 
provide  that  meetings  of  the  stockholders  shall  be  called 
by  the  trustees,  the  action  of  the  board  of  trustees  is  ne- 
cessary to  convene  a  legal  meeting;  the  president  of  the 
corporation  has  no  authority  to  call  such  a  meeting.** 

Illustrations. — Under  a  statute  providing  "that  a  general 
meeting  of  the  stockholders  may  be  called  at  any  time  by  the 
board  of  directors,  or  by  any  number  of  stockholders,  holding 
together  at  least  one  tenth  of  the  capital,''  held,  that  a  call  by 
the  secretary,  simply  on  authority  of  stockholders  holding  one 
tenth  of  the  capital,  was  invalid,  and  all  proceedings  thereunder 
illegal:  Reilly  v.  Oglebay,  25  W.  Va.  36. 


§478.    Oeneral  and  Special  Meeting — Distinction. — 

It  is  not  necessary  to  notify  the  stockholders  of  the  nature 
of  the  business  to  be  brought  before  a  general  meeting.^ 
But  as  to  a  special  meeting  it  is,  and  no  business  can  be 
transacted  at   such  a  meeting   except  as  to  the  matters 


1  Bethany  v.  Sperry,  10  Conn.  200; 
State  V.  Pettinelli,  lONev.  141;  Johns- 
tv;n  V.  Jonei,  '23  N.  J.  Eq.  21G;  Evans 
r.  Oigooil,  18  Me.  213;  Ste,eu3  v. 
Ellen  Meetiuf,'  House,  12  Vt.  688. 

'■'.lu.lah  /•.  Ins.  Co.,  4  Tnl.  .333; 
Jeaeu  v.  Turnpike  Co.,  7  Ind.  475. 


'  Hardenburg  v.  Farmers'  and  Me- 
chanics' Bank,  3  N.  J.  Eq.  68. 

*  Elkins  V.  R.  R.  Co.,  36  N.  J.  Eq.  467. 

*  State  V.  Wright,  10  Nev.  167. 

*  Stater.  Pettineli,  10  Nev.  141. 

^  Sampson  v.   Steam  Mill  Co.,   36 
Me.  78;  Warner  t>.  Mower,  11  Vt.  385. 


wmm 


mm 


792 

ity  of  the 
)rs  attend- 
orporators 
sr  of  those 
that  it  is 
•f  a  corpo- 
1  of  direc- 
hange  the 
uselves  in 
he  holders 
ary  that  a 
jrporation 
len  in  ses- 
)f  the  cor- 
)rporation 
I  be  called 
tees  is  ne- 
ent  of  the 
ting.** 

t  a  general 
ime  by  the 
rs,  holding 
t  a  call  by 
olding  one 
thereunder 


inction.  — 

the  nature 

meeting/ 

sss  can  be 

e  matters 

ers'  and  Me- 
l.  68. 

N.  J.  Eq.  467. 
fev.  167. 
Nev.  141. 
Mill  Co.,   36 
r,  11  Vt.  385. 


793 


STOCKHOLDERS. 


§§  479,  480 


specified  m  such  notice.'  In  Vermont,  private  businoss 
corporations,  at  the  annual  meeting,  if  there  be  no  restric 
tion  in  the  charter  or  by-laws,  may  transact  any  business 
incident  to  the  corporate  interests.^  A  by-law  of  an  in- 
surance company,  which  provides  that  a  special  meeting 
shall  be  called  by  the  president,  or  in  his  absence,  by  the 
secretary,  on  application  made  to  them  in  writing,  by  ten 
members,  does  not  preclude  the  directors  from  calling 
special  meetings  without  such  application.^  Where  the 
by-laws  of  a  corporation  authorize  the  president  to  call 
special  meetings  of  the  directors,  upon  giving  notice  of 
the  time  and  place  thereof,  and  such  place  is  not  pre- 
scribed  by  the  by-laws,  the  president  may  call  such  meet- 
nig  ut  a  place  other  than  the  principal  place  of  business 
ot  the  corporation.* 

§479.  Adjourned  Meetings. -A  meeting  properly 
called  to  transact  certain  business  may  be  adjourned  to 
another  day  to  finish  the  business,  and  no  other  notice  of 
the  adjourned  meeting  will  be  necessary .« 

§  480.  Who  have  Right  to  Vote.-Only  stockholders 
can  vote  at  meetings.^  A  vendor  of  shares  may  vote 
until  the  transfer  is  recorded  on  the  stock-books  ^  A 
pledgor  or  mortgagor  may  vote;»  so  may  a  trustee  or  an 

'  People  Ins.  Co.  v.  Westcott,  14 
Oray,  440;  In  re  Bridport  Brewery 
Co.,  L.  R.  2Ch.  191;  Atlantic De Laine 
[^:  '"•  ^ffl«o».  5  R.  I.  463j  Smith  v. 
Lrb,  4  Gill.  437. 

-  Warner  v.  Mower,  11  Vt.  385 

'Citizens'  Ins.  Co.  v.  Sortwell.  8 
Allen,  217. 

*  Corbett  v.  Woodward,  5  Saw.  403 
c  ,'  X''"\*;i"  "•  Mower,  11  Vt.  385; 
hchoflF  V.  Bloomfield,  8  Vt.  472;  Smith 
V.  Law,  21  N.  Y.  296. 

•Morawetz    on    Corporations,   sec. 

'McNeil  t,.  Tenth  Nat.  Bank,  46  N. 
X.  362;  Johnston  v.  Jones,  23  N.  J. 


?Q^w^*.  ^?/^„L°»g  isi^n^i  R-  R-  Co., 

19  Wend.  37;  32  Am.  Dec.  429;  State 
V.  Pettmelli,  10  Nev.  141;  People  v. 
Robinson,  64  Cal.  373. 

^Hoppin  V.  Buffum,  9  R.  I.  513- 
}}  '^^!i\?^*'P-  29' 5  McDanieb  v.  Mfg.' 
Sk.22Vt.274;InreBarkcr,GWc.„S 
509;  Ex  parte  Willcooks,  7  Cow.  402: 
17  Am.  pec.  525;  ScholHeld  v.  Bank. 
2  Cranch  C.  C.  115.  A  dei.osit  of 
corporate  stock,  made  by  a  stock- 
holder with  the  directors  or  their 
agent,  to  enable  the  stock  to  be  roted 
on  and  to  be  sold,  is  revocable  before 
sale:  Woodruff  v.  R.  R.  Co.,  30  Fed. 

Xw6p.  Jl, 


480 


CORPORATIONS. 


794 


administrator.*    The  owner  of  all  the  stock  of  a  corpora- 
tion is  not  thereby  the  owner  of  the  property.^    The  per- 


»  Wilson  V.  Central  Bridge  Co.,  9  R. 
I.  590;  In  re  Mohawk  R.  R.  Co.,  19 
Wenil.  135;  In  re  North  Shore  Ferry 
Co.,  63  Barb.  556. 

'■'  Button  V.   Hoffman,  61   Wis.  20; 
50   Am.   Rep.    131.     The  court  say: 
"From   the   very   nature    of   a   pri- 
vate business  corporation,  or  indeed 
of  any  corporation,  the  stockholders 
are  not  the  private  and  joint  owners 
of  its  property.     The  corporation  is 
the  real  though  artificial  person  sub- 
stituted for  the  natural  persons  who 
procured  its  creation  antl  have  pecu- 
niary interests  in  it,  in  which  all  its 
property  is  vested,  and  by  which  it  is 
controlled,  managed,  and  disposed  of. 
It   must  purchase,   hold,  grant,  sell, 
and  convey  the  corporate  property, 
and  do  business,    sue  and  bo  sued, 
plead  and  be  impleaded,  for  corporate 
purposes,  by  its  corporate  name.    The 
corporation  must  do  its  business  in  a 
certain  way,  and  by  its  regularly  ap- 
pointed ofHcera  and  agents,  whoso  acts 
are  those  of  the  corporation  only  as 
they  are  within  the  powers  and  pur- 
poses of  tlie  corporation.     In  an  ordi- 
nary copartnership,  the  members  of  it 
act  a.s  natural  persons  and  as  agents 
for  each  other,  and  with  unlimited  lia- 
bility.   But  not  so  with  a  corporation; 
its  members,  as  natural  persons,  are 
merged    in    the    corporate    identity. 
Angell  and  Ames  on  Corporations,  sees. 
40,  46,  100,  591,  595.     A  share  of  the 
capital  stock  of  a  corporation  is  de- 
fined to  be  a  right  to  partake,  accord- 
ing to  the  amount  subscribed,  of  the 
surplus  profits  obtained  from  the  use 
and  disposal  of   the  capital  stock  of 
the  company,  to  those  purposes  tor 
which    the  company  is    constituted: 
Angell  and  Ames  on  Corporations,  sec. 
557.     The  corporation  is  the  trustee 
for  the  management  of  the  property, 
and   the   stocKholders    are  the   mere 
ce-ituis    que  trmt :    Gray  v.   Portland 
Bank,  3  Mass.  365;  Eidman  v.  Bow- 
man, 58  111.  444;  11  Am.  Rep.  90;  4 
American     Corporation     Cases,    350. 
The  right  of  alienation  or  assignment 
of  the  property  is  iu  the  corporation 
alone,  and  this  right  is  not  afiected  by 
making  the  stockholders  individually 
liable  for  the  corporate  debts:  Angell 


and  Amea  on  Corporations,  sec.  191; 
Pope  V.  Brandon,  2  Stew.  401;  Whit- 
well    V.    Warner,   20  Vt.    444.     The 
property  of    the  corporation    is    the 
mere  instrument  whereby  the  stock  is 
made  to  produce   the  profits,  which 
are  the  dividends  to  be  declared  from 
time  to  time  by  corporate  authority 
for  the  benefit  of  the  stockholders, 
while  the  property  itself,  which  pro- 
duces them,  continues  to  belong  to 
the  corporation:    Bradley  r.     Holds- 
worth,  3  Mees.  &  W.  422;  Waltham 
Bank  v.  Waltham,  10  Met.  334;  Tip- 
pets V.   Walker,    4  Mass.  595.     Tiie 
corporation  holds  its  property  only  for 
the  purposes   for  which   it  was   per- 
mitted to  acquire  it;   and  even  the 
corporation  cannot  divert  it  from  such 
use,  and  a  share-holder  has  no  legal 
right  to  it,  or  the  profits  .  -ising  there- 
from, until  a  lawful  division  is  made 
by  the  directors  or  other  proper  offi- 
cers of  the  corporation,  or  by  judicial 
determination:  Angell  and  Ames  on 
Corporations,    sees.     160,     190,    557; 
Hyatt  V.  Allen,  56  N.  Y.  553;  15  Am. 
Rep.   449;    4    American   Corporation 
Cases,  624.     A  conveyance  of  all  the 
capital  stock  to  a  purchaser  gives  to 
such  purchaser  only  an  equitable  in- 
terest   in  the  property  to  carry  on 
business  under  the  act  of  incorpora- 
tion and  in  the  corporate  name,  and 
the  corporation  is  still  the  legal  owner 
of  the  same:  Wilde  v.  Jenkins,  4  Paige, 
481.    A  legal  distribution  of  the  prop- 
erty after  a  dissolution  of  the  corpora- 
tion, and  settlement  of  its  affairs,  is 
the  inception  of  any  title  of  a  stock- 
holder to  it,  although  he  be  the  sole 
stockholder.     Angell    and    Ames    on 
Corporations,  sec.  779  a.     Tiiese  gen- 
eral   principles    sufficiently  establish 
the  doctrine  that  tlie  owner  of  all  the 
capital  stock  of  a  corporation  does  not 
therefore  own  its  property,  or  any  of 
it,  and  does  not  himself  become  the 
corporation,  as  a  natural  person,  to 
own  its  property  and  do  its  bu.siness 
in  his  own  name.     While  the  corpo- 
ration exists,  he  is  a  mere  &tockholder 
of  it,  and  nothing  else.     The  conse- 
quences of  a  violation  of  these  prin- 
ciples would  be  that  the  stockhoblers 
would  be  the  private  and  joint  owners 


794 


a  corpora- 
The  per- 

ions,  sec.   191; 
IV.  401 ;  Whit- 
't.    444.     The 
ration    ia    the 
)y  tho  stock  ia 
profits,  wliich 
declared  from 
rate  authority 
stockholilerH, 
ilf,  wliich  pro- 
to   belong   to 
icy  ?'.     Holds- 
*22;  Waltham 
klet.  334;  Tip- 
iss.  595.     The 
nperty  only  for 
h  it  was   per- 
and  even  the 
rt  it  from  such 
r  lias  no  legal 
s  irising  there- 
vision  is  made 
ler  proper  offi- 
or  by  judicial 
and  Ames  on 
30,     190,    557; 
{.  553;  15  Am. 
n   Corporation 
ince  of  all  the 
ihaser  gives  to 
equitable  in- 
to  carry  on 
of  incorpora- 
■ate  name,  and 
jho  legal  owner 
iikins,  4  Paige, 
)n  of  the  prop- 
of  tlio  corpora- 
f  its  affairs,  is 
,le  of  a  stock- 
he  be  the  sole 
nd    Ames    on 
These  gen- 
ntly  establish 
ner  of  all  the 
ation  does  not 
rty,  or  any  of 
If  become  the 
[ral  person,  to 
o  its  business 
ile  the  corpo- 
re  stockholder 
The  coiise- 
of  these  prin- 
stockholders 
joint  owners 


795 


STOCKHOLDERS. 


§480 


sou  in  whose  name  stock  stands  on  the  transfer-book 
is  entitled  to  vote  on  it.'  The  owner  of  hypothecated 
stock  may  vote  thereon.''    The  transfer-book  is  conclu- 


of  the  corporate  property,  and  they 
couM  assume  tho  powers  of  tho  corpo- 
ration, and  supersede  its  functions  in 
Hi  use  and  disposition  for  their  own 
benefit  without  personal  liability,  and 
thus  destroy  the  corporation,  termi- 
nate the   l)Ubiness,   and    defraud    its 
creditors.    The  stockholders  would  be 
tho  ownor.i  of  the  property,  and  at  the 
same  time  it  would  belong  to  the  cor- 
poration.   One  stockholder  fawning  the 
whole  capital  stock  could  of  course, 
do  wliat  several  stocldiolders  could 
lawfully  do.     It   is   saiil  in  Utica  v. 
Churchill,  33  N.  Y.  1(51,  'the  interest 
of  a  stockholder  is  of  a  collateral  na- 
ture, and  is  not  tho  interest  of  an 
owaer ';  and  in  Hyatt  v.  Allen,  supra, 
that  'a  sharo-holiler  in  a  corporation 
has  no  legal  title  to  its  property  or 
profits  until  a  division  is  made.'     In 
Winona  etc.  11.  R.  Co.  v.  R.  R.  Co., 
23  Minn.  359,  it  is  held  that  the  cor- 
poration is  still  the  absolute  owner, 
and  vested  with  tho  legal  title  of  the 
property,  and  the  real  party  in  inter- 
est, although  another  party  has  be- 
come tho  owner  of  the  sole  beneficial 
interest  in  its  rights,  property,  and 
immunities.     In  Baldwin  v.  Canfield, 
23  Minn.  43,  it  was  held  that  the  sole 
owner  of  tho  stock  did  not  own  the 
land  of  the  corporation  so  as  to  con- 
vey the  same.    In  Bartlett  v.  Brickett, 
14  Allen,  02,  an  action  of  replevin  was 
brouglit  by  A,  B,  and  C,  as  the  'Trus- 
tees of  tho  Ministerial  Fund  in  the 
North  Parish  in  Haverhill,' which  was 
the  corporate  name.     In  portions  of 
the  writ,  the  plaintiffs  were  referred 
to  as   'the  said  trustees'   and    'the 
said  plaintiffs.'    In  the  bond,  'A,  B, 
and  C,  trustees  as  aforesaid,'  bucame 
bound,  ami  the  officer  in  his  return 
certified  that  he  had  taken  a  bond 
'  from  tho  within-named  A,    B,   and 
C,'  and  the  property  was  receipted  by 
'A,    B,    and   C,    plaintiffs.'     It  was 
held  that  the  action  was  not  by  the 
corporation,  as  it  should  have  been, 
and  judgment  was  rendered  for  the 
defeiuLuit.    It  ia  said  in  Van  Allen  v. 


Assessors,  3  Wall.  584,  '  tho  corpora- 
tion is  tho  legal  owner  of  all  tho  prop, 
erty  of  tlio  l)ank,  both  real  and  per- 
sonal.'   In  Wilde  v.  Jenkins,  supra, 
where  a  copartnership  bought  all  tho 
property  and    effects,    together  with 
the  franchises  of  a  corporation,  and 
elected  themselves  trustees  of  the  cor- 
poration, it  was  held  that  tho  corpo- 
ration was  not  dissolved,  and  that  the 
legal  title  to  the  real  and  personal 
property  was  still  in  tho  corporation 
for  their  benefit.     In  Micklu.i  v.  R.  C. 
Bank,  11  Paige,  118,  it  was  held  that 
although  a  corporation  was  deemed  to 
have  surrendered  its  charter  for  non- 
user,  it  was  not  dissolved,  and  would 
not  be  until  its  dissolution  was  judi- 
cially declared,  and  that  until  then  its 
property  could  bo  taken  and  sold  by 
its   judgment  creditors.     In  Bennett 
V.   Am.    Art  Union,    5  Sand.   014,   it 
was  held  that  '  as  a  general  rule,  the 
whole  title,  legal  and  equitalil  •  [to  its 
property],  is  vested  in  the  corporation 
itself, '  and  that  the  individual  members 
have  no  other  or  greater  interest  in  it 
than  is  e.rpressly  given  to  them  l)y  the 
charter,  and  tho  prayer  of  the  com- 
plainant as  a  shareholder  in  the  Art 
Union,    for  an   injunction  against    a 
certain  disposition  of  its  property,  was 
denied,  because  ho  had  no  interest  in 
it.     See  also  Goodwin  v.   Hardy,   57 
Me.  143.     It  is  true  that  none  of  the 
above  eases  are  precisely  pandlel  with 
the  present  case  in  facts,  but  they  are 
sufficiently  analogous  to  be  authority 
upon  the  principle  that  the  plaintiff, 
as  the  sole  stockholder  of  tho  corpora- 
tion, is  not  the  legal  owner  of  its  prop- 
erty.     He  may  have  an  equitable  in- 
terest in  it,  but  in  this  action  he  must 
show  a  legal  title  to  the  property  in 
himself,  in  order  to  recover,  and  he 
has  shown  that  such  title  is  in  another 
person. " 

1  Ex  parte  WUlcocks,  7  Cow.  403;  17 
Am.  Dec.  525;  Iloppin  v.  Buffum,  9 
R.  I.  513;  11  Am.  Rep.  291. 

»  Ex  parte  Willcocks,  7  Cow.  403; 
17  Am.  Dec.  525. 


g480 


CORPORATIONS. 


796 


sive  on  the  right  of  a  person  to  vote.*    The  fact  that  a 
pledgee  of  corporate  stock  has,  without  authority  from 
the  pledgor,  caused  it  to  be  registered  on  the  company's 
books,  in  his  name  as  trustee,  does  not  authorize  him 
to  vote  thereon.*     Any  transfer  of  stock  sufficient  to  pass 
the  property  is  sufficient  to  entitle  the  transferee  to  vote 
in  the  election  of  directors,  unless  some  specific  mode  of 
transfer  is  made  necessaay  by  statute  or  the  by-laws  of 
the  company.'     A  surviving  partner  has  the  right,  the 
partnership  business  remaining  unsettled,  to  vote  upon 
corporation  stock  standing  in  the  name  of  the  firm,  or 
which,  although  standing  in  the  name  of  the  deceased 
partner,  is  shown   actually  to  be   firm   property.*     One 
to  whom  stock  has  been  issued  as  trustee  without  the 
knowledge  or  consent  of  the  owner  is  not  a  "bona  fide 
stockholder,"  within  the  California  code,  as  to  qualifi- 
cation to  vote,  etc.*    A  charter  declaring  that  "each  per- 
son being  present  at  an  election  "  shall  be  entitled  to 
vote,  means  an  actual  and  not  a  constructive  presence." 
Where  a  holder  of  stock  in  a  corporation  really  holds  it 
in  trust  for  another,  but  such  trust  does  not  appear  on 
the  books,  and  is  not  disclosed  by  the  trustee,  votes  of 
the  trustee  on  such  stock,  at  a  corporation  meeting,  aro 
valid,  at  least  where  it  does  not  appear  that  such  votes 
were  not  in  accordance  with  the  wishes  of  his  cestui,  or 
that  the  latter  was  not  content  that  the  stock  should  stand 
in  the  name  of  the  person  voting,  without  any  trust  being 
disclosed.^     The  right  to  vote  at  meetings  of  the  stock- 
holders of  a  corporation,  on  shares  in  its  capital  stock 
held  in  trust  for  the  benefit  of  the  corporation,  is  sus- 


^  In  ro  Long  Island  R.  R.  Co.,  19 
Wend.  37;  32  Am.  Dec.  429;  Stote  v. 
Harris,  3  Ark.  570;  36  Am,  Dec. 
4G0. 

'^  McHenry  v.  Jewett,  26  Hun, 
453. 

» People  V.  Devin,  17  111.  84. 


*  Allen  V.  Hill,  IG  Cal.  113. 

*  Stewart  v.  Mahoney  Mining  Co., 
54  Cal.  149. 

^  Brown  v.  Commonwealth,  3  Grant 
Cas.  209. 

'  Wilson  V.  Proprietors  of  Central 
Bridge,  5  R.  I.  590. 


797 


STOCKHOLDERS. 


§480 


[Oil,  is  sus- 


pended while  they  are  so  hold.*     Stock  owned  by  the  cor- 
poration cannot  be  voted,  although  held   by  a  trustee.' 
The  owner  of  stock  need  not  have  a  certificate  thereof,  in 
order  to  entitle  him  to  vote  at  an  election  for  directors  of 
the  corporation.*     A  stockholder  cannot  be  required  by 
the  corporation  to  make  oath,  in  order  to  determine  his 
qualifications  as  a  voter.*     When  stock  in  a  corporation 
is  owned  by  two  persons  jointly,  and  they  disagree  as  to 
the  vote  to  be  cast  upon  the  shares,  at  an  election  for 
trustees,  the   vote   upon   such   stock   may   bo   rejected,' 
When  the  qualifications  of  persons  who  may  vote  for 
directors  of  a  corporation  are  definitely  prescribed  by 
statute,  the  corporation  cannot  extend  or  limit  the  right 
to  vote.     A  resolution  of  the  board,  declaring  that  a  cer- 
tain person  is  recognized  as  the  one  entitled  to  vote  on 
certain  stock,  is  inoperative,  if  his  right  cannot  bo  estab- 
lished under  the  statute."     The  requirement  in  an  act  to 
prevent  fraudulent  elections  by  incorporated  companies, 
which  directs  that  a  list  of  the  stockholders  entitled  to 
vote,  with  the  shares  held  by  each,  shall  be  made  out  ten 
days  prior  to  tlie  election,  is  directory  only,  and  non- 
compliance with  it  does  not  of  itself  make  void  the  elec- 
tion.^    Where  a  statute  expressly  declares  who  shall  be 
entitled  to  vote  for  directors  of  a  corporation,  the  corpo- 
ration has  no  authority  to  extend  or  limit  the  right  as 
regulated  by  the  statute.*     The  president  has  no  author- 
ity, unless  the  charter  or  by-laws  give  it,  to  pass  upon 
the  right  to  vote.     And  one  who,  without  appealing  to 
the  meeting,  refrains  from  voting  because  the  president 
denies  him  the  right,  cannot  complain.' 


^  American  R.  R.  Frog  Co.  v.  Haven, 
101  Mass.  398. 

^  Brewster  v.  Hartley,  37  Cal.   15; 
99  Am.  Dec.  237. 

^  Beckett    v.     Houston,     32     lad. 
393. 

*  People    V.   Tibbets,    4  Cow.    358;    99  Am.  Dec.  237 
People  V.  Kip,  4  Cow.  382,  note.  *  State  v.  Cliute,  34  Miun.  135. 


*  Matter  of  Pioneer  Paper  Co.,  36 
How.  Pr.  111. 

« Brewster  v.  Hartley,  37  Cal.   15, 
24;  99  Am.  Dec.  237. 

'  Downing  v.  Potts,  23  N.  J.  L.  66. 

*  Brewster  v.   Hartley,  37  Cal.  16; 


480 


CORPORATIONS. 


798 


Voting  must  be  personal,  and  not  by  proxy,  unless  por- 
mittod  by  the  charter  or  statute.*  At  common  law  each 
share-holdor  has  only  one  vote,  no  matter  how  many 
shares  he  holds;"  but  this  is  generally  fixed  by  charter  or 
Btatuto.'  It  has  been  held  that  where  the  charter  gives  no 
such  authority,  a  by-law  giving  members  a  right  to  vote 
by  proxy  is  invalid.*  But  in  other  jurisdictions  such  a 
by-law  has  been  considered  valid."  A  proxy  given  by  a 
member  of  a  corporation  for  voting  in  the  ordinary  con- 
cerns of  the  corporation  is  no  authority  to  vote  for  a 
fundamental  change  in  or  surrender  of  the  charter  of 
the  corporation."  Where  by  statute  a  stockholder,  "being 
a  citizen,"  is  authorized  to  vote  by  proxy,  such  privilege 
cannot  be  claimed  by  an  alien  stockholder.'  Inspectors 
of  a  corporate  election  have  no  right  to  reject  a  vote 
offered  by  proxy,  upon  the  ground  that  the  written  proxy 
is  not  acknowledged  or  proved  by  a  subscribing  witness. 
If  the  proxy  is  regular  in  its  form,  and  apparently  the 
act  of  the  stockholder,  the  inspectors  should  receive  it.* 

Illustrations. — Some  of  the  stockholders  of  a  manufacturing 
company  transferred  four  hundred  shares  to  C,  to  be  held  by  him 
"  for  the  benefit  of  the  corporation  ";  and  at  an  election  of  officers 
C.  voted  on  these  four  hundred  shares,  whereupon  the  election 
was  claimed  by  the  persons  having  the  highest  number  of  votes. 
Held,  that  a  mandamus  would  issue  to  compel  the  surrender  of 
the  offices  to  the  persons  having  the  highest  number  of  votes, 
after  excluding  the  four  hundred:  American  R.  R.  Frog  Co.  v. 
Haven,  101  Mass.  398;  3  Am.  Rep.  377.  In  an  election  of  ofli- 
cers  one  stockholder  claimed  to  represent  another  as  proxy,  and 

tion  that  the  statutes  thereof  do  not 
provide  for  voting  by  proxy:  Wood- 
ruffs R.  R.  Co.,  30  Fed.  Rep.  91. 

'Taylor  v.  Griswold,  14  N.  J.  L. 
222,  237;  27  Am.  Dec.  33. 

'  See  the  statutes  allowing  voting  by 
proxy  cited  in  27  Am.  Dec.  62. 

*  Taylor  w.  Griswold,  14  N.  J.  L. 
222;  27  Am.  Dec.  33. 

*  People  V.  Crossley,  69  111.  195. 

*  Smith  V.  Smith,  3  Desaus.  Eq. 
557. 

T  Ex  parte  Barker,  6  Wend.  509. 
«  Matter  of  Cecil,  3G  How.  Pr.  477. 


•  Philips  V.  Wickham,  1  Paige,  590; 
People  V.  Twaddell,  18  Hun,  427;  Tay- 
lor V.  Griswold,  14  N.  J.  L.  222;  27 
Am.  Dec.  33;  Craig  v.  First  Presby- 
terian Church,  88  Pa.  St.  42;  32  Am. 
Rep.  417;  State  v.  Tudor,  5  Day,  329; 
6  Am.  Dec.  162;  Brown  v.  Com.,  3 
Grant  Cas.  209;  Com.  v.  Bringhurst, 
103  Pa.  St.  134;  49  Am.  Rep.  119.  An 
injunction  will  not  be  granted  in  one 
state  to  restrain  officers  of  a  corpora- 
tion from  voting  upon  proxies  of  the 
stockholders  at  an  approaching  meet- 
ing in  another  state,  upon  an  allega- 


799 


STOCKHOLDERS. 


§481 


Bhowc<l  a  power  of  attorney.  lie  nlso  had  a  l«;ttcr  of  instruc- 
tions, of  which  ho  informed  the  inspecitors,  l)Mt  they,  witliout 
asking  to  see  it,  rejected  the  proxy,  on  the  ground  that  the  otuis- 
fiion  of  tlio  date  in  the  power  of  attorney  excited  their  suspi- 
cions. Ileli],  that  the  proxy  should  have  been  received:  In  re 
St.  Lawrence  Steamboat  Co.,  44  N.  J.  L,  529. 


Wend.  509. 
How.  Pr.  477. 


§  481.  Election  of  Officers.  —  Where  the  members  of  n 
corporation  are  directed  to  bo  annually  elected,  the  words 
are  only  directory,  and  do  not  take  away  the  power  inci- 
dent to  the  corporation  to  elect  afterwards,  when  the 
annual  day  has  by  some  means,  free  from  design  or  fraud, 
been  passed  by.'  If  the  statute  requires  an  annual  elec- 
tion, the  directors  cannot,  especially  against  the  will  of 
the  stockholders,  alter  the  time  of  the  election  so  as  mate- 
rially to  prolong  their  own  term,  as,  for  example,  for  fif- 
teen months.''  An  election  for  directors  of  a  corporation 
is  not  rendered  invalid  by  the  fact  that  the  inspectors  keep 
the  polls  open  softiewhat  longer  than  the  hour  named  in 
the  notice;  if  done  in  the  exercise  of  a  reasonable  discre- 
tion, and  for  tho  purpose  of  enabling  stockholders  present 
and  offering  to  vote  to  do  so.*  At  a  meeting  of  stock- 
holders called  to  elect  directors  under  section  324G  of  the 
Ohio  Revised  Statutes,  the  right  to  choose  tho  inspectors 
of  election  is  vested  in  the  stockholders,  and  not  in  the 
directors.*  An  election  of  directors  of  an  incorporated 
company  in  New  York  will  not  be  set  aside  on  the  ground 
that  the  inspectors  were  not  sworn  in  the  form  prescribed 
by  the  statute.*^  Inspectors  of  an  election  of  directors 
may,  in  their  discretion,  keep  open  the  polls  beyond  the 
hour  limited  by  the  board  from  which  they  derive  their 
authority.®  Where  no  time  is  limited  within  which  the 
poll  of  an  election  must  be  held,  it  may  be  adjourned  from 

»  State  V.  Young,  51  111.  149.  *  State  v.  Merchant,  37  Ohio  St.  251. 

-  Curtis  V.  McCullough,  3  Nev.  202.  *  In  re  Chenango  Mutual  Ins.  Co., 

3  People  V.  R.  R.  Co.,  55  Barb.  344;  19  Wend.  6.35. 

7  Abb.  Pr.,  N.  S.,  265;  38  How.  Pr.  «  In  re  Mohawk  R.  R.  Co.,  19  Wend. 

228.  135. 


8  481 


CORPORATIONS. 


800 


day  to  day  in  the  discretion  of  the  inspectors.*  Where  a 
statute  authorizes  the  choice  of  officers  for  a  particular  pur- 
pose, but  prescnbes  no  particular  mode  of  making  the 
choice,  if  all  persons  entitled  to  vote  have  an  opportunity, 
and  the  officers  chosen  are  the  choice  of  a  maiority  of  the 
persons  voting,  the  election  is  valid.''  Where  the  act  of 
incorporation  does  not  require  a  majority  oi'  votes  of  all 
the  corporators  to  elect  a  board  of  directors,  a  majority 
actually  voting  is  sufficient  to  elect.^  An  election  of 
directors  of  a  corporation  by  those  holding  less  than  one 
half  of  the  shares,  brought  about  by  the  exclusion  from 
voting  of  other  share-holders  by  an  injunction  issued  by 
a  competent  court,  is  legal.**  Where  the  by-laws  provide 
that  the  capital  stock  shall  be  divided  into  400  shares,  and 
that  "no  business  shall  be  transacted  at  any  meeting 
unless  a  majority  of  the  stock  is  represented,"  it  will  take 
201  shares  to  constitute  a  quorum  for  the  transaction  of 
business,  although  but  243  shares  of  the  stock  were  ever 
subscribed  for.^  A  court  of  equity  lias  no  authority  to 
determine  the  validity  of  the  election  of  the  officers  of  a 
private  corporation,  and  pronounce  judgment  of  a  motion, 
but  when  the  question  of  the  validity  of  such  an  election 
necessarily  arises  in  the  determination  of  a  suit  properly 
cognizable  by  a  court  of  equity,  such  court  will  determine 
it  as  it  would  any  other  question  of  law  or  fact  necessary 
to  be  decidod  to  settle  the  rights  of  the  parties.^  It  is  no 
objection  to  an  election  that  illegal  votes  were  received, 


'  In  re  Chenango  Mutual  Ins.  Co., 
19  Wend.  635. 

^  Philips  V.  Wickham,  1  Paige,  590. 

*  Columbia  etc.  Co.  v.  Meier,  39  Mo. 
53;  State  v.  Wilmington,  3  Harr. 
294. 

*  Brown  v.  Pacific  etc.  Co.,  SBlatchf. 
525. 

^  Ellsworth  Woolen  Mfg.  Co.  v. 
Fauncc,  79  Mo.  440. 

"  Mcchaiiica'  Bank  v.  Buruofc  Mfg. 
Co.,  32  N.  J.  Eq.  236.  A  court  of 
chancery  has  no  jurisdiction  to  deter- 


mine the  validity  of  an  election  of  the 
directors  of  a  private  corporation,  and 
■wliether  certain  persons  claiming  to  he 
and  acting  as  .rectons  arc  such.  T!ie 
courts  of  law  exercise  jurisdiction  hy 
\/rit  of  (jHO  warranto,  and  if  there  is 
any  doubt  as  to  the  application  of  these 
remedies  in  New  Jersey  to  corpora- 
tions merely  civil,  the  difficulty  is 
obviated  and  supplied  by  tlie  summary 
and  efficient  proceeding  under  the 
statute  pasbcd  for  this  very  purpose: 
Owen  V.  Whitaker,  20  iN\  J.  E<i.  1'22. 


WL 


STOCKHOLDERS. 


§481 


unless  such  votes  were  sufficient  m  number  to  chnnge  the 
majority;  the  mere  fact  that  illegal  votes  were  cast  will  not 
avoid  an  election.^  Wlierc  votes  rejected  by  inspectors  at 
an  election  of  directors,  and  which,  if  received,  would  have 
elected  a  certain  ticket,  arc  adjudged  to  have  been  errone- 
ously rejected,  tiie  only  remedy  is  to  set  aside  the  election.- 
Where  the  charter  provides  that  "there  shall  be  tln-ce 
directors,  out  of  whom  a  president  shall  bo  chosen,"  the 
president  may  be  elected  with  the  other  directors,  without 
being  previously  elected  a  director  himself.''  Directors 
who  are  in  office  cannot  dispute  the  right  of  a  stockholder 
holding  a  majority  of  the  stock  to  have  an  election  in 
accordance  with  the  by-laws,  on  the  ground  that  he  in- 
tends to  use  his  legal  rights  for  purposes  detrimental  tu 
the  interests  of  the  corporation,  and  that  the  desired  elec- 
tion is  merely  a  step  toward  that  end.''  An  agreement 
among  some  of  the  share-hohlers,  who  together  own  a 
majority  of  the  stock,  that  all  will  vote  for  certain  direc- 
tors, in  the  belief  they  will,  if  elected,  manage  the  alfairs 
in  a  certaiu  way,  or  to  hold  their  shares  antl  sell  only 
together,  is  not  unlawful  or  contrary  to  public  policy.^ 
The  officers  of  a  corporat  n  elected  for  a  year  hold  over 
until  others  are  elected.*'  If  an  election  for  managers  of 
a  corporation  be  not  disputed  during  their  term  of  office 
by  quo  warranto,  and  they  are  permitted  to  act  throughout 
their  term  as  managers  do  facto,  the  legcVuv  of  tiir  next 
election  cannot  bo  questioned  for  any  vice  or  irregularity 
in  the  first.''  The  acts  of  a  person  elected  as  a  director, 
tliough  not  possessing  tlie  charter  qualifications,  are  valid 
as  to  tliird  persons,  if  his  election  appears  uf  record,  and 


'  Siulliuiy  V.  Stearns,  21  Pick.  148; 
Ex  parte  i\in:p!iy,  7  Cow.  153. 


^  MatLcr  jf  Long  Island  11.  R.  Co.,     111.  4!{i. 


^  ITa\'T;m  ;ycr  ?'.  Ilavcmoyer,  4r!  X. 
Y.  Sup.  Ct.  50o;  FauUls  v.  Yutco,  ol 


1'.)  Wend.  .T.';  .-{2  Am.  Dec.  429. 

'Carrio  v.  Mut.  Asa'n  Soc,  4  Hen 
&  M    'SKr,  4  Am.  Doc.  517. 

♦  Caiiulon  etc.  R.  R.  Co.  v.  Elkins.     St.  59 
37  N.  J   Eq.  '273. 
Vol.  I.— 61 


"Trustees  v.   Hills,  C  Cow.  23;   1(3 
Am.  Dec.  429. 

'  Cominouwealth  v.   Smith,  45  Pa. . 


§481 


CORPORATIONS. 


802 


he  has  been  permitted  by  the  corporation  to  act  as  direc- 
tor.* If  the  clerk  of  a  corporation  is  present  when  a  vote 
approvin,:;^  liis  election  is  taken,  and  ho  himself  records  the 
vote,  his  acceptance  of  the  office  will  be  presumed."  The 
records  of  a  corporation  showinj^  the  election  at  an  annual 
meeting  of  a  certain  person  as  director,  and  his  presence 
and  making  motions  at  a  subsequent  meeting  of  the  di- 
rectors, are  admissible  as  prima  facie  evidence,  though 
not  conclusive  of  his  acceptance  of  the  office,  in  an  action 
of  tor'  brought  by  him  against  a  sheriff  for  levying  an 
execution  against  the  corporation  on  his  propeity  as  a 
director.^  Where  an  officer  of  a  corporation  is  requiri 
to  be  chosen  by  ballot,  and  the  record  of  his  election  does 
not  specify  the  mode,  the  legal  presumption  is  that  ho 
was  chosen  by  ballot.^ 

Illustrations. — The  Pennsylvania  constitution  of  1874  pro- 
vided "that  in  all  elections  for  directors  or  managers  of  !i  corpo- 
ration each  member  or  share-holder  may  cast  the  whole  iiuml.jcr 
of  his  votes  for  one  candidate,  or  distribute  them  U|)on  two  or 
n^ore  candidates,  as  he  may  prefer."  IldJ,  more  than  direc- 
tory, and  not  to  require  any  legislative  action  to  make  it  effect- 
ive: Pcirce  v.  CommnnuraUh,  104  Pa.  St.  150.  By  'l;e  by-laws 
of  an  incorporated  hospital,  an  election  for  governors  was  requind 
to  be  held  on  a  certain  day  in  each  year;  but  by  the  neglect  of 
the  othcers  no  election  was  had  for  several  years.  7/-?^/,  that  a 
mandamus  would  be  issued  to  compel  an  election  within  sixty 
days  from  the  time  fixed  in  the  by-laws,  without  proof  of  any 
demand  that  an  election  he  held:  People  v.  Albany  Hospital,  01 
Barb.  397.  A,  owning  certain  shares  in  a  corporation,  gave 
them  to  his  son,  with  the  request  that  new  certificates  shouJd 
be  issued  in  the  eon's  name,  and  transferred  upon  the  books  of 
the  conq)any.  This  request  was  complied  with.  The  son  paid 
nothing  for  the  stock,  the  transfer  being  made  in  order  that  he 
might  be  eligible  to  the  office  of  trustee.  Held,  on  a  review  of 
the  statutes  of  Nevada,  that  such  transaction  constituted  the 
son  a  stockholder,  and  made  him  eligible  to  such  ofiice:  S''i'.c 
V.  Leele,  IG  Nev.  242.  The  power  of  election  was  vested  in  a 
board  of  directors,  who  were  accustomed  to  elect  their  cashier 


i 


*  Dispatch  Lino  f.  Bellamy  Co.,  12 
N.  H.  '205;  V.7  Am.  Dec.  '20.3. 

•  Dula:io  r.  Charities,  lo8  Mass.  C3. 


»  Blake  r.  Bayley,  8'2  Masa.  B.ll. 
♦  Blaachard  v.  Dow,  32  Mc.  5J7. 


802 

;  as  direc- 
icn  a  vote 
pcords  the 
,ed.=     The 
an  annual 
s  presence 
of  the  di- 
36,  tliough 
.  an  action 
evying  an 
►perty  as  a 
s  require 
pction  does 
is  that  he 


of  1874  pro- 
's of  a  corpo- 
hole  numlMT 
upon  two  or 
f  than  dirct- 
\ko  it  eff»;ot- 
'he  by-lawy 
was  required 
10  neglect  of 
IT.:ld,  that  a 
within  sixty 
)roof  of  any 
IlospitaU  *'l 
oration,  gave 
cates  shouid 
the  hoolvs  of 
The  son  paid 
a-der  that  lie 
1  a  review  of 
sti luted  the 
office:  .S"('( 
vested  in  a 
their  cashier 

h  Ma93.  531. 
32  Mc.  5j7. 


803 


BTOCKEOLDERS. 


§  482 


annually,  liccording  to  a  resolution  to  that  cfTcct,  hut  the  char- 
ter provided  thnt  hefor'^  ho  entered  upon  the  duties  of  his  ofTico 
he  should  give  bond.  Ileld^  that  the  term  of  oflice  (hd  not  ex- 
pire at  the  end  of  the  year,  but  that  the  old  cashier  continued 
in  oflice  until  a  new  ono  was  qualified  by  giving  a  bond:  i^ purls 
V.  Farmer-^'  Baiil,  3  Del.  Ch.  274.  A  longlit  stock  with  his  wife's 
money  as  an  investment  for  lier,  but  the  certificate  was  acci- 
dentally  made  out  to  hiuj.  At  first  he  ordered  it  to  be  changed, 
but  afterwards  concluded  to  take  tiie  siock  himself,  and  coun- 
termanded the  ordt^r,  and  transferred  the  cost  from  his  wife's 
account  to  his  own.  Held,  a  himn  fidr  liolder  of  stock,  and 
eligible  as  director:  hi  re  fS7.  Lfucrrnrr  Stcamhnat  Co.,  44  N.  J. 
L.  529.  A  statute  authorizes  any  perton  who  "may  be  aggrieved 
t^y  or  may  cemplain  of  any  election  "  of  directors  of  a  corpora- 
tion to  make  application  to  the  eupreme  court  to  compel  a  new 
election.  Held,  that  this  provision  of  law  could  not  be  invoked 
by  one  who  was  not  a  stockholder  at  the  time  of  the  election 
■Minplained  of,  and  who  received  his  stock  from  one  of  tho 
'U'xors  of  the  wrong  complained  of:  In  re  Syracuse  etc.  li.  Ji, 
C<.,yi  N.Y.I. 

§482.    Powor  of   Msjority  to  Make  By-laws.— The 

corp'>ration  by  a  majority-  of  its  members  has  an  implied 
author^.y  to  make  by-laws  for  tic  government  of  the 
concern.'  The  power  to  enact  by-laws  does  not  reside  in 
the  board  of  directors,  but  in  the  aggregate  body  of  tho 
stockholders.  A  by-luw,  adopted  at  a  meeting  of  all  the 
stockholders,  cannot  be  avoided  because  the  meeting  is 
designated  on  the  record  j  as  a  meeting  of  the  board  of 
directors.^  But  by-laws  must  bo  reasonable,^  and  not 
contrary  to  law,  morals,  or  pubUe  policy.^  A  member 
of  a  corporation  is  presumed  to  know  its  by-laws,"'  and  is 
bound  by  the  articles  of  corporation  and  Ijj'-laws,  whether 
he  sijrned  them  or  not."  A  bv-law  is  a  rule  or  law  of  a 
corporation  for  its  government,  and  is  a  legislative  act, 

'  Monawetz    o;i    Corporations,    sec.  a  Ly-law  is  reasonalile  ia  to  bo  (Icci'.leil 

300.     .Stockholders  wild,  at  n  meeting,  by  tho  court;  Coiniuoiiweakh  r.  Wor- 

<h)  not  votu  when  th'.-y  iiii-Iituic  bouiul  ueatLT,  3  Pic!;,  473;  .State  r.  Overton, 

by  tho  result:  .Slate?'.  Chute,  3t  Minn.  21  N.  J.  L.  435;  Gl  Am.  Dec.  G7I. 

13o.  *  Sayre   i'.    Loui.sville    He-i.    Soc,   1 

^  iStato  Siiv.    Asa'n  r.  Nixon- Jones  Duvall,  143;  8o  Am.  Dec.  013. 

Prin^nj  Co.,  25  Mo.  App.  (Jl'J.  *  Pd'nyra  r.  Morton,  25  Mf).  5i)3. 

^  P..l:;iotto    L.iil„-c    V.    IlubbcU,    2  '^  McFaillen  v.  Lo3  Auyules  Co.,  74 

a.Toh.  457;  4U  Am.  Dec.  004.  Whether  Cal.  671. 


§482 


CORPORATIONS. 


804 


and  the  solemnities  and  sanction  required  by  the  charter 
must  be  observed.  A  resolution  is  not  necessarily  a 
by-law,  though  a  by-law  may  be  in  the  form  of  a  resolu- 
tion.' Corporations  must  show  their  power  to  pass  by- 
laws, and  bring  themselves  by  proof  within  that  power." 
The  legislature  cannot  confer  on  a  moneyed  corporation 
power  to  enact  a  by-law  contravening,  repealuig,  or  in 
uuy  wise  changing  the  statutory  or  common  law  of  the 
land.^  The  by-laws  of  a  corporation,  made  in  pursuance 
of  their  charter,  are  equally  as  binding  on  all  their  mem- 
bers, and  otheis  acquainted  with  their  method  of  busi- 
ness, as  any  public  law  of  the  state.^  The  facts  that  the 
by-laws  of  a  corporation  express  an  individual  liability  of 
members  for  company  debts,  and  that  each  member  sub- 
scribed the  by-laws  merely  to  become  a  member,  are  not 
enough  to  su;  luin  an  action  by  a  creditor  of  the  company 
against  a  member  for  the  amount  due.  The  oflice  of  a 
by-law  is  to  regulate  the  uuties  of  members  towards  the 
corporation  and  among  themselves.  A  third  party  can 
enforce  them  only  when  he  yhows  some  privity;  as  wlicre 
his  claim  is  for  value  advanced  upon  the  credit  of  tito 
by-law  and  the  signatures,  or  the  like.*  A  by-law  may  bo 
good  in  part,  and  void  for  the  rest.'  But  it  cannot  be 
made  to  operate  retrospDctively.'  A  power  conferred  by 
the  charter  of  a  privai.6  corporation  to  repeal  a  by-law 
cani\ot  be  exercised  to  impair  any  rights  that  have  be- 
come vestci?  by  virtue  of  the  by-law.* 


'  Drake  v.  R.  R.  Co.,  7  Barb. 
603. 

■'  Dunham  v.  Trustees  of  Rochester, 
6  Cow.  4(52;  Taylor  v,  Griswolil,  14 
N.  J.  L.  2*23;  27  Am.  Dec.  SS. 

"  Scjnoca  County  Bank  v.  Lamh,  2G 
Biirh.  P9i).  Iti  (iotldanl  v.  St.  Louia 
Merchants'  Exchange,  78  Mo.  (509,  the 
court  held  valid  a  hy-law  of  a  board  of 
trade  that  "on  all  sales  of  grain  in 
bulk  on  elevator  receipt,  the  buyer 
shall  pay  the  tirst  ten  days'  storage, 
unlesa  otherwise  specitled  at  the  time 


of    sale,"  although    the  common-law 
rule  in  such  cas  -s  would  bo  different. 

*  Cummings  v.  Web  iter,  43  Mo.  1 ',)'.'; 
AnacostaTribei'.  Murbach,  13  iMd.  1)1; 
71  Am.  Dec.  025;  Brick  Presbytoriuii 
Church  V.  Mayor  etc.  of  Now  York, 
5  Cow.  538;  McDcrinott  v.  Board  of 
Police,  5  Abb.  Pr.  422. 

*  Flint  V.  Pierce,  9!)  Mass.  68. 

^  Rogers  v.  Jones,  1  Wend.  237. 
'  Howard   v.   Savannah,  T.    U.  P. 
Charlt.  173. 
«  Kent  V.  Mining  Co.,  78  N.  Y.  15S), 


805 


STOCKHOLDERS. 


§483 


§  483.  By-laws  Held  Valid.—  All  by-laws  which  carry 
into  effect  the  objects  of  the  corporation  are  valid.^  So 
are  by-laws  regulating  the  manner  of  holding  meetings 
and  electing  officers,^  regulating  the  manner  of  transferring 
shares;^  a  by-law  prohibiting  tickets  to  be  counted  at  an 
election  on  which  there  was  anything  besides  the  names 
of  the  candidates,*  authorizing  stockholders  to  vote  by 
proxy;*  a  by-law  which  prescribes  a  trial  of  the  members 
of  the  oorp-^ration  for  any  delinquencies,  before  a  select 
number  of  members  appointed  by  the  president,  and  pre- 
sided over  by  him,  without  the  right  of  appeal,  and  con- 
fines the  evidence  to  such  as  may  be  brought  by  members 
only,  and  prescribes  that  members  shall  be  dropped  with- 
out trial,  if  fines  imposed  by  said  by-laws  are  not  paid.* 
A  by-law  of  the  New  York  board  of  underwriters, —  a  cor- 
]'  >:ation  chartered  to  establish  and  maintain  uniformity 
in  insurance, —  requiring  members  to  follow  uniform  rates 
of  insurance,  is  valid.''  One  who,  by  becoming  a  member 
of  the  New  York  Stock  Exchange,  agrees  that  his  seat  may 
be  disposed  of  among  his  creditors  in  the  exchange  in  a 
certain  manner,  is  bound  by  his  agreement.*  A  board  of 
trade,  which  is  an  association  of  persons  for  their  own 
convenience  merely,  may  decide  among  what  outside  per- 
sons its  telegraphic  reports  may  be  distributed."  A  cor- 
poration may,  for  their  own  security,  make  a  by-law 
requiring  their  clerk  to  be  sworn,  but  cannot  avail  them- 
selves of  his  omission  to  take  the  oath  in  defense  of  an 
action  against  them.^°    The  by-laws  of  the  Chicago  Board 


o..  78  N.  Y.  159. 


'  People  V.  Sailor's  Snug  Harbor,  54 
Barb.  532;  Came  v.  Brigham,  39  Me. 
a5;  State  v.  Tudor,  5  Day,  329;  5  Am. 
Dr>c.  1G2. 

^  Kearney  v.  Andrews,  10  N.  J.  Eq. 
70. 

"  Morawetz  on  Corporations,  sec. 
3GG. 

♦  Com.  V.  Woelper,  3  Serg.  &  R.  29; 
8  Am.  Dec.  G29. 

*  State  ».  Tudor,  5  Day,  329;  6  Am. 
Dec.  102. 


«  Hussey  v.  Ganagher,  61  Ga.  86. 

''  People  V.  New  York  Board  of  Un- 
derwriters, .54  How.  Pr.  228. 

»  Weston  V.  Ives,  97  N.  Y.  222. 

•  Marine  Grain  and  Stock  Exchange 
V.  Western  Union  Telegraph  Co.,  22 
Fed.  Rep.  23;  Met.  etc.  Exchange  i\ 
Chicago  Board  of  Trade,  15  Fed.  Kep. 
847. 

1"  Hastings  ».  Blue  Hill  Turnpike,  9 
Pick.  80. 


§484 


CORPORATIONS. 


806 


of  Trade,  authorizing  the  board  of  directors  to  expel  a 
member  found  guilty  of  "any  act  of  dishonesty,"  does  not 
contravene  any  principle  of  natural  justice  as  a  wrongful 
forfeiture,  nor  the  charter  (111.  Acts,  1859,  sec.  G),  allowing 
expulsions  by  the  corporation  "in  manner  prescribed  by 
the  rules,  regulations,  and  by-laws  thereof."  "Manner" 
embraces  both  method  and  mode.' 

Illustrations.  —  A  member  of  the  Philadelphia  Stock  Ex- 
change who  subscribed  to  its  constitution  and  by-laws,  held, 
bound  by  an  amendment  ade  in  accordance  therewith,  pro- 
viding for  a  gratuity  funj  from  which  payments  were  to  be 
made  to  the  representatives  of  deceased  members,  who  should 
pay  dues  and  assessments  prescribed,  and  providing  that  mem- 
bers failing  to  pay  such  dues  and  assessments  should  be  de- 
barred from  participation  in  the  benefits  from  the  fund;  the 
representatives  of  a  member  thus  failing  to  pay  could  not  be 
heard  to  question  the  validity  of  the  amendment,  and  could 
receive  no  benefit  from  the  fund:  MacDowell  v.  Ackley,  98  Pa.  St. 
277.  In  an  action  brought  against  a  suspended  member,  by  a 
corporate  lodge  of  Odd  Fellows,  for  arrears  due  by  him,  it  ap- 
peared that  such  member,  on  his  admission  to  the  lodge,  had 
signed  the  constitution  and  by-laws,  and  thereby  agreed  to  sup- 
port the  same,  and  to  pay  all  legal  demands  against  him  so 
long  as  he  should  continue  a  member  of  the  lodge.  Held,  that 
by  suspension  the  defendant  did  not  cease  to  be  a  member,  and 
that,  while  a  member,  he  continued  liable  by  law,  and  by  his 
express  undertaking  to  pay  the  contributions  which  the  by-laws 
required:  Palmetto  Lodge  v.  Hubhell,  2  Strob.  457. 

§  484.  By  Laws  Held  Invalid. — A  by-law  contrary 
to  the  intent  or  the  prosrisions  of  the  charter  is  vo?d," 
so  is  a  by-law  in  vioiation  of  common  law  or  statutes.'' 
These  by-laws  have  been  held  invalid,  viz.:  A  by-law  in 
restraint  of  trade;''  a  by-law  requiring  the  members  to 
bring  suit  only  in  a  certain  county;*^  a  by-law  renuiring 
members  to  submit  their  disputes  to  arbitration;"  curtail- 


'  Pitcher  v.  Chicaro  Board  of  Trade, 
20111.  App.  3ia. 

^  Martin  v.  Nashville  etc.  A8;s'n,  S 
Cold.  418;  Kearney  v.  Andrews,  10  N. 
J.  Eq.  70;  State  r  Curtis,  9  Nev.  325. 

^  IS«aeca  Co.  Basak  v.  Lamb,  2(i  Barb. 
59& 


*  Sayre  i\  i«>uisville  etc.  Ass'n,  1 
Duvall,  144. 

*  Nute  V.  Hamilton  Mut.  Ins.,  6 
Gray,  174;  Amesbury  v.  Ina.  Co.,  ti 
Gray,  51>6. 

"  State  V.  Union  Merchants'  Elx- 
change  Ca,  2  Mo.  App.  96. 


80G 


807 


STOCKHOLDERS. 


§485 


to  expel  a 
"  does  not 
1  wrongful 
),  allowing 
scribed  by 
"Manner" 


,  Stock  Ex- 
-lavvs,  held, 
rewith,  pro- 
were  to  be 
who  should 
[  that  mem- 
ould  be  de- 
i  fund;  the 
>uld  not  be 
,  and  could 
ij,  93  Pa.  St. 
ember,  by  a 
'  him,  it  ap- 
3  lodge,  had 
reed  to  sup- 
inst  him  so 
Held,  that 
lember,  and 
and  by  his 
the  by-laws 


contrary 

is  void," 

statutes.'' 

by-law  in 

embers  to 

requiring 

;•*  curtail- 

etc.  Ass'n,  1 

Mut.   Ins.,   6 
v.  Ins.  Co.,  0 

;rchant3'   Ex- 
96. 


ing  the  rights  of  members  to  vote;*  a  by-law  prohibiting 
the  transfer  of  stock,  except  at  the  office  of  the  company, 
personally  or  by  attorney,  and  with  the  assent  of  the  presi- 
dent;^ a  by-law  providing  that  membership  is  to  be  for- 
feited upon  enlistment  in  the  army  or  navy;'  a  by-law  of 
a  benevolent  association  providing,  as  a  penalty  for  the 
non-payment  of  dues,  that  the  delinquent  should  forfeit 
his  right  to  any  benefits  while  in  arrears,  an<l  for  a  period 
of  three  months  after  the  payment  of  arrears.^  A  by-law 
which  requires  the  consent  of  all  the  stockholders  to  a 
transfer  of  the  stock  of  one  of  them  is  void  as  against 
public  policy;  nor  does  it  matter  that  the  stockholder 
who  objects  to  the  enforcement  of  the  by-law  originally 
voted  for  it.** 

Illustrations.  —  A  volunteer  fire  company,  upon  the  crea- 
tion of  a  paid  fire  department,  ceased  to  run  to  fires,  converted 
its  effects  into  cash,  and  leased  its  engine-house.  Some  months 
afterwards  the  by-laws  were  amended,  changing  the  rate  of  duos 
from  twelve  and  one  half  cents  to  two  dollars  per  month.  A, 
a  member,  did  not  consent  to  the  increase  of  dues,  and  did  not 
pay  them,  lor  which  reason  his  name  was  erased  from  the 
books.  In  a  proceeding  by  mandamus  at  his  rcloiion,  held, 
that  the  amendment  to  the  by-laws  was  unreasonabl},  and  that 
upon  a  dissolution  of  the  company,  and  a  distribution  of  its 
property  among  its  members,  A  was  entitled  to  his  share  as  a 
member:  Hibemia  Fire  Engine  Co.  v.  Commonwealth,  03  Pa. 
St.  204. 

§  485.  Corporation  must  Sue  for  Injuries  to  Itself — In- 
dividual Stockholders  cannot  Sue  for  It.  —  For  wrongs  or 
injuries  to  a  corporation  the  agents  of  the  corporation 
must  sue,  acting  for  it.  A  stockholder  or  stockholders 
cannot  bring  any  suit  or  proceeding  on  behalf  of  the  cor- 
poration, unless  the  corporation  refuses  to  proceed  itself, 
on  account  of  the  misconduct  or  failure  of  its  agents.*^    A 


'  St.  Luke'a  Church  v.  Mathews,  4 
Desaus.  E(i.  578;  G  Am.  Dec.  G19. 

*  Sargent  v.  Franklin  Ins.  Co.,  8 
Pick.  90;  J9  Am.  Dec.  306. 

^  In  re  Rev.  Davul  ^lulhoUand  Ben. 
Soc.  of  Manajrunk,  10  Phila.  19. 


*  Cartnn  v.  Father  Matthew  etc. 
Soc,  3  Daly,  20. 

"  In  re  Klaus  07  Wis.  401. 

«  Russell  V.  Wakeiiekl  Co.,  L.  R.  20 
Eq.  479;  Horsey  v.  Veazio,  24  Mo.  9; 
41  iim.  Dec.  305;  Robinson  i".  Smith, 


§485 


CORPORATIONS. 


808 


stockholder  in  a  corporation,  the  directors  of  which  have 
been  guilty  of  mismanagement  and  neglect  of  duty,  by 
which  the  value  of  the  stock  has  become  depreciated,  can- 
not bring  suit  in  his  own  behalf  to  recover  damages  for 
himself  personally.*  The  general  rule  is,  that  a  suit 
brought  for  the  purpose  of  compelling  the  ministerial 
officers  or  agents  of  a  private  corporation  to  account,  or 
for  misconduct,  must  be  in  the  name  of  the  c(»rporation 
itself,  and  cannot  be  maintained  in  the  name  of  an  in- 
dividual stockholder.*^  A  stockholder  cannot  enjoin  a  levy 
and  sale  upon  the  foreclosure  of  a  mortgage,  executed  by 
the  officers  of  his  corporation,  without  showing  some 
sufficient  reason  why  the  corporation  is  not  the  com- 
plainant.^ Where  a  corporation  by  a  valid  contract  ac- 
quires a  majority  of  the  stocK  of  another  corporation, 
share-holders  in  the  latter  corporation  have  no  standing 
in  court  to  restrain  the  acts  of  the  directors  of  the  former 
corporation,  it  not  appearing  that  they  have  unsuccess- 
fully tried  within  the  corporation  to  get  what  they  want, 
or  that  their  interests  are  betrayed  or  jeopardized.  It  is 
not  enough  that  the  former  corporation  is  violating  its 
contract.*  A  bill  cannot  be  maintained  by  the  stock- 
holders of  a  corporation  against  its  officers  for  conduct 
prejudicial  to  the  corporation,  to  which  the  corporation 
is  not  made  a  party,  and  in  which  no  reason  was  given 
w^hy  the  relief  sought  might  not   be  had  through  the 


3  Paige,  233;  Allen  v.  R.  R.  Co.,  49 
Htiw.  Pr.  14;  Memphis  City  v.  Dean, 
8  Wall.  73;  Kennebec  R.  R.  Co.  v.  R. 
R.  Co.,  54  Me.  181;  Smith  v.  Hurt!, 
12  Met.  372;  4G  Am.  Dee.  GOO;  Brown 
V.  Van  Dyke,  8  N.  J.  Eq.  795;  55  Atn. 
Dec.  250;  Arkenborg  v.  Wood,  23 
Barb.  360;  Baltimore  etc.  R.  R.  Co.  v. 
Wheeling,  13  Gratt.  40;  Allen  v. 
Curtis,  20  Conn.  450;  Silk  Co.  v. 
Campbell,  27  N.  J.  L.  539;  Dimpfell 
V.  R.  R.  Co.,  110  U.  S.  209;  Smith  v. 
Poor,  40  Me.  415;  03  Am.  Dec.  672; 
Bradley  v.  Richardson,  2  Blatchf.  343; 
Insane  Hospital  v.   Uiggios,    15  Ul. 


185;  Campbell  v.  Brunk,  25  111.  225; 
Hay  V.  McCoy,  6  Blackf.  69;  Trustees 
of  Lexington  v.  McConnell,  3  A.  K. 
Marsh,  224;  Mauney  v.  Motz,  4  Ired. 
Eq.  195;  Porter  v.  Neckervis,  4  Rand. 
359.  Corporation  is  trustee  for  its 
stockholders:  Supply  Ditch  Co.  v. 
Elliott,  10  Col.  327;  3  Am.  St.  Rep. 
586;  Caulkin  V.  Gas  Light  Co.,  85Tenn. 
683;  4  Am.  St.  Rep.  786. 

»  Evans  v.  Brandon,  53  Tex.  56. 

*  Brown  w.  Van  Dyke,  8  N.  J.  Eq.  795. 
»  Henry  v.  Elder,  63  Ga.  347. 

*  Conrerse  v.  Dimock,  22  Fed.  Rep. 
573. 


808 


809 


STOCKHOLDERS. 


§485 


iors  of  which  have 
leglcct  of  duty,  by 
e  depreciated,  can- 
cover  damages  for 
le  is,  that  a  suit 
ig  the  ministerial 
ion  to  account,  or 
of  the  corporation 
16  name  of  an  in- 
mnot  enjoin  a  levy 
tgage,  executed  by 
lut  showing   some 

is  not  the  com- 
valid  contract  ae- 
other  corporation, 

have  no  standing 
;tors  of  the  former 
y  have  unsuccess- 
it  what  they  want, 
eopardized.  It  is 
m  is  violating  its 
led  by  the  stock- 
ficers  for  conduct 
1  the  corporation 

reason  was  given 
had  through  the 

V.  Brunk,  25  111.  225; 

6  Blackf.  C9;  Trustees 

V.  McConnell,  3  A.  K. 

launey  v.  Motz,  4  Ired. 

r  V.  Neckervis,  4  Rami. 

tion    is  trustee  for  its 

Supply    Ditch    Co.    v. 

327;  3  Am.  St.  Rep. 

Gas  Light  Co.,  SoTenn. 

Rep,  786. 

raadon,  53  Tex.  5G. 
,nDyke,8K  J.  Eq.  795. 
Ider,  63  Ga.  347. 

Dimock,  22  Fed.  Rep. 


machinery  of  the  corporation,  or  in  its  name.*  If  an 
individual  stockholder  has  suffered  damage  on  a  contract 
with  the  corporation,  through  the  fraudulent  and  illegal 
acts  of  tho  directors,  done  by  color  of  their  office,  his  only 
remedy  is  against  the  corporation.  lie  can  maintain  no 
action  against  the  directors,  who  are  themselves  liable  to 
the  corporation.''  A  refusal  by  the  directors  of  a  bank 
to  commence  a  suit  to  test  the  question  of  the  legality  of 
a  tax  upon  the  property  of  the  bank  is  not  a  breach  of 
their  duty  for  which  a  bill  will  lie  against  them  at  the 
suit  of  a  stockholder.'  Stockholders  of  a  corporation 
cannot  maintain  an  action  accruing  to  the  corporation 
for  breach  of  contract,  and  which  its  officers  and  directors 
refuse  to  bring.'*  The  commission  of  a  fraud  upon  a  cor- 
poration by  its  officers  does  not  give  to  a  creditor  an 
action  at  law  for  fraud  and  deceit  against  them.'  The 
request  made  by  corporators  to  the  directors  to  bring  an 
action  must  have  been  made  in  good  faith,  and  not  have 
been  simulated  to  serve  as  the  foundation  of  a  suit  by  the 
corporators.^  A  bill  in  equity  to  enforce  performance  of 
public  duty  by  a  corporation  cannot  be  maintained  by  a 
private  person  in  the  absence  of  a  special  right  or  au- 
thority; nor  in  such  a  case  has  the  complainant  a  right 
to  a  decree  compensating  him  for  any  damage  suffered.^ 
That  a  stockholder  has  been  refused  permission  to  ex- 
amine the  books  of  the  corporation  with  the  assistance  of 
an  expert,  his  bill  charging  no  fraud  or  misconduct,  but 
alleging  his  desire  to  discover  whether  he  has  been  de- 
frauded by  the  directors  of  the  assets,  presents  no  ground 
of  equitable  jurisdiction;  Lis  remedy  is  at  law  by  manda- 


mus.^ 

I  Black  V.  Hugging,  2  Tenn.  Ch.  780. 

■•'  Smith  V.  Poor,  40  Me.  415;  7  Am. 
Dec.  072. 

'Dodgo  V.  Woolsej',  18  How.  331; 
Moch.  etc.  Bank  v.  Debolt,  18  How. 
380;  Same  v.  Thomas,  18  How.  384. 

*  Shittery  v.  Transportation  Co.,  91 
Mo.  217;  CO  Am.  Rep.  245. 


5  Priest  V.  White,  89  Mo.  609. 

«  Bacon  v.  Irvine,  70  Cal.  221. 

'  Buck  Mountain  Co.  v.  Lehigh  Coal 
etc.  Co.,  50  Pa.  St.  91;  88  Am.  Dec. 
534. 

*  Stettauer  v.  New  York  etc.  Con- 
struction Co.,  42  N.  J.  Eq.  46. 


,§486 


CORPORATIONS. 


810 


Illustrations,  —  In  an  action  on  a  note,  defendant  pleaded 
that  certain  shares  of  stock  in  a  corporation  of  which  plaintiff 
was  an  oflicer  were  delivered  as  security  for  the  note;  that  by 
plaintiff's  negligence  and  misconduct  as  such  oflicer  the  stock 
subsequently  greatly  depreciated  in  value,  to  defendant's  dam- 
age. Held,  that  this  defense  was  not  available,  as  it  would  in 
effect  be  an  action  against  a  corporate  oflicer  by  a  stockholder, 
to  hold  him  responsible  for  his  official  misconduct,  without 
request  and  refusal  of  the  corporation  to  bring  the  action:  Palmer 
V.  Ilawes,  73  Wis.  46. 

§  486.    When  Stockholders  Entitled  to  Relief.— But 

where  the  managing  agents  of  the  corporation  are  doing 
wrong,  and  wrongfully  refuse  to  bring  suit,  in  the  name 
of  the  corporation,  then  at  the  suit  of  a  stockholder  the 
courts  will  give  relief.  "A  stockholder  is  entitled  to  re- 
lief in  a  court  of  equity  on  account  of  an  injury  to  his 
equitable  rights  as  member  and  beneficiary  of  a  corpora- 
tion, provided,  firstly,  that  the  corporation  be  unable,  by 
reason  of  the  default  of  its  agents,  to  obtain  an  adequate 
remedy  within  a  reasonable  time;  and  secondly,  that  the 
right  to  obtain  redress  for  the  injury  be  not  impliedly 
relinquished  by  the  stockholders  to  the  discretion  of  the 
regular  agents  of  the  corporation  as  a  mutual  concession 
for  the  sake  of  peace  and  good  government."*     A  corpora- 


*  Morawetz  on  C'orporationa,  sec. 
400;  Taylor  ?■.  Miami  Exporting  Co., 
5  Ohio,  102;  22  Am.  Dec.  78");  Dodge 
V.  Woohey,  18  How.  331;  Hotlges  v. 
New  Euglaiul  Screw  Co.,  1  K.  I.  312; 
53  Am.  Deo.  024;  Mussina  v.  Golil- 
thwaite,  34  Tex.  125;  7  Am.  Rep.  281; 
March  v.  R.  R.  Co.,  40  N.  H.  548;  77 
Am.  Dec.  733;  Hawea  v.  Oakland,  104 
U.  S.  450,  the  court  saying:  "We 
under.itand  the  doctrine  to  be,  that 
to  enable  a  stockholder  in  a  corpora- 
tion to  sustain  in  a  court  of  equity,  in 
his  own  name,  a  suit  founded  on  a 
right  of  action  existing  in  the  corpora- 
tion itself,  and  in  which  the  corpora- 
tion itself  is  the  appropriate  plaintitF, 
there  must  exist,  as  the  foundation  of 
the  suit,  some  action,  or  threatened 
action,  of  tlve  managing  board  of  direc- 
tors or  trustees  of  the  corporation, 
which  is  beyond  the  authority  con- 


ferred on  them  by  their  charter  or 
other  source  of  organization;  or  such 
a  fraudulent  transaction,  completed  or 
contemplated  by  the  acting  managers, 
in  connection  with  some  other  party, 
or  among  themselves,  or  with  other 
sharediolders,  as  will  lesult  in  serious 
injury  to  the  corporation,  or  to  the 
interests  of  the  other  share-holders; 
or  where  the  board  of  directors,  or  a 
majority  of  them,  are  acting  for  their 
own  interest,  in  a  manner  destructive 
of  the  corporation  itself,  or  of  the  rights 
of  the  other  share-holders;  or  where 
the  majority  of  share-holders  them- 
selves are  oppressively  and  illegally 
pursuing  a  course,  in  the  name  of  the 
corporation,  which  is  in  violation  of 
the  rights  of  the  other  share-holders, 
and  wTiich  can  only  be  restrained  by 
the  aid  of  a  court  of  equity.  Possibly 
other  cases  njay  arise  iu  which,  to  pre- 


810 


811 


STOCKHOLDERS. 


§486 


int  pleaded 
icli  plaintiff 
(to;  that  by 
3r  the  stock 
hint's  dam- 
it  Avould  in 
?tocicholdor, 
let,  without 
ion:  Palmer 


jlief.— But 

I  are  doing 
the  name 
:holder  the 
itled  to  re- 
jury  to  his 
a  corpora- 
unable,  by 
n  adequate 
y,  that  the 
impliedly 
Lion  of  the 
concession 
A  corpora- 

lir  charter  or 
ation;  or  such 

completcil  or 
ng  managers, 

other  party, 
ir  with  other 
suit  in  serious 
on,  or  to  tlie 
share-holders; 
directors,  or  a 
iting  for  their 
er  destructive 
jr  of  tlie  rights 
ers;  or  wliere 

olders   them- 

aud  illegally 
e  name  of  the 
u  violation  of 
share-holders, 
restrained  by 
ity.  Possibly 
which,  to  pre- 


tor  whoso  membership  has  been  denied  by  the  corporation 
may  sue  the  corporation  to  establish  his  right  thereto.' 
Where  the  majority  of  the  stockholders  are  illegally  pur- 
suing a  course,  in  the  name  of  the  corporation,  which  is 
in  violation  of  the  rights  of  the  other  stockholders,  and 
which  can  only  be  restrained  by  a  court  of  ccjuity,  an 
action  to  obtain  equitable  relief  may  be  maintained  by 
an  aggrieved  stockholder,  or  those  whose  rights  are  thus 
aifected  may  join  as  plaintiils  in  the  action."  A  stock- 
holder may  file  a  bill  in  chancery  to  restrain  the  ofHcers  of 
the  company  from  the  commission  of  an  unauthorized 
act.'*  A  minority  of  the  stockholders  have  a  remedy  in 
chancery  against  the  directors  and  against  the  corporation, 
and  against  all  others,  whether  individuals  or  corpora- 
tions, assisting  or  confederating  with  them,  to  prevent 
such  corporation,  and  the  directors  thereof,  from  making 
any  misapplication  of  their  capital  or  profits  which  might 
result  in  lessening  the  dividends  of  stockholders,  or  the 
value  of  their  shares,  if  the  acts  intended  to  bo  done  create 
what  in  law  is  denominated  a  breach  of  trust  or  duty.''  A 
stockhol'^er  may  bring  suit  in  his  own  name,  for  himself, 


vent  irremediable  injury  or  a  total 
failure  of  justice,  the  court  would  be 
justified  in  exercising  its  powers,  but 
the  foregoing  may  bo  regarded  as  an 
outline  of  the  principles  which  govern 
this  class  of  cases.  But,  in  addition 
to  the  existence  of  grievances  which 
call  for  tliis  kind  of  relief,  it  is  equally 
important  that  before  the  share-holder 
is  permitted,  in  his  own  name,  to  in- 
BtitUuu  and  conduct  a  litigation  which 
usually  belongs  to  the  corporation,  he 
should  show  to  the  satisfaction  of  the 
court  that  he  has  exhausted  all  the 
means  within  his  reach  to  obtain, 
within  the  corporation  itself,  the  re- 
dress of  his  grievances,  or  action  in 
conformity  to  his  wishes.  He  must 
make  an  earnest,  not  a  simulated,  ef- 
fort, with  the  managing  body  of  the 
corporation,  to  induce  remedial  action 
on  their  part.  If  time  permits,  or  has 
permitted,  he  must  show,  if  he  fails 
with  the  directors,  that  he  has  made 


an  honest  efifort  to  obtain  action  by  the 
stockholders  as  a  body,  in  tlie  matter 
of  which  he  complains.  And  he  must 
show  a  cause,  if  this  is  not  done,  where 
it  could  not  be  done,  or  it  was  not 
reasonable  to  re([uire  it.  The  efforts 
to  induce  such  action  as  coin])lainant 
desires  on  the  part  of  the  directors  and 
of  the  share-holders,  when  that  is 
necessary,  and  the  cause  of  failure  in 
these  efforts,  should  be  stated  with  par- 
ticularity, and  an  allegation  that  com- 
plainant was  a  share-hoMer  at  the  time 
of  the  transactions  of  which  he  com- 
plains, or  that  his  shares  have  devolved 
on  him  since,  by  operation  of  law. " 

'  Tipton  Fire  Co.  v.  Barnheisel,  92 
Ind.  88. 

a  Barr  v.  R.  R.  Co.,  96  N.  Y.  444. 

'Bliss  V.  Anderson,  31  Ala.  612; 
Neall«.  Hill,  16Cal.  145. 

♦  March  v.  R.  R.  Co.,  40  N.  H.  548; 
77  Am.  Dec.  733. 


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Sciences 

Corporation 


23  WEST  MAIN  STREET 

WEBSTER,  N.Y.  M5M 

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§486 


CORPORATIONS. 


812 


and  others  similarly  situated,  to  recover  the  property  of 
the  corporation  which  one  of  its  trustees  has  converted 
to  his  own  use,  where  the  corporation  has  declined  to 
hring  the  action;  and  in  such  a  case  the  corporation  is 
properly  made  a  party  defendant.*  A  stockholder  has  a 
remedy  in  chancery  against  the  directors  to  prevent  them 
from  doing  acts  which  would  amount  to  a  violation  of  th© 
charter,  or  to  prevent  any  misapplication  of  their  capital 
or  profits  which  might  lessen  the  value  of  the  shares,  if 
the  acts  intended  to  be  done  amount  to  what  is  called  in 
law  a  breach  of  trust  or  duty.  So,  also,  a  stockholder  has 
a  remedy  against  individuals,  in  whatever  character  they 
profess  to  act,  if  the  subject  of  complaint  is  an  imputed 
violation  of  a  corporate  franchise,  or  the  denial  of  a  right 
glowing  out  of  it,  for  which  there  is  not  an  adequate 
remedy  at  law.*  A  stockholder  of  an  insolvent  corpora- 
tion may  bring  suit  for  a  rescission  of  an  unlawful  con- 
tract, without  first  demanding  that  the  corporation  shall 
sue,  if  it  is  apparent  that  the  corporation  could  not  act 
because  its  directors  are  under  the  control  of  the  persons 
with  whom  the  contract  was  made.'  Where  the  officers 
and  directors  have  improperly  exercised  their  powers  in 
making  contracts,  and  in  using  the  company's  money, 
and  have  the  control  of  the  company,  the  stockholders 
may  sue  in  equity  for  redress,  making  said  officers  and 
directors  defendants,  together  with  the  corporation.*  To 
constitute  an  illegal  application  of  the  funds  or  money  of 
a  corporation,  it  is  not  necessary  that  there  should  be  any 
intentional  wrong  or  actual  fraud;  and  to  give  the  court 
jurisdiction  in  equity  in  such  a  case,  the  plaintiff  need 
not  allege  or  prove  any  such  actual  and  willful  fraud  or 
collusion  on  the  part  of  the  company  or  companies,  or  the 
directors  thereof.* 


,  '  Carpenter  v.  Roberts,  56  How.  Pr. 
216. 
«  WUcoz  V.  Bickel,  11  Neb.  154. 


»  Currier  v.  R.  R.  Co.,  35  Hun,  355. 
*  Dcaderick  v.  Wilson,  8  Baxt.  108. 
"  March  o.  R.  R.  Co.,  43  N.  H.  515. 


812 


813 


STOCKHOLD?  ilt 


§486 


iroperty  of 
converted 
leelined  to 
poration  is 
ilder  has  a 
3vent  them 
ition  of  the 
leir  capital 
B  shares,  if 
is  called  in 
cholder  has 
racter  they 
in  imputed 
,1  of  a  right 
n  adequate 
nt  corpora- 
lawful  con- 
ration  shall 
uld  not  act 
the  persons 
the  officers 
powers  in 
y's  money, 
ockholders 
)fficers  and 
ation.*    To 
r  money  of 
)uld  be  any 
e  the  court 
lintiff  need 
ul  fraud  or 
nies,  or  the 


L,  35  Hun,  355. 
n,  8  Baxt.  108. 
,  43  N.  H.  515. 


A  stockholder  may  maiiitain  a  bill  against  the  corpora- 
tion to  restrain  them  from  paying  a  tax  illegally  levied 
upon  the  property  of  the  company,  the  state  treasurer  be- 
ing made  a  party  defendant  to  the  bill,  and  enjoined  from 
collecting  the  tax.*  Stockholders  may  bring  suit  to  can- 
cel a  deed  purporting  to  have  been  made  by  the  corpora- 
tion, as  a  cloud  on  the  title  of  the  corporation.^  Where 
the  officers  have  wasted  its  funds,  a  share-holder  desiring 
redress  need  not,  before  resorting  to  the  courts,  make  a 
demand,  which  necessarily  would  be  unavailing,  on  the 
officers  to  bring  suit.'  Where  a  stockholder  brings  suit 
to  obtain  redress  for  grievances  common  to  others,  and 
to  vindicate  the  rights  of  the  corporation,  he  must  show 
that  he  has  made  an  earnest,  not  a  simulated,  effort  to 
obtain  redress  within  the  corporation,  and  where  time 
has  permitted,  that  he  has  endeavored  to  induce  the 
stockholders,  as  a  body,  to  take  action.  He  must  also 
show  that  he  was  a  share-holder  at  the  time  of  the  trans- 
actions complained  of,  or  that  his  shares  have  since  de- 
volved on  him,  not  by  purchase,  but  by  operation  of  law; 
and  his  bill  must  disclose  his  efforts  to  obtain  redress  in 
the  ordinary  mode.*  Where  a  stockholder  brings  a  suit 
in  equity,  which  should  have  been  brought  by  the  corpo- 
ration, his  bi)l  must  set  forth  in  detail  the  efforts  made  by 
him  to  secure,  on  the  part  of  the  corporation,  the  desired 
action,  or  it  will  be  dismissed.®  A  stockholder  may  main- 
tain an  action  to  set  aside  an  election  of  directors,  although 
at  the  time  of  the  election  no  stock  had  stood  in  his  name 
on  the  books  of  the  corporation  sufficiently  long  to  entitle 
him  to  vote.*  A  court  of  equity  will  enforce  assessments 
on  unpaid  subscriptions  necessary  to  pay  creditors,  if  the 


'Dodge  V.  Woolsey,  18  How.  331; 
Mechaincs'  and  Traders'  Bank  v.  De- 
bolt,  18  How.  380;  Mechanics'  and 
Traders' Bank  V.  Thomas,  18  How.  384. 

*  Baldwin  t*.  Canfield,  26  Minn.  43. 

*  K«l«ey  V.  Sargent,  40  Hun,  150. 


*  Dannmeyer  v.   Coleman,    8   Saw. 
51. 

"  Foote  V.  Cunard  Mining  Co.,  17 
Fed.  Rep.  46. 

•  Wright  "  Central  California  Col- 
ony Water  Co.,  67  Cal.  532. 


486 


CORPORATIONS. 


814 


directors  refuse  to  act.*  Where  a  corporation  has  ceased 
to  appoint  officers,  and  has  abandoned  its  business,  a 
stockholder  may  bring  suit  for  himself  and  the  others  for 
the  protection  of  their  rights,  without  a  showing  of  a  re- 
fusal of  corporate  officers  to  act.'*  Stockholders  may  main- 
tain a  bill,  to  which  the  corporation  is  party  defendant, 
against  the  remaining  stockholders  who  have  a  majority  of 
the  stock,  and  constitute  a  majority  of  the  directors,  where 
the  bill  charges  such  directors  with  fraudulently  combin- 
ing to  appropriate  the  funds  of  the  corporation  for  their 
individual  benefit,  destroying  the  business,  and  depre- 
ciating the  stock,  improperly  withdrawing  the  funds  of 
the  corporation,  concealing  their  amount,  and  refusing  to 
permit  it  to  be  charged  on  the  books,  or  to  permit  suits  to 
be  brought  for  its  recovery,  and  threatening  to  sell  the 
corporation  property  for  less  than  its  value,  and  to  waste 
and  destroy  it  for  their  individual  benefit,  and  praying 
for  a  disclosure  and  an  account,  the  payment  of  whatever 
may  be  due  to  the  corporation,  and  an  injunction  against 
selling  or  wasting  its  property.' 

Illustrations. — A  number  of  shares  of  the  stock  of  a  turn- 
pike company  being  about  to  be  sold,  the  officers  of  the  com- 
pany appointed  an  agent  to  buy  them,  for  the  "use  of  the 
company  ";  but  when  purchased,  they  took  a  part  of  them  to 
themselves.  A  stockholder  instituted  a  suit  against  them  to 
recover  the  damages  he  sustained  by  the  course  taken.  Held, 
that  he  could  recover:  Kimmel  v.  Stoner,  18  Pa.  St.  155.  By 
state  statute,  a  street-railroad  company's  charter  was  repealed, 
and  its  franchises  and  track  transferred  to  another,  and  the 
company  refused  to  seek  a  remedy.  Held,  that  a  stockholder 
asking  for  an  injunction,  on  the  ground  that  the  statute  im- 
paired the  obligation  of  a  contract,  had  a  standing  in  equity: 
Greenwood  v.  Freight  Co.,  105  U.  S.  1 3.  Plaintiflf  and  others,  hav- 
ing owned  and  worked  for  some  years  a  mining  claim,  incorpo- 
rated themselves,  and  turned  their  interests  into  shares  of  cor- 
porate stock.  Plaintiff  failed  to  pay  a  stock  assessment,  and 
the  corporation  sold  his  share  at  public  auction;  he  then  sued 

*  Glenn  r.  Semple,  80  Ala.  159.  *  Sears  v.  Hotobkisa,  25  Conn.  171; 

>  Crum}iah  v.  R.  R.  Co.,  28  W.  Va.    66  Am.  Dec.  667. 
623. 


814 


815 


STOCKHOLDERS. 


§487 


has  ceased 
business,  a 
B  others  for 
ing  of  a  re- 
may  main- 
'  defendant, 
majority  of 
ctors,  where 
tly  combin- 
on  for  their 
and  depre- 
tie  funds  of 
refusing  to 
mit  suits  to 
;  to  sell  the 
nd  to  waste 
,nd  praying 
of  whatever 
tiou  against 


Bk  of  a  turn- 
of  the  corn- 
use  of  the 
of  them  to 
st  them  to 
ten.    Held, 
155.     By 
as  repealed, 


3t 


ler,  and  the 
stockholder 
statute  im- 
in  equity: 
others,  hav- 
im,  incorpo- 
lares  of  cor- 
ssment,  and 
e  then  sued 

25  Conn.  171; 


for  his  undivided  proportion  of  the  claim.  Held,  that  he  cou^d 
maintain  suit  to  recover  his  stock  if  the  sale  had  been  improper, 
but  could  not  sue  the  corporation  for  a  specific  interest  in  the 
corporate  property:  Smith  v.  Maine  Boys  etc.  Co.,  18  Cal.  611. 
In  a  suit  by  a  stockholder  against  a  corporation  of  which  he 
was  a  member,  the  declaration  alleged  a  conversion  and  niis- 
(Kpplication  of  money  by  the  corporation  and  its  president,  and 
that  the  latter  kept  false  books  of  account,  and  refused  to  pay 
over  money  rightly  due  plaintiff.  Held,  that  a  suHicient  cause 
of  action  had  been  stated,  without  alleging  that  the  corporation 
had  refused  to  bring  suit:  Brown  v.  R.  R.  Co.,  27  Hun,  342.  In 
A  suit  by  a  stockholder  of  a  corporation  to  restrain  it  from  ille- 
gally furnishing  water  to  a  city,  plaintiff  alleged  simply  that  he 
requested  the  directors  to  desist,  and  that  they  refused.  Five 
days  after  the  refusal  he  brought  suit.  Held,  that  there  was 
no  such  action  or  fraud  on  the  part  of  the  corporation,  or  the 
majority  of  its  directors,  or  injury  to  plaintiff's  interest,  apparent 
on  the  face  of  his  allegations,  as  to  entitle  him  to  equitable  re- 
lief: Hawes  v.  Oakland,  104  U.  S.  450;  Huntingdon  v.  Palmer, 
104  U.  S.  482.  A  corporation  having  forfeited  its  property,  two 
of  the  three  directors  voted  against  bringing  any  suit  enjoining 
defendant  from  taking  possession,  alleging,  as  ground  for  their 
action,  that  they  feared  they  could  not  obtain  justice  in  the  state 
courts.  The  third  director,  a  non-resident,  was  willii.g  to  trust 
the  local  courts.  Upon  suit  brought  in  the  United  States  court 
by  him  the  next  day  after  the  vote,  held,  that  the  refusal  was 
not  so  cL  trly  real  and  persistent  as  to  give  him  authority  to 
sue  on  behalf  of  the  corporation:  Detroit  v.  Dean,  106  U.  S.  537. 

§  487.  Discretionary  Powers  of  Officers  will  not  be 
Interfered  with  at  Suit  of  Stockholders. — The  court  will 
not,  as  a  rule,  interfere  with  the  discretion  of  the  oflBcers 
in  acting  within  the  powers  given  them,  so  long  as  they 
act  honestly.'  The  action  of  the  officers  of  an  incorporated 
company,  without  any  violation  of  the  charter  or  consti- 
tution of  the  company,  cannot  be  disregarded  or  controlled 
by  any  court  at  the  instance  of  a  stockholder,  unless  it  is 
shown  to  have  been  a  willful  abuse  of  their  discretion,  or 
the  result  of  bad  faith,  or  of  a  willful  neglect  or  breach 
of  a  known  duty.*    Only  in  cases  of  aggravated  miscon- 

*Morawetz  on  Corporations,   sees.  1  Woolw.  400;  Chetlain  v.  Republic 

387,  388;  Dudley  v.  Kentucky  High  etc.  Ins.  Co.,  86  111.  220. 

School,  9  Bush,  678;   Hedges  r.  Pa-  '  Smith  v.  PrattviUe  Mfg.  Co.,  29 

quett,  3  Or.  77;  Samuel  v.  HoUaday,  Ala.  503. 


8  488 


CORPORATIONS; 


816 


duct  will  equity  interfere  with  the  acts  of  corporate  of- 
ficers.*  Equity  will  not,  by  injunction  at  the  suit  of  a 
stockholder  in  a  business  corporation,  interefere  with  the 
general  management  of  the  corporation  property, — such 
as  the  mode  of  investing  its  surplus  moneys, — unless 
there  be  a  clear  violation  of  express  law,  or  a  wide  depart- 
ure  from  charter  powers.'  The  directors  of  a  railroad  will 
not  be  enjoined  from  doing  acts  within  their  powers,  sucli 
as  making  contracts  with  connecting  roads,  and  selling 
stock  of  another  road  owned  by  the  company,  at  the  suit 
of  one  holding  a  majority  of  the  stock,  because  they  arj 
hostile  to  him,  unless  some  dishonest  purpose  is  shown.' 
But  any  one  dissenting  stockholder  may  restrain  the  com- 
pany from  executing  a  contract  which  exceeds  its  powers.* 

Illustrations.  —  In  an  action  for  fraud  against  a  corporation, 
wherein  the  declaration  alle^  i  that,  in  order  to  carry  out  the 
fraud  an  unnecessary  assess  .  ent  was  levied,  but  did  not  allege 
that  the  assessment  was  in  excepsof  the  powers  of  the  directors, 
held,  that  as  to  the  wisdom  or  necessity  of  an  assessment,  or 
the  motives  which  prompted  it,  the  court  would  not  inquire: 
Ogleshy  v.  Attrell,  105  U.  S.  605.  A  corporation  voted  to  in- 
crease its  capital  stock  two  thousand  shares  out  of  its  sur- 
plus earnings.  The  increase  was  for  a  special  object,  though 
not  so  stated  in  the  vote,  and  the  object  immediately  there- 
after failed,  whereupon  the  vote  was  rescinded  before  action 
taken  under  the  former  vote.  A  stockholder,  with  knowledge 
of  the  foregoing  facts,  a  year  later  brought  a  suit  in  equity 
to  compel  an  issue  to  him  of  stock,  upon  the  basis  of  the  vote 
before  mentioned.  Important  transactions  had  intervened,  and 
stock  changed  hands  on  the  basis  of  the  unincreased  capital. 
Held,  that  the  mere  vote  to  increase  gave  the  petitioner  no  vested 
interest,  and  that  the  company  had  power  to  rescind  its  vote, 
and  that  the  petitioner,  by  his  laches  and  acquiescence  for  po 
long  a  time,  had  lost  whatever  equity  he  might  have  had:  Terry 
V.  Eagle  Lock  Co.,  47  Conn.  141. 

§  488.  Stockholders'  Bill  —Who  may  or  must  be  Com- 
plainants. — The   holder   of   a   single   share   may   bring 

1  Cicotte    V.    Aaciaux,     53    Mich.  '  Elkins  v.  R.  R.  Co.,  36  N.  J.  Eq. 

227.  241. 

*  Bach  V.Pacific  Mail  Steamship  Co.,  ^Zabriskie  v.  R.  R.  Co.,  23  How. 

12  Abb.  Pr.,  M.  S.,  373.  381. 


817 


STOCKHOLDERS. 


§§  489,  490 


suit,'  or  all  the  share-holders  may  join  as  complainants.* 
It  has  been  held  that  a  person  who  has  purchased  shares 
for  the  simple  purpose  of  bringing  suit  cannot  bring  the 
action.'  The  liability  of  stockholders  for  the  debts  of  a 
corporation,  contracted  before  the  whole  capital  stock  has 
been  paid  in,  cannot  be  enforced  by  a  single  creditor 
suing  on  his  own  behalf.  The  bill  must  be  brought  in 
behalf  of  all  creditors,  and  the  assets  of  the  corporation 
must  first  have  been  exhausted.*  Where  any  fraud  has 
been  perpetrated  by  the  director  of  a  company,  by  which 
the  property  or  interest  of  the  stockholders  is  affected, 
they  have  a  right  to  come  in  as  parties  to  a  suit  against 
the  company,  and  ask  that  their  property  shall  be  relieved 
from  the  effect  of  such  fraud." 

§  489.  Who  may  or  must  be  Defendants.  —  The  de- 
fendants in  a  bill  by  a  stockholder  to  protect  his  interests 
in  a  corporation  should  be,  first,  the  corporation  itself;* 
and  secondly,  all  other  persons  against  whom  relief  is 
sought.'  A  stockholder,  not  being  personally  liable,  is 
not  a  proper  party  in  an  action  against  the  corporation.* 


§  490.  Corporators  or  Share-holders  not  Liable  Person- 
ally on  Corporate  Contracts. — If  the  corporation  was  not 
in  legal  existence  at  the  time,  or  if  the  contract  made 
with  a  corporation  legally  in  existence  is  not  enforceable 
against  it,  either  because  it  was  ultra  vires  the  corporation 


'  Seaton  v.  Grant,  L.  R.  2  Ch.  462; 
Arinatroag  v.  Church  Soc,  1.3  Grant 
Ch.  550;  Zabriskie  v.  R.  R.  Co.,  23 
How.  395;  Dodge  v.  Woolsey,  18  How. 
3.31 :  Giflford  v.  R.  R.  Co.,  10  N.  J.  Eq. 
171. 

^  Robinson  v.  Smith,  3  Paige,  232; 
Peiibody  v.  Flint,  6  Allen,  57;  Rogers 
ft.  Lafayette  Agr.  Works,  52  Ind.  297; 
Whitney  r.  Mayo,  15  III.  251. 

»  Sparhawk  v.  R.  R.  Co.,  54  Pa.  St. 
401. 

*  Harper  v.  Union  Mfg.  Co.,  100 
III.  225. 

Vol.  I.— 62 


*Bayliss  v.  R.  R.  Co.,  8  Biss. 
193. 

«  Davenport  V.  Dows,  18  Wall.  626; 
Greaves t). Gouge,  69N.  Y.154;  Charles- 
ton Ins.  Co.  V.  Sebring,  5  Rich.  Eq. 
342;  Deaderick  v.  Wilson,  8  Baxc. 
108. 

'  Morawetz  on  Corporations,  sec. 
411;  Hare  v.  R.  R.  Co.,  1  Johns.  &  H. 
252;  Taylor  u.  Maimi  Co.,  5  Ohio,  162; 
22  Am.  Dec.  785. 

»  Adams  V.  Bank,  I  Me.  361;  10  Am. 
Dec.  88. 


§491 


CORPORATIONS. 


818 


or  beyond  the  authority  of  the  agent,  the  members  of  the 
corporation  cannot  bo  charged  personally,  either  jointly 
or  severally.*  The  stockholders  in  a  corporation  are  not 
liable  as  such,  either  on  account  of  any  misrepresenta- 
tions made  by  the  company  before  incorporation,  or  for 
the  non-disclosure  of  the  company's  indebtedness,  on  its 
application  for  a  charter.^  But  incorporators  are  individ- 
ually liable  for  money  illegally  received  by  the  corpora- 
tion, where  the  corporation  is  but  a  cloak  for  the  purpose 
of  covering  up  the  gaming  transactions  contemplated  in 
its  organization  and  done  as  a  business.' 

Illustrations. — The  directors  of  a  bank  agreed  to  buy  the 
stock  of  A,  a  stockholder  for  the  bank.  The  bank  had  no  power 
to  purchase  the  stock.  Held,  that  the  directors  were  not  per- 
sonally liable  to  A:  Abeles  v.  Cochran,  22  Kan.  405;  31  Am. 
Rep.  194.  A  colored  man  was  ejected  from  an  omnibus  by  the 
driver,  receiving  injuries.  The  omnibus  was  owned  and  run  by 
a  corporation,  and  suit  was  brought  against  certain  of  the  stock- 
holders for  the  tort  of  the  omnibus  driver.  No  evidence  was 
introduced  to  show  any  participation  in  the  act  on  the  part  of 
the  defendants.  Held,  that  there  could  be  no  recovery:  Peck  v. 
Cooper,  8  111.  App.  403. 

§  491.  Stockholders  not  Personally  Liable  for  Debts, 
etc.,  of  Corporation. — The  stockholders  of  a  corporation 
are  not  personally  liable  for  its  debts,  unless  made  so  by 
statute.*  A  by-law  of  a  corporation  will  not  suffice  to 
create  liability  foi  corporation  debts  upon  a  member  or  of- 
ficer, unless  the  member  signs  it  and  money  is  lent  upon 
the  credit  thereof.®  When  neither  the  charter  of  a  corpo- 
ration nor  any  general  statute  imposes  on  the  individual 


*  Fay  V.  Noble,  7  Cush.  188;  Trow- 
bridge  V.  Scudder,  11  Cush.  83;  First 
Nat.  Bank  v.  Almy,  117  Mass.  476; 
Blanchard  v.  Kaull,  44  Cal.  440;  contra, 
Hill  V.  Beach,  12  N.  J.  Eq.  31;  Hess 
V.  Werts,  4  Serg.  &  R.  350. 

'  Matthewes  v.  Stanford,  17  6a. 
543. 

*  McGrew  v.  Produce  Exchange,  85 
Tenn.  572;  4  Am.  St.  Rep.  771. 

*  Tbompdou  on  Stock  and    Stock- 


holders, sec.  4;  Morawetz  on  Cor- 
porations, sec.  559;  Freeland  v. 
McCullough,  1  Denio,  414;  43  Am. 
Dec.  685;  Salt  Lake  City  Bank  v. 
Hendrickson,  40  N.  J.  L.  52;  Norton 
V.  Hodges,  100  Mass.  241;  Lowrv  v. 
Inman,  46  N.  Y.  119;  Pollard  v. 
Bailey,  20  Wall.  527;  Shaw  r.  Boylan, 
16  Ind.  384. 

»  Flint  V.  Pierce,  99  Maw.  68;  96 
Am.  Dec.  691. 


818 

mber8  of  the 
ither  jointly 
tion  are  not 
Isrepresenta- 
ation,  or  for 
iness,  on  its 
are  individ- 
the  corpora- 
'  the  purpose 
templated  in 


ed  to  buy  tho 
had  no  powor 
were  not  per- 
405;  31  Am. 
mnibus  by  the 
ed  and  run  by 
in  of  the  stock- 
)  evidence  was 
on  the  part  of 
overy:  Peck  v. 


le  for  Debts, 

corporation 

made  so  by 

lot  suffice  to 

lember  or  of- 

is  lent  upon 

r  of  a  corpo- 

16  individual 

>rawetz  on  Cor- 
9;  Freeland  v. 
io,  414;  43  Am. 
e  City  Bank  v. 
J.  L.  52;  Norton 

I.  241;  Lowry  t'. 

119;    Pollard   v. 

Shaw  V.  Boylan, 

99  Maas.  68;  96 


819 


STOCKHOLDERS. 


§492 


members  a  liability  to  pay  its  debts,  such  liability  cannot 
be  imposed  by  a  by-law  of  the  corporation.*  But  stock- 
holders in  a  corporation  which  has  failed  to  comply  with 
the  requirements  of  the  law  necessary  to  render  their  prop- 
erty exempt  from  corporate  debts  are  primarily  liable  for 
such  debts,  and  maj'  be  sued  without  the  property  of  the 
corporation  being  first  exhausted.'  To  render  the  indi- 
viduals of  a  corporation  personally  liable  for  its  debts  on 
account  of  fraud,  creditors  must  show  that  they  were  in- 
duced to  become  creditors  by  something  said  or  done  by 
its  members,  amounting  to  the  perpetration  of  deceit 
upon  them.* 

§  492.  Oapital  Stuck  a  Trust  Fund  for  Payment  of 
Creditors. — But  the  capital  stock  of  a  corporation  is  a 
trust  fund  for  the  payment  of  creditors.*  The  unpaid 
subscriptions  are  a  trust  fund  for  all  the  creditors,  and 
cannot  be  attached  by  a  judgment  creditor.* 

Illustrations.  —  A  railroad  company,  being  indebted  to  a 
construction  company  in  the  sum  of  seventy  thousand  dollars, 
which  it  could  not  pay,  issued  to  the  members  of  the  construc- 
tion company,  in  satisfaction,  certificates  of  its  stock  of  the  face 
value  of  three  hundred  and  fifty  thousand  dollars.    Held,  that 

N.  Y.  422;  Hurd  v.  Tallman,  60  Barb. 
272;  Bank  of  St  Marys  v.  Powers,  25 
Ala.  612;  Currey  r.  Woodward,  63  Ala. 
375;  Smith  v.  Huckabee,  53  Ala.  195; 
Pascball  v.  Whitsett,  11  Ala.  472; 
Allen  V.  K.  B.  Co.,  11  Ala.  437;  Bas- 
sett  V.  St.  Albans  Hotel  Co.,  47  Vt. 
313;  Adlerv.  Milwaukee  Patent  Brick 
Co.,  13  Wis.  57;  Miers  v.  Zanesville, 
Co.,  11  Ohio,  274;  130hio,  197;  Henry 
V.  R.  R.  Co.,  17  Ohio,  187;  Moss 
V.  Burroughs,  1  Wood,  467;  Payne  v. 
BuUard,  23  Miss.  90;  55  Am.  Dec.  74; 
Tinkham  v.  Borst,  31  Barb.  407;  Has- 
tings V.  Drew,  76  N.  Y.  9;  Wetherbee 
V.  Baker,  35  N.  J.  Eq.  501 ;  Rider  t;. 
Morrison,  54  Me.  429;  Shickle  v. 
Watts,  94  Mo.  410;  Thompson  v. 
Reno  Savings  Bank,  19  Nev.  103;  3 
Am.  St.  Rep.  797;  and  see  note  to  this 
case  in  3  Am.  St.  Rep.  806-873. 
''  Lane's  Appeal,  105  Pa.  St  49;  51 


'  Trustees  of  Free  Schools  in  An- 
dover  v.  Flint,  13  Met.  539;  Reid  v. 
Eatonton  Mfg.  Co.,  40  Ga.  98. 

*  Marshall  v.  Harris,  55  Iowa,  182. 

*  Sisson  V.  Matthews,  20  Ga.  848. 
♦Story's  Eq.  Jur.,  sec.  1252;  Wood 

V.  Dummer,  3  Mason,  308;  Vose  v. 
Grant,  15  Mass.  505;  Spear  v.  Grant, 
16  Mass.  9;  Baker  r.  Atlas  Bank, 
9  Met.  192;  Mumma  v.  Potomac  Co., 
8  Pet.  286;  Curran  v.  Arkansas,  15 
How.  304;  TarbeU  r.  Page,  24  IlL  40; 
Ogilvie  V.  Knox  Ins.  Co.,  Sfe  How.  387; 
Payson  v.  Stoever,  2  Dill.  431 ;  Sawyer 
V.  Hoag,  17  Wall.  610;  Burke  r.  Smith, 
16  Wall.  390;  New  Albany  v.  Burke, 
11  Wall.  96;  Hightower  v.  Thornton, 
8  Ga.  486;  52  Am.  Dec.  412;  Robinson 
('.  Carey,  8  Ga.  530;  Reid  v.  Eatonton 
Co.,  4  Ga.  102;  Schley  v.  Dixon,  24 
Ga.  273;  71  Am.  Dec.  121;  Slee  v. 
Bloom,  19  Johns.  456;  Briggsv.  Penni- 
inan,  8  Cow.  395;  Mann  r.  Peats,  3 


Am.  Rep. 


493 


CORPORATIONS. 


820 


the  receivers  were  liable  as  stockholders  to  creditors  of  the  rail- 
rond  company,  for  the  remaining  eighty  per  cent  of  the  par 
value:  Jackson  v.  Trner,  64  Iowa,  409;  52  Am.  Rep.  449.  A 
corporation  whose  capital  was  impaired  bought  in  its  own  stock 
through  an  agent.  The  seller  did  not  know  who  the  purchaser 
^vi^8.  Held,  that  the  seller  was  liable  to  a  creditor  of  the  corpo- 
rntion:  Crandall  v.  Lincolny  52  Conn.  73;  52  Am.  Rep.  560.  A 
j>rivate  corporation,  the  stockholders  of  which  were  not  individu 
iUy  responsible  for  its  debts,  increased  its  stock  under  authority 
of  its  charter,  and  subscriptions  to  such  new  stock  were  made 
upon  tlie  agreement,  set  forth  in  the  subscription  paper,  tliat 
no  assessment  should  be  made,  and  that  each  subscriber  was  to 
pay  only  ten  dollars  per  share  for  such  new  stock,  the  par  value 
of  which  was  one  hundred  dollars  per  share.  Held,  that  this 
provision  was  void  as  against  creditors  of  the  corporation  with- 
out notice  of  it,  and  that  such  creditors  could  enforce  payment 
for  such  stock  to  the  extent  of  their  demands:  Union  Mutnrd 
Life  Ins.  Co.  V.  Frenr  Stone  Mfg.  Co.,  97  111.  537;  37  Am.  Kep. 
129.  A,  by  his  bond,  acknowledged  the  receipt  from  an  insur- 
ance company  of  ten  shares  of  its  capital  stock,  and  agreed  to 
pay  two  hundred  dollars  therefor  in  installments, — one  fourth 
on  receipt  of  the  stock  certificate,  and  the  remainder  in  three 
equal  amounts,  at  three,  six,  and  nine  months  from  January  7. 
1871,  the  date  of  the  bond.  He  paid,  on  executing  it,  twenty- 
five  dollars,  and  his  name  was  entered  as  a  stockholder  on  the 
books  of  the  company.  The  certificate  was  not  delivered  or 
demanded.  In  1872  the  company  became  bankrupt.  IlchI, 
that  the  assignee  was  entitled  to  recover  of  A  the  unpaid  install- 
ments- Hawley  v.  Upton,  102  U.  S.  314.  An  insurance  com- 
pany had  been  officially  reported  as  unsound,  and  proceedings 
to  wind  up  its  affairs  were  to  be  instituted.  The  directors, 
being  aware  of  these  facts,  passed  a  resolve  that  all  stockhoklcrs 
who  would  pay  five  per  cent  on  their  stock  (on  which  ninety  i)cr 
cent  was  unpaid),  and  surrender  their  certificates  to  the  cou)- 
pany,  should  have  the  privilege  of  retiring  and  withdrawing  the 
notes  which  they  had  given  for  their  stock.  Had  all  the  stock- 
holders done  this,  the  company  would  have  had  funds  enough  to 
pay  about  one  half  of  its  ascertained  liabilities,  without  making 
any  provision  for  its  outstanding  policies.  Held,  that  this  re- 
solve was  a  fraud  upon  the  company's  creditors,  in  law  if  not 
in  fact,  and  as  against  them  it  afforded  no  protection  to  the 
stockholders  who  had  availed  themselves  of  it:  Gill  v. 
Mo.  424. 


Balis,  72 


§  493.    Snares  must  be  Paid  for  in  Money  or  Money's 
Worth. -r- Shares  of  stock  must  be  paid  for  in  money  or 


821 


STOCKHOLDERS. 


493 


money's  worth.  Paid-up  stock  may  be  lawfully  issued  iu 
payment  of  indebtedness  duo  and  payable/  or  in  payment 
for  property  purchased  by  the  corporation."  Subscriptions 
of  stock  to  a  corporation,  organized  to  carry  on  an  iron 
furnace,  may  bo  paid  in  coal  lands,  iron  lands,  and  other 
property  necessary  for  the  business,  if  such  property  is 
taken  at  its  real  value,  and  the  transactions  are  in  good 
faith.'  In  the  absence  of  any  showing  of  fraudulent  rep- 
resentation or  concealment,  the  fact  that  securities  given 
by  a  part;^  to  a  corporation  in  payment  of  a  subscription 
to  stock  prove  to  be  of  no  value,  does  not  invalidate  the 
certificates  issued  and  delivered.*  Stock  issued  by  a  cor- 
poration to  a  creditor,  in  satisfaction  of  a  debt  due,  is  paid- 
up  stock,  and  such  stockholder  is  not  liable  to  a  creditor 
of  the  corporation  as  unpaid  stock.  Where  stock  is  issued 
for  a  sum  less  than  the  par  value  thereof,  a  creditor  of  the 
corporation  may  recover  the  difference  from  the  stock- 
holder.*    While  unpaid  installments  on  stock  ordinarily 

be  paid  otherwise  than  in  money,  we 
regard  as  asserting  a  more  reasonable 
doctrine,  —  a  doctrine  better  adapted 
to  the  practical  affairs  of  business  life. 
Regarding  the  matter,  then,  in  this 
light,  we  shall  rule  that  payment  of 
stock  subscriptions  need  not  be  in  cash, 
but  may  be  in  whatever,  considering 
the  situation  of  the  corporation,  repre- 
sents to  that  corporation  a  fair,  just, 
lawful,  and  needed  equivalent  for  the 
money  subscribed.  Any  other  doc- 
trine than  this  would,  as  it  seems  to 
us,  place  a  corporation  at  a  disadvan- 
tage, under  a  disability  not  contem- 
plated by  the  law,  and  under  which  a 
natural  person  does  not  labor.  Besides, 
a  corporation,  unless  prohibited  by 
statutory  provisions,  has  a  general 
capacity  of  contracting,  which  the 
common  law  concedes  to  every  one 
ordinarily  competent  to  enter  into 
binding  engagements. " 

»  Searight  v.  Payne,  6  Lea,  283. 

*  Protection  Life  Ins.  Co.  v.  Osgood, 
93111.69. 

'  Kehlor  v.  Lademann,  11  Mo.  App. 
550L 


>  Van  Cott  V.  Van  Brunt,  82  N.  Y. 
535.  Power  conferred  by  charter  upon 
(brcctor.4  to  decide  time,  manner,  and 
proportions  in  which  the  stockholders 
sliali  pay  for  their  respective  shares, 
authorizes  them  to  give  a  subscriber 
crtdit:  Blunt  v.  Walker,  11  Wis.  334; 

78  Am.  Dec.  710. 
'^  Brant  v.  Ehlen,  59  Md.  1;  East  N. 

Y.  R.  R.  Co.  V.  Lighthall,  6  Rob.  (N. 
Y.)  407;  Phelan  v.  Hazard,  5  Dill.  45; 
Coit  r.  N.  C.  Gold  Amalgamating  Co., 
14  Fed.  Rep.  12;  Peck  v.  Coalfield  Coal 
Co.,  11  Brad.  (III.)  88;  Schenck  v.  An- 
drews, 57  N.  Y.  133;  Carr  w.  Le  Fevre, 
27  Pa.  St.  413.     In  Liebke  v.  Knapp, 

79  Mo.  22,  49  Am.  Rep.  213,  shares  of 
sto<:k  iu  a  bridge  company  were  given 
to  a  newspaper  iu  consideration  of 
articles  to  be  published  in  the  paper 
advocating  the  enterprise.  This  was 
held  to  be  "  paid-up  "  stock.  Said  the 
court:  "The  authorities  are  not  in 
entire  accord  as  to  whether  the  pay- 
ment of  a  stock  subscription  can  be 
made  in  anything  else  than  money, 
some  holding  one  way  and  some  the 
other.  But  the  class  of  authorities 
which  declare  that  a  subscriptioa  may 


§  493 


CORPORATIONS. 


822 


0 


constitute  a  trust  fund  for  tho  payment  of  the  corporate 
debts,  yet  whore  stock  has  been  issued  to  a  stockholdcr 
and  settled  for  by  him,  under  an  arrangement  made  iii 
good  faith  with  the  company,  it  is  not  in  the  power  of  a 
creditor,  iu  all  cases,  and  as  a  matter  of  right,  to  disturb 
tho  arrangement  so  made,  on  the  ground  that,  in  the  light 
of  subsequent  events,  it  was  a  disadvantageous  one,  and 
especially  where  such  creditor  know  of  the  transaction  ut 
the  time,  and  acquiesced  in  it,*  Where  a  stockholder  exe- 
cuted to  the  company  his  note  and  mortgage  in  payment 
of  his  stock  subscription,  the  stock  must  be  regarded  as 
paid  in,  and  the  note  and  mortgage  as  given  for  money 
loaned  or  invested  by  the  company.  The  liability  of  the 
stockholder  on  the  note  and  mortgage  is  no  less  than  that 
of  any  other  borrower;  nor  do  his  rights  as  a  stockholder 
stand  on  any  better  footing  than  those  who  paid  for  their 
stock,  but  borrowed  nothing  from  the  company.^ 

Illustrations.  —  Stockholders  were  allowed  to  pay  their 
subscriptions  by  conveying,  or  causing  to  be  conveyed,  to  tho 
corporation  coal-lands,  the  business  of  the  corporation  being  to 
mine  coal  and  to  buy  and  sell  coal-lands,  and  the  value  thereof 
was  bona  fide  fixed  at  five  hundred  thousand  dollars,  the  whole 
amount  of  the  capital  stock,  although  the  land  cost  only  fifty- 
seven  thousand  dollars  when  bought  from  the  farmers.  Held, 
that  they  were  not  liable  as  upon  unpaid  stock  for  tho  debts 
of  the  corporation:  Peck  v.  Coalfield  Coal  Co.,  11  III.  App.  88. 
Certain  stock  in  a  company  was  sold  at  par.  A  note  was  given 
for  the  price  payable  out  of  the  net  receipts  or  earnings  of  the 
stock,  to  be  paid  quarterly  by  the  company.  The  note  contained 
a  condition  that  the  principal  should  become  due  upon  failure 
to  pay  the  installments  regularly.  Held,  that,  under  the  cir- 
cumstances, the  transaction  amounted  to  a  valid  sale:  Dean  v. 
Nelson,  10  Wall.  158.  After  the  owners  of  mining  property  had 
organized  themselves  into  a  corporation,  they  contracted  with 
the  directors,  they  being  the  directors,  whereby  they  conveyed 
the  property  to  the  corporation,  and  received  as  payment  full- 
paid  stock.  This  contract  was  never  impeached.  Held,  that  a 
creditor  of  the  corporation,  which  had  become  insolvent,  could 
not  show  that  the  said  stock  had  never  been  paid  for,  in  whole 


'  Coit  V.  North  Caroliua  Gold  Ainal- 
gamating  Co.,  14  Fed.  Rep.  12. 


=>Uaion  Central   Life  Ins.  Co. 
Curtis,  35  Ohio  St.  313. 


823 


STOCKHOLDERS. 


494 


or  in  part,  so  as  to  hold  tho  stockholders  liable  for  his  debt: 
Phelan  v.  Hazard,  5  Dill.  45.  In  an  action  to  recover  from  de- 
fendant a  debt  of  a  manufacturing  corporation,  on  the  ground 
that  the  capital  stock  had  not  been  fully  paid  in,  it  appeared 
thai  defendant  had  signed  the  articles  of  incorporation,  had 
subscribed  for  stock,  was  a  trustee  and  secretary  of  tho  corpo- 
ration, and  actively  engaged  in  its  management,  and  that  his 
name  was  recorded  in  tho  corporation  books  as  a  stockholder. 
IIcUl,  that  he  was  a  stockholder,  although  ho  had  neither  paid 
for  his  stock  nor  received  a  certificate  for  it:  Wheeler  v.  Millar, 
90  N.  Y.  353. 

§  494.  When  Property,  etc.,  cannot  be  Taken  in  Pay- 
ment of  Shares.  —  Where  property  has  no  actual,  posi- 
tive, and  ascertainable  value,  it  seemd  that  it  cannot  law- 
fully be  accepted  in  payment  of  stock.*  Where  paid-up 
stock  is  issued  for  services  to  !/o  peiformo-l,'' or  in  pay- 
ment of  indebtedness  not  yot  due,' tho  person  receiving 
it  becomes  liable  for  its  par  value.  Wiioro  nominally  paid- 
up  stock  is  issued  without  consideration,  either  as  a  bribe 
or  a  present,  the  person  who  receives  it  becomes  liable  to 
creditors  for  its  par  value.*  A  secret  agreement  with  a  com- 
pany, that  a  stock  subscription  of  defendant  was  merely 
to  be  colorable,  is  a  fraud  upon  other  subscribers  for  stock, 
and  is  not  a  defense.'*  One  who  takes  capital  stock  from 
the  corporation,  paying  no  consideration  therefor,  cannot 
avoid  his  responsibility  to  creditors  of  tho  corporation,  on 
the  ground  that  he  is  the  holder  of  full-paid  stock.'  Pay- 
ment by  a  stockholder  to  a  firm  of  which  ho  was  a  mem- 
ber, of  a  sum  equal  to  the  amount  of  his  stock,  to  satisfy  a 
debt  duo  from  the  corporation  to  the  firm,  will  not  ex- 
tinguish his  liability  as  stockholder  to  other  creditors  of 
the  corporation.'  Transfer  of  patent  rights  of  unascer- 
tained value  cannot  be  deemed  payment  of  a  subscription 


»  Tasker  v.  Wallace,  6  Daly,  364. 

*  Barnes  v.   Brown,    11  Hun,   .315; 
Audress's  Case,  L.  R.  8  Ch.  Div.  126. 

^Appleyard's  Case,   49  L.    J.   Ch. 
290. 

*  Everman  v.    Krieckhaus,   7    Mo. 
4pp-  455;  Ex  parte  Dauiell,  1  DeGex 


&  J.  372;  Crawford  v.  Rohrer,  59  Md. 
599. 

»  Downio  V.  White,  12  Wis.  176;  78 
Am.  Dec.  731. 

«  A.  Wight  Co.  V.  Steinkemeyer,  6 
Mo.  App.  574. 

'  Buchanan  v.  Meisaer,  105  111.  638. 


§495 


CORPORATIONS. 


824 


to  the  stock  of  a  railroad  company  such  as  will  satisfy 
the  statute.*  Notwithstanding  stock  in  a  corporation  has 
been  issued  as  full-paid  stock,  but  in  payment  for  property 
taken  by  agreement  instead  of  money  for  the  use  of  the 
company,  yet,  upon  proof  that  the  property  was  not  of 
value  commensurate  with  the  stock,  and  that  the  arrange- 
ment  wj;.s  collusively  made,  a  receiver  can  maintain  a 
suit  to  compel  the  stockholder  to  contribute  the  amount 
unpaid  towards  the  demands  of  creditors.'  Where  the 
charter  of  a  corporation  authorizes  capital  stock  to  be 
paid  for  in  property  instead  of  in  cash,  creditors  cannot 
complain  because  this  is  done,  if  it  is  done  in  good  faith 
and  without  fraud.'  ' 


4 


§  49S.  Rights  of  Creditoni  to  Unpaid  Assessments  by 
Share-holders. — Therefore  when  any  share-holder  has  not 
paid  up  his  share  in  full,  he  holds  the  balance  as  a  trustee 
for  the  creditors  of  the  corporation,*  and  if  the  corpora- 
tion becomes  insolvent,  and  its  assets  exhausted  before 
a  member  has  paid  for  his  shares,  a  court  of  equity  will 
interpose  and  compel  him  to  make  such  payment  for  the 
benefit  of  creditors.  Unless  he  has  paid,  he  must  pay; 
and  the  court  will  entertain  a  bill  for  discovery  to  compel 
the  corporation  or  its  members  to  disclose  whether  they 
have  paid  or  not,®  and  will  put  aside  and  discharge  all  sham 
devices  and  secret  agreements  not  to  pay,  or  not  to  pay 
in  full,  or  to  pay  in  something  other  than  money  or 
money's  worth.*     The  obligation  to  make  good  unpaid 


'  Tosker  v.  Wallace,  6  Daly,  364. 

»  Van  Cott  V.  Van  Bruat,  2  Abb.  N. 
C.  283. 

'  Coit  V.  Gold  Amalgamating  Cn., 
119  U.  S.  343. 

*  Adler  v.  Patent  Brick  Co.,  13  Wia. 
60.  But  stockholdei-a  are  liable  to 
creditor*  only  to  the  oxtent  of  their 
unpaid  Bubscriptions:  Warfieldv.  Can> 
ning  Co.,  72  Iowa,  666;  2  Am.  St.  Rep. 
263;  Bell's  Appeal,  116  Fa.  St.  88;  2 
Am.  St.  Rep.  632. 


'Miers  v.  Zaneaville  Co.,  11  Ohio, 
273;  Middletown  Bank  V.  Kuss,  3Cona- 
135;  Bogardus  v.  Roaendale  Man.  Co.. 
7  N.  Y.  147. 

•  Mann  v.  Cooke,  20  Conn.  179,  187; 
Robinson  r.  R.  R.  Co.,  32  Pa.  St.  334; 
GraflFv.  R.  R.  Co.,  31  Pa.  St.  489;  New 
Albany  etc.  R.  R.  Co.  v.  Fields,  lOInd. 
187;  New  Albany  etc.  R.  R.  Co.  v. 
Slaughter,  10  Ind.  218;  Downie  v. 
White,  12  Wis.  176;  78  Am.  Dec.  731; 
Blodgett  V.  Morrill,  20  Vt.  609;  Ma- 


824 


825 


STOCKHOLDERS 


§495 


(  win  satisfy 
poration  has 
i  for  property 
e  use  of  the 
'  was  not  of 
the  arrange- 

maiiitain  a 
the  amount 

Where  the 
stock  to  be 
itors  cannot 
I  good  faith 


lessments  by 

Ider  has  not 
>  as  a  trustee 
the  corpora- 
isted  before 

equity  will 
Dent  for  the 
J  must  pay; 
y  to  compel 

lether  they 
'ge  all  sham 
not  to  pay 

money  or 
)od  unpaid 

Co.,  II  Ohio, 
;.  Russ,  3  Conn- 
dale  Man.  Co.. 

Conn.  179,  187; 
32  Pa.  St.  334; 
u  St.  489;  New 
Fields,  lOInd. 

R.  R.  Co.  V. 
8;  Downie  v. 
Am.  Dec.  731; 

Vt.  509;  Na- 


portions  of  capital  stock  when  necessities  of  creditors 
require  it  is  a  charge  upon  the  stock,  which  passes  with 
it  to  the  transferees  thereof,  subject  to  exceptional  in- 
stances, where  the  original  subscribers  are  not  with- 
standing liable  by  charters  or  general  statutory  provis- 
ions.' A  bill  in  equity  by  a  creditor  will  lie  to  compel 
a  stockholder  to  pay  arrears  on  stock,  though  by  the 
statutes  of  the  state  an  ample  remedy  is  provided.'^  Be- 
fore the  dissolution  of  a  corporation,  a  court  of  equity, 
not  a  court  of  law,  is  the  proper  forum  for  a  suit  by  a 
judgment  creditor  of  the  corporation  to  enforce  the 
liability  of  a  share-holder  on  his  unpaid  subscriptions.' 
Creditors  of  an  incorporated  company,  who  have  ex- 
hausted their  remedy  at  law,  can,  in  order  to  obtain  sat- 
isfaction of  their  judgment,  proceed  in  equity  against  a 
stockholder  to  enforce  his  liability  to  the  company  for 
the  amount  remaining  due  upon  his  subscription,  al- 
though no  account  is  taken  of  the  other  indebtedness  of 
the  company,  and  the  other  stockholders  are  not  made 
parties,  and  although,  by  the  terms  of  their  subscriptions, 
the  stockholders  were  to  pay  for  their  shares  "as  called 
for"  by  the  company,  and  the  latter  had  not  called  for 
more  than  thirty  per  cent  of  the  subscriptions.*  A  stock- 
holder cannot  decrease  his  number  of  shares  after  debts 
have  accrued.®  A  resolution  permitting  stockholders  on 
payment  of  thirty  per  cent  on  their  shares  to  forfeit  them 
is  void  as  against  creditors.*  The  word  "non-assessable  " 
upon  the  certificate  of  stock  does  not  cancel  or  impair  the 
obligation  to  pay  the  amount  due  upon  the  shares  created 

than  V.  Whitlock,  9  Paige,  152;  Noble 
V.  Callender,  20  Ohio  St.  199;  Henry  v. 
R.  R.  Co.,  17  Ohio  187;  Haviland  v. 
Chace,  39  Barb.  283.  The  presump- 
tion is,  that  a  oertiticate  of  stock  in 
tlic  usual  form  is  full  paid,  and  a  pur- 
cha<«er  who  takes  it  without  notice  is 
not  liable  to  creditors  if  the  company's 
represoiitutions  that  the  stock  is  full 

laid  were  false:  Johtuoa  v.  ^  ullmaa, 

8  Mo.  5ti7. 


» Bell's  Appeal,  115  Pa,  St.  88;  2  Ain. 
St.  Rep.  b'h. 

» Payne  v.  BuUard,  23  Miss.  88;  55 
Am.  Dec.  74. 

» Brown  v.  Fisk,  23  Fed.  Rep. 
228 

*  Hatch  V.  Dana,  101  U.  S.  205. 

'Payne  v.  BuUard,  23  Miss.  88;  55 
Am.  Dec.  74. 

« Slee  V.  Bloom,  19  Johns.  45G;  10 
Am.  Dec.  273. 


495 


COBPOBATIONS. 


826 


by  the  acceptance  and  holding  of  such  certificate.  At 
most,  its  legal  effect  is  a  stipulation  against  liability  from 
further  assessment  or  taxation  after  the  entire  subscrip- 
tion of  one  hundred  per  cent  shall  have  been  paid.* 

Illustrations.  —  The  general  law  under  which  a  corporation 
was  organized  declared:  "  No  stockholder  shall  ever  be  held 
liable  for  the  contracts  or  faults  of  such  corporation  in  any 
further  sum  than  the  unpaid  balance  due  to  the  company  on 
the  shares  owned  by  him."  The  charter  prescribed  in  what 
installments  forty  per  cent  of  the  stock  should  be  paid,  and 
then  declared:  "The  balance  on  each  share,  or  any  portion  of 
such  balance,  shall  not  be  called  for  unless  with  the  assent  of 
three  fourths  of  the  stockholders,  and  then  only  to  increase  the 
business  of  the  corporation."  Held^  that  after  the  payment  of 
forty  per  cent  of  his  stock,  no  stockholder  was  liable  for  the 
br  lance,  unless  it  had  been  called  for  by  a  vote  of  three  fourths 
of  the  stockholders:  Louisiana  Paper  Co.  y.  Waples,  3  Woods, 
34.  One  subscribed  for  the  capital  stock  of  a  corporation, 
under  a  parol  promise  by  the  agent  who  procured  the  subscrip- 
tion that  the  subscriber  should  not  be  called  upon  to  pay  for  the 
stock  or  respond  to  any  assessments.  Held,  that  he  was  never- 
theless bound:  Choxiteau  Ins.  Co.  v.  Floyd,  74  Mo.  286.  Certain 
stockholders  of  a  corporation  took  some  of  its  first-mortgage 
bonds,  and  in  return  received  stock  issued  by  the  corporation, 
of  which  forty  per  cent  was  credited  as  paid.  Held,  that  said 
stockholders  were  liable  to  the  extent  of  this  forty  per  cent  to 
the  creditors  of  the  corporation:  Skramka  v.  Allen,  7  Mo.  App. 
434;  76  Mo.  384.  Subscribers  to  the  stock  of  a  corporation 
paid  twenty  per  cent  of  the  shares,  and  received  full-paid  cer- 
tificates, with  an  agreement  by  the  company  that  no  further 
assessments  should  be  made  thereon.  Held,  that  this  agree- 
ment was  void  as  to  creditors,  who  are  entitled  to  consider  the 
stock  subscribed  as  a  trust  fund  for  their  payment:  Scovill  v. 
Thayer,  105  U.  S.  143.  A  corporation  in  1871  reduced  its  cap- 
ital stock,  of  which  twenty-four  per  cent  only  had  been  paid  in, 
and  issued  paid-up  certificates  based  upon  the  new  valuation. 
Afterwards  the  corporation  became  bankrupt,  and  the  assignee 
paid  a  forty-per-cent  dividend  to  creditors  generally  from  assets 
realized  upon,  without  calling  on  the  stockholders.  Held,  that 
as  to  debts  contracted  before  the  reduction  of  the  capital  stock 
in  1871,  the  stockholders  of  that  date  were  liable  beyond  the 
amount  of  their  twenty-four-per-cent  payment;  but  that  as  to 
debts  afterwards  contracted,  those  stockholders  were  to  be  con- 


I  Upton  V.  Tribilcock,  91  U.  S.  45. 


■ 


826 

tificate.  At 
ability  from 
re  subscrip. 
L  paid.* 

a  corporation 
ever  be  held 
ation  in   any 
company  on 
bed  in   what 
be  paid,  and 
ny  portion  of 
the  assent  of 
)  increase  the 
5  payment  of 
liable  for  the 
three  fourths 
leSj  3  Woods, 
corporation, 
the  subscrip- 
to  pay  for  the 
he  was  never- 
286.     Certain 
irst-mortgage 
corporation, 
Id,  that  said 
r  per  cent  to 
7  Mo.  App. 
I  corporation 
ull-paid  cer- 
no  further 
this  agrce- 
consider  the 
nt:  Scovill  v. 
uced  its  cap- 
seen  paid  in, 
valuation, 
the  assignee 
from  assets 
Held,  that 
apital  stock 
beyond   the 
that  as  to 
e  to  be  con- 


827 


STOCKHOLDERS. 


§496 


w 


sidered  as  having  paid  up  their  subscriptions,  but  that  they 
bhould  take  no  benefit  from  the  forty-per-cent  payment  by  the 
assignee,  as  this  should  have  been  made  primarily  to  creditors 
who  could  not  resort  to  the  liabilities  of  the  stockholders:  In  re 
State  Ins.  Co.,  14  Fed.  Rep.  28.  The  charter  of  a  railroad  com- 
pany provided  that  five  per  cent  on  each  share  should  be  paid 
when  subscribed,  and  subsequent  payments  be  made  upon  calls. 
The  stockholders  voted  that  no  further  calls  be  made;  that  cer- 
tificates issue  for  stock  to  the  extent  to  which  payment  had 
been  made,  and  that  the  balance  of  the  subs'" .'iption  be  can- 
celed. This  vote  was  carried  out  while  the  company  was  sol- 
vent. Seven  years  after,  when  the  company  was  bankrupt  and 
practically  dissolved,  certain  of  its  creditors  sought  to  make 
the  parties  released  liable  as  stockholders  for  unpaid  subscrip- 
tions. Held,  that  said  parties  had  been  released  from  all  such 
liability:  Steacy  v.  R.  R.  Co.,  5  Dill.  348.  A  railroad  corpora- 
tion was  insolvent,  and  its  stock  was  worthless.  The  corpora- 
tion owed  G.,  and  in  good  faith  transferred  to  him,  in  payment 
of  the  debt,  the  unissued  sto(!k  at  twenty  cents  on  the  dollar. 
Held,  that  notwithstanding  the  Iowa  statute,  G.  was  not  liable 
to  creditors  of  the  corporation  for  the  remaining  eighty  cents: 
Clark  V.  Bever,  31  Fed.  Rep.  670.  A  corporation  transferred 
shares  of  its  stock  and  its  bonds  to  the  defendant  gratuitously. 
The  defendant  sold  the  bonds.  None  of  the  property  of  the 
corporation  had  been  applied  in  the  payment  of  the  bonds. 
Held,  that  a  creditor  of  the  corporation  could  not  compel  the 
defendant  to  pay  for  the  stock,  or  account  for  the  bonds:  Chris- 
tenson  v.  Eno,  106  N.  Y.  97;  60  Am.  Rep.  429. 

§  496.    Personal  Liability  of  Stockholders  by  Statute.  — 

But  in  some  states,  by  statute  stockholders  have  been  made 
personally  liable  for  the  debts  of  the  corporation.^  Un- 
der the  New  York  statutes,  the  receiver  of  a  corporation 
may  bring  separate  actions  against  each  stockholder  to 
collect  unpaid  subscriptions.''  Fraud  must  be  established 
to  authorize  the  recovery  of  damages  against  members  of 
a  corporation  under  the  Iowa  code.  The  statute  does  not 
give  a  right  of  action  tor  negligence  or  mismanagement.* 


it 


'  Mokelumne  etc.  Co.  v.  Woodbury, 
14  Cal.  265;  G»ay  v.  Coffin,  9  Cush. 
192;  Coffin  v.  Rich,  45  Me.  507;  71 
Ain.  Dec.  539;  Com.  Bank  v.  Steam 
Factory,  6  R.  I.  164;  75  Am.  Dec.  688. 
A  corporation  cannot,  unless  autlior- 
ized  by  charter  or  statute,  impose  a 


Etrsonal  liability  upon  its  stockholders: 
eid  V.  Eaton  ton  Mfg.  Co.,  40  Ga.  98; 
2  Am.  Rep.  562. 

*  Van  Wageneu  v.  Clark,  22  Hun, 
497. 

*  Hofifman  v.  Dickey,  54  Iowa,  135. 


§496 


CORPORATIONS. 


828 


Under  a  statute  providing  that  all  stockholders  of  corpo- 
rations shall  be  individually  liable  to  the  creditors  of  the 
company  to  the  amount  of  unpaid  stock  held  by  them, 
that  the  creditor  who  sues  is  also  a  stockholder  does  not, 
under  the  statute,  make  any  difference,  provided  he  has 
paid  in  full  for  the  stock  held  by  him,  and  consequently 
is  not  individually  liable  for  the  debts  of  the  company.^ 
A  receiver  of  a  corporation  organized  under  the  New  York 
general  manufacturing  act  is  not  vested  with  the  right 
of  action  given  by  that  act  to  creditors  of  the  corporation 
to  enforce  their  liabilities  against  the  stockholders.  This 
right  is  conferred  only  upon  such  creditors  as  are  within 
the  prescribed  conditions,  and  for  their  perGonal  benefit.'' 
Where  a  statute  makes  each  stockholder  liable  for  the 
debts  of  a  company,  each  stockholder  at  the  time  the 
debt  was  contracted  is  meant.'  The  liability  of  a  stock- 
holder for  the  debt  of  a  corporation  may  be  enforced  by 
action  against  his  executors,  although  the  debt  accrues 
after  the  stockholder's  death.*  If  one  subscribes  for  stock 
in  the  name  of  minors,  for  the  purpose  of  avoiding  per- 
sonal  responsibility  if  the  corporation  should  become  in- 
solvent, and  receives  the  benefit  of  the  stock,  he  will  be 
liable  for  the  corporate  debts."  The  liability  of  a  stock- 
holder, under  a  charter  making  each  liable  to  the  corpo- 
ration creditors  "to  the  amount  of  his  stock,  and  no 
more,"  is  not  affected  by  the  fact  of  his  having  paid  to 
the  corporation  the  full  amount  of  his  stock  subscrip- 
tion.* A  clause  of  the  constitution  providing  for  the 
personal  liability  of  stockholders  of  corporations  may  be 
waived  by  the  insertion  of  a  stipulation  to  that  effect  in 
all  the  contracts  of  the  corporations.^  In  Iowa,  before 
any  stockholder  can  be  charged  with  the  payment  of  a 

^  Smith  V.  Londoner,  5  Col.  365.  '  Castlemanv.  Holmes,  4  J.  J.  Marsh. 

«  Farns worth   v.  Wood,  91   N.  Y.  1;  Roman  v.  Fry,  5  J.  J.  Marsh.  634. 

308.  'Lewis  v.   St   Charles  County,  5 

*  Moss  V.  Oakley,  2  Hill,  265.  Mo.  App.  225. 

*  Manville  v.  Edgar,  8   Mo.  App.  ^  French  v.  Teschemaker,  24  Cal. 
S24.  518. 


829 


STOCKHOLDEKS. 


§496 


judgment  rendered  against  a  corporation  of  which  he  is 
a  stockholder,  a  proceeding  by  ordinary  action  must  be 
instituted    against    him,   and    his   liability   determined 
therein.*     Stockholders   in    a   banking    corporation    are 
only    personally    liable,    or    their    individual    property 
chargeable,  for  the  debts  of  the  corporation  to  the  extent 
and  as  prescribed  by  the  charter.     By  becoming  stock- 
holders, they  assent  to  the  terms  and  assume  the  liabilities 
imposed  by  the  act  creating  the  corporation.     The  obli- 
gations thus  assumed   are  created  by  the  charter,  and 
cannot  be  extended  by  implication  beyond  the  terms  of 
that   instrument   reasonably   interpreted.     If  a   general 
personal  liability  is  created,  it  may  be  enforced  by  a  per- 
sonal action,  as  other  personal  obligations  are  enforced. 
If  the  charter  merely  permits  the  individual  property  of 
stockholders  to  be  levied  upon  and  taken  in  execution 
on  a  judgment  against  the  corporation  in  a  given  con- 
tingency, and   provides  that   the  same   process  may  be 
used  and  enforced  by  the  stockholders  whose  property  is 
first  taken,  against  the  property  of  the  other  stockholders, 
so  as  to  compel  a  ratable  contribution  by  all,  no  general 
individual  liability  is  created  for  which  a  personal  action 
can  be  brought.     In  such  case  the  creditor  of  the  corpora- 
tion is  confined  to  the  remedy  against  the  stockholders, 
and  their  individual  property  given  by  the  act.^     Where 
a  stockholder  was  induced  to  take  the  stock  by  the  false 
representations  of  the  president  of  the  corporation,  that 
it  was  full-paid  capital  stock,  on  which  was  no  liability  of 
stockholders,  it  was  held  to  be  no  defense  in  an  action  by 
judgment  creditors  of  the  corporation  on  his  statutory 
liability.'    Where  by  the  charter  of  a  bank  stockholders 
are  "bound  respectively  for  all  the  debts  of  the  bank  in 
proportion  to  their  stock   holden  therein,"  one  creditor 
cannot  sue  a  stockholder  at  law  (there  being  numerous 


^  Bayliss  v.  Swift,  40  Iowa,  648. 
*  Lowry  v.  laman,  46  N.  Y.  119. 


*  Brigga  v.  Cornwell,  9  Daly,  436. 


496 


CORPORATIONS. 


880 


other  creditors)  to  recover  the  full  amount  of  his  debt, 
without  regard  to  those  other  creditors,  or  to  the  ability 
of  the  other  stockholders  to  respond  to  their  obligations 
under  the  charter,  and  so  appropriate  to  himself  the  en- 
tire benefit  of  that  stockholder's  security,  and  exclude  all 
other  creditors  from  it.  He  should  proceed  in  equity, 
where  the  proportion  can  be  ascertained  upon  an  ac- 
count taken  of  debts  and  stock,  and  a  'pro  rata  distribu- 
tion of  the  debts  among  the  several  stockholders.^  Where 
by  statute  a  stockholder  is  liable  to  creditors  to  double 
the  amount  of  his  stock,  each  stockholder  is  severally 
liable  to  any  creditor.^  A  receiver  of  "all  the  estate, 
property,  and  equitable  interest"  of  an  insolvent  banking 
corporation  created  by  the  state  of  Illinois  cannot  enforce 
against  a  stockholder  in  the  corporation  the  liability  im- 
posed by  the  statute  of  Illinois  on  ear  i  stockholder  for 
double  the  amount  of  his  stock,  such  liability  being  one 
in  favor  of  creditors  of  the  bank,  and  not  in  favor  of  the 
corporation.'  A  creditor  of  a  corporation,  who  can  also 
resort  to  stockholders,  has  not  two  funds  in  such  a  sense 
as  to  be  compelled  to  resort  first  to  the  stockholders  at  the 
suit  of  a  corporation  creditor  who  has  no  recourse  against 
the  stockholders,  because  the  stockholders  are  not  com- 
mon debtors.* 

Illustrations. — A  bank  charter  provided  that  stockholdera 
"shall  be  individually  liable  to  the  amount  of  their  stock 
for  all  the  debts  of  the  corporation."  Held,  1.  That  the  lia- 
bility reaches  to  the  nominal  value  of  the  isto'ek,  and  not 
merely  to  the  unpaid  balance  on  stock  subficr'-  '  ns;  2.  That 
the  stockholder  is  liable,  although  he  was  'v '  fjtockholder 
when  the  creditor's  cause  of  action  accrutd:  l-  e  v.  Sinnock, 
120  111.  350;  60  Am.  Rep.  558.  The  charter  .i  corporation 
provides  that  "each  stockholder  shall  be  jointly  and  severally 
liable  to  the  creditors  thereof  in  an  amount,  besides  the  value  of 
his  share  or  shares  therein,  not  exceeding  ten  per  cent  of  the 
par  value  of  the  share  or  shares  held  by  him."    Held,  that  a 


1  Pollard  V.  Bailey,  20  Wall.  520. 
>  McCarthy  v.  Lavasehe,  89  HI.  270; 
31  Am.  Bep.  83. 


*  JtMsobaon  v.  Allen,  20  Blatchf.  525. 

*  Carter  v.  Neal,  24  6a.  34C;  71  Am. 
Deo.  136. 


830 


831 


STOCKHOLDERS. 


§497 


creditor  may  bring  his  individual  action  at  law  against  one  of 
the  stockholders  to  recover  his  debt  to  the  extent  of  ten  per 
cent  of  the  par  value  of  the  defendant's  shares:  Hall  v.  Klinck, 
25  S.  C.  348;  60  Am.  Rep.  505. 


§  497.  Construction  of  Such  Statutes.  — Statutes  ren- 
dering a  stockholder  personally  liable,  it  is  held  in  some 
courts,  should  be  liberally  construed;*  in  other  courts  it  is 
held  that  such  statutes  should  be  strictly  construed;''  and 
again  in  other  courts  it  is  said  that  they  should  be  rea- 
sonably construed.*  A  statute  which  provides  that  the  di- 
rectors of  any  corporation  (except  banking  companies) 
shall  be  liable  for  its  debts  in  excess  of  its  capital  stock, 
applies  only  to  debts  voluntarily  created  by  the  directors, 
and  does  not  include  a  judgment  against  the  corporation 
for  damages  for  loss  of  a  steamboat  through  the  negli- 
gence of  its  agents.''  Where  a  statute  makes  stockholders 
personally  liable  to  the  holder  of  bills  drawn  on  the  cor- 
poration and  refused  payment  by  the  corporation,  only 
such  stockholders  and  their  successors  as  were  members 
when  the  payment  was  refused  are  liable.*  A  subscriber 
for  stock  in  a  corporation  who  has  paid  part  of  his  sub- 
scription, but  whose  stock  is  afterwards  forfeited  by  the 
company  for  non-payment  of  calls,  is  not  a  stockholder 
within  the  meaning  of  the  New  York  statute,  making 
each  stockholder  in  any  company  formed  under  the  act 
liable  to  its  creditors  "to  an  amount  equal  to  the  amount 
of  unpaid  stock  held  by  him,"  until  the  stock  so  held  by 
him  shall  have  been  paid  up.  The  forfeiture  relieves  the 
subscriber  from  all  liability  to  the  company  for  the  un- 
paid subscription,  and  he  ceases  to   be   a  stockholder 


*  Carver  v.  Braintree  Mfg.  Co.,  2 
Story,  432;  Frecland  v.  McCoUough, 
I  Denio,  414;  43  Am.  Dec.  685. 

«  Lowry  v.  Inmaii,  46  N.  Y.  119; 
Chase  v.  Lord,  77  N.  Y.  1 ;  Meyer  v. 
Slate  Co.,  71  Pa.  St.  293;  Means's 
Appeal,  85  Pa.  St.  75;  Gray  v.  Coffin, 
9  Cush.  192;  Salt  Lake  Nat.  Bank  v. 


Hendrickson,  40  N.  J.  L.  62;  Irvine 
V.  McKeon,  23  Cal.  472. 

'  Mokelumno  Hill  Co.  v,  Woodbury, 
14  Cal.  265;  Davidson  v.  Rankin,  34 
Cal.  505. 

♦  Cable  V.  Gaty,  34  Mo.  573. 

''  Bond  V.  Appleton,  8  Mass.  472;  5 
Am.  Dec.  111. 


M97 


CORPORATIONS. 


832 


;i 


i 


] 


■ 


i 


^ 


within  the  meaning  of  the  statute.*  The  summary  rem- 
edy provided  by  the  Missouri  Revised  Statutes,  against 
stockholders  of  a  corporation  against  which  an  execu- 
tion has  been  obtained,  cannot  be  maintained  against 
the  administrator  of  a  deceased  stockholder.'^  A  judg- 
ment against  the  corporation  for  waste  is  an  "indebted- 
ness" for  which  a  stockholder  is  liable.'  The  liability  of 
a  corporation  for  the  infringement  of  letters  patent  is  not, 
before  judgment,  a  "debt"  for  which  under  a  statute  the 
officers  arc  personally  liable.*  A  street  railway  is  a  railroad 
corporation,  under  a  statute  imposing  only  single  liability 
on  the  stockholders  of  "  all  existing  railroad  corporations."' 
The  individual  liability  of  a  stockholder  for  a  debt  of  the 
corporation  may  be  released  by  a  cancellation  of  the  stock 
by  the  corporation  before  the  creation  of  the  debt,  the  issue 
having  been  on  the  pretense  that  a  stock  dividend  had  been 
earned  when  such  was  not  the  fact.®  A  judgment  credi- 
tor of  a  corporation,  after  execution  returned  unsatisfied, 
may  sue  in  equity  for  himself,  and  for  such  other  credi- 
tors aL'  mny  join  him  making  the  corporation,  and  such  of 
its  delinqueni  stockholders  as  are  within  the  jurisdiction, 
defendants,  and  may  have  an  account  taken,  and  an  order 
compelling  payment  by  such  stockholders;  and  this  not- 
withstanding that  a  state  statute  provides  a  remedy  at  law 
against  an  individual  stockholder  to  enforce  contribution. 
If  such  stockholders  are  liable  to  the  full  amount  of  their 
unpaid  subscriptions,  an  assessment  before  suit  is  un- 
necessary.^ A  demand  against  a  corporation  for  damages 
for  loss  of  a  steamboat  through  the  negligence  of  its  agents 
is  not  a  "debt"  of  the  corporation  for  which  the  stock- 
holders are  jointly  and  severally  liable,  under  a  statute 
providing  that  the  stockholders  are  jointly  and  severally 

1  Mills  V.  Stewart,  41  N.  Y.  384.  *  Jerman  v.  Benton,  79  Mo.  148. 

'  Cummings  V.  Wright,  11  Mo.  App.  ^  HoUingahead    v.    Woodward,    35 

348.  Hun,  410. 

»  Powell  V.  R.  R.,  36  Fed.  Rep..  726.  '  Holmea  v.  Sherwood,  3  McCrary, 

*  Child  V.  Boston  Iron  Works,  137  405;  16  Fed.  Rep.  725 
Mass.  516;  50  Am.  Rep.  328. 


832 

ry  rem- 
against 
execu- 
against 
1  judg- 
idebted- 
t)ility  of 
t  is  not, 
tute  the 
railroad 
liability 
itions.'" 
)t  of  the 
he  stock 
he  issue 
lad  been 
it  credi- 
mtisfied, 
3r  credi- 
such  of 
diction, 
an  order 
his  not- 
y  at  law 
ibiition. 
of  their 
is  un- 
lamages 
|s  agents 
stock- 
statute 
jverally 


lo.  148. 
Iward, 


33 


McCrary, 


i 


! 


833 


STOCKHOLDERS. 


§497 


liable  if  the  corporation  fails  to  give  notice  annually  of 
all  the  "existing  debts"  of  the  corporation.*  A  creditor 
of  a  corporation  which  was  established  in  New  York,  un- 
der the  statute  of  that  state  which  provides  that  stock- 
holders and  officers  shall  be  personally  liable  as  a  penalty 
iu  certain  contingencies,  cannot  maintain  hi^  action  in 
Massachusetts  to  enforce  his  claim  personally  against  a 
stockholder  or  officer  of  the  corporation.''  A  statute  pro- 
viding that  if  the  indebtedness  of  a  mining  company 
shall  at  any  time  exceed  the  capital  stock  paid  in,  the 
directors  assenting  thereto  shall  be  individually  liable 
to  the  creditors  for  such  excess,  applies  only  to  the  un- 
paid cr  ditors,  to  the  making  of  whose  debts  the  directors 
assented,  and  directors  are  not  liable  to  creditors  to  whoso 
debts  they  did  not  assent,  although  such  debts  were  in- 
curred to  pay  off  former  illegal  indebtedness  to  whica 
they  had  assented.'  A  notice  of  an  application  for  an 
execution  against  a  stockholder  on  a  judgment  against  a 
corporation  confers  no  jurisdiction  of  the  person  if  served 
personally  without  the  state.* 

Illustrations. — A  Missouri  statute  exempted  from  liabil- 
ity for  corporate  debts  all  persons  holding  stock  in  a  corpoi- 
ration  as  collateral  security,  but  treated  the  persons  pledging 
such  stock  as  holding  the  same,  making  them  liable  therefor. 
Held,  that  persons  to  whom  a  corporation  pledged  its  stock  as 
collateral  security  were  exempt:  Burgess  v.  SeUgman,  107  U.  S. 
20.  A  corporation  became  insolvent  pending  the  settlement  of 
the  estate  of  a  stockholder  whose  stock  was  only  half  paid  up 
at  the  time  of  his  death.  No  call  was  made  on  him  or  on  his 
executor.  Held,  that  after  settlement  and  distribution,  a  credi- 
tor of  the  corporation  could  not  maintain  an  action  against  the 
executor,  who  was  legatee  and  devisee  as  well:  Larkin  v.  Willi, 
12  Mo.  App.  135.  A  corporation  gave  a  trust  deed  to  S.  to 
secure  the  payment  of  first-mortgage  bonds,  and  also  issued 
paid-up  stock  to  be  held  by  S.  for  one  year,  that  he  might  con- 
trol the  corporation,  and  secure  the  payment  of  interest  on 


» Cable  V.  McCune,  26  Mo.  371;  72 
Am.  Dec.  214. 

^  Halsey  v.  McLean,  12  Allen,  439; 
90  Am.  Deo.  157. 
Vol.  L— 68 


s  Allison  V.  R.  R.  Co.,  Tenn.,  1888 
*  Wilaon  v.  Seligman,  36  Fed.  Rep 
154. 


§497 


CORPORATIONS. 


834 


the  bonds;  the  stock-book  showed  that  S.  was  a  stockholder, 
and  the  transfer-book  that  he  held  the  stock  in  escrow.  Held, 
that  S.  was  not  liable  to  one  who  became  a  creditor  of  the 
corporation  before  S.  assumed  the  rights  of  a  stockholder  by 
voting:  Fisher  v.  Scllgman,  7  Mo.  App.  383.  The  charter  of  a 
cori)uration  contained  this  clause:  "Each  stockholder  shall  ho 
liable  to  double  the  amount  of  stock  held  or  owned  by  him, 
and  for  three  months  after  giving  notice  of  transfer,"  etc.  The 
corporation  having  become  insolvent.  A,  a  creditor,  brought  an 
action  against  B,  one  of  the  stockholders,  in  which  he  pought  to 
hold  him  responsible  for  the  debt  to  the  amount  of  the  stock 
held  by  him.  Held,  that  B  could  not  set  up  the  unconstitution- 
ality of  the  charter  in  defense,  and  that  under  the  above  clause, 
the  stockholders  were  severally  and  individually  liable:  Mr- 
Carthy  v.  Lavasche,  89  111,  270.  A  statute  provides  that  where 
execution  against  a  corporation  lannot  bo  satisfied  on  the  cor- 
porate property,  it  may  be  levied  on  the  property  of  the  stock- 
holders to  the  extent  of  their  shares,  but  only  upon  an  order 
from  tiio  court  in  which  the  action  has  been  brought,  and  upon 
motion  after  notice  to  the  stockholders.  Held,  that  the  stock- 
holder's liability  depended  upon  the  amount  of  shares  held  at 
the  return  of  the  execution,  and  not  at  the  time  of  making 
the  motion:  SkrainJca  v.  Allen,  76  Mo.  384.  A  statute  pro- 
vides that  every  stockholder  of  any  company  shall  be  indi- 
vidually liable  to  the  creditors  of  such  company  to  an 
amount  equal  to  the  amount  unpaid  of  the  stock  held  by 
him,  for  all  debts  and  liabilities  of  such  company,  until  the 
whole  amount  of  the  capital  stock  so  held  by  him  shall  have 
been  paid  to  the  company.  Held,  that  a  stockholder  could 
ofiset  any  demand  he  had  against  the  company:  Jcrman  v. 
Benton,  79  Mo.  148.  The  statutory  requirement  to  make  stock- 
holders liable  personally,  that  a  demand  shall  be  made  on  the 
corporation,  that  it  may  pay  the  debt  or  expose  property  to 
attachment,  held,  met  by  a  demand  by  letter  on  the  treas- 
urer, who  told  the  creditor  he  could  not  pay  the  debt,  and  did 
not  expose  any  property:  Connecticut  River  Savings  Bank  v. 
Fiske,  60  N.  H.  363.  Iowa  Code,  section  1072,  makes  stock- 
holders liable  when  corporate  funds  have  been  diverted  to  pay- 
ments of  dividends,  leaving  insufficient  funds  to  meet  the  lia- 
bilities. Held,  that  the  word  "funds"  means  resources,  and 
not  merely  cash  on  hand,  and  that  the  word  "liabilities"  does 
not  include  the  capital  stock  of  ihe  corporation:  Miller  v.  Bra- 
dish,  69  Iowa,  278.  A  bank  charter  made  the  stockholders  in- 
dividually liable  "to  make  good  losses  to  depositors  or  others." 
Held,  that  the  stockholders  were  liable  to  all  creditors  suflfering 
from  the  failure  of  the  bank  to  pay  its  debts:  Queenan  v. 
Palmer,  11 V  111.  619. 


835 


STOCKHOLDERS. 


498 


§  498.  Nature  of  Personal  Liability.— The  liability  of 
stockholders  under  such  statutes  is  not  that  of  guarantors, 
but  is  an  original  liability  like  that  of  partners  or  mem- 
bcrs  of  an  unincorporated  association.*  The  stockholders 
arc  liable  for  the  corporate  debts  as  if  there  had  been  no 
incorporation,  except  that  the  liability  is  suspended  until 
tho  assets  of  the  corpoiation  have  been  exhausted."  But 
a  few  cases  deny  this  doctrine,  and  hold  that  the  liability 
of  the  stockholder  is  secondary  and  collateral,  and  like 
that  of  a  guarantor.*  Creditors  of  a  corporation  seeking 
to  recover  from  a  stockholder  on  his  individual  liability 
must  first  show  that  they  have  exhausted  their  remedy 
against  the  corporation.*  A  stockholder  is  not  liable  to 
an  execution  creditor  unless  such  stockholder  be  in  default 
to  the  corporation.'  A  creditor  of  a  corporation  organ- 
ized under  the  general  manufacturing  act  cannot  proceed 
against  a  stockholder  for  the  debt  until  he  has  obtained 
judgment  against  the  corporation,  and  an  execution  has 
been  returned  unsatisfied.®  A  stockholder  who  is  also  a 
creditor  of  tho  corporation  cannot  enforce  the  personal 
liability  of  the  stockholders  for  his  debt,  and  one  to  whom 
he  has  assigned  his  claim  for  the  sole  purpose  of  enforcing 
such  liability  stands  in  no  better  position.'  A  stockholder 
who  under  the  charter  of  a  corporation  is  personally  lia- 
ble for  its  debts  cannot,  by  buying  up  at  a  discount  debts 


>  Oreen  v.  Beekman,  59  Cal.  547; 
Corning  v.  McCulIough,  1  N.  Y.  47; 
41)  Ajn.  Dec.  287;  Conklin  v.  Furman, 
8  Abb.  Pr.,  N.  S.,  164;  Clark  t).  Myers, 
11  Hun,  609;  Moss  v.  Averill,  ION.  Y, 
459;  Jones  v.  Barlow,  62  N.  Y.  210; 
Wiles  V.  Suydam,  64  N.  Y.  176;  Chase 
V.  Lord,  77  N.  Y.  33;  Southmayd  v. 
Rnss,  3  CoDU.  52;  Planters'  Bank  v. 
Billingsville,  10  Rich.  95.  The  liabil- 
ity of  members  for  the  corporate  debts 
is  by  the  statutes  several,  and  not  joint, 
an. I  iu  the  nature  of  a  guaranty,  and 
diflfers  from  the  common-law  obliga- 
tion of  a  contract  deemed  to  have  been 
made  by  them:  Pratt  v.  Bacon,  10 
Pick.  127. 


» Conklin  v.  Furman,  8  Abb.  Pr.,  N. 
S.,  164;  Hawthorne  v.  Calef,  2  Wall. 
22. 

'  Wright  V.  McCormack,  17  Ohio 
St.  86;  Patterson  v.  Wyomissing  Co., 
40  Pa.  St.  117;  Hoard  v.  Wilcox,  47 
Pa.  St.  51;  Perry  v.  Turner,  55  Mo. 
418;  Hanson  v,  Donkersley,  37  Mich. 
184;  Malloy  v.  Mallett,  6  Jones  Eq. 
345;  Andrew  v.  Vanderbilt,  37  Hun, 
46a 

♦  Bush  V.  Cartwright,  7  Or.  327. 

'  Simpson  v.  Reynolds,  71  Mo.  594. 

«  Handy  v.  Draper,  89  N.  Y.  334. 

'  Potter  V.  Stevens  Machine  Co.,  127 
Mass.  692;  34  Am.  Rep.  428. 


408 


CORPORATIONS. 


836 


of  tho  corporation,  thus  discharge  his  liability  for  moro 
than  the  amount  actually  paid  by  him.'  A  judgment 
against  a  corporation  is  binding  upon  tho  stockholders 
till  reversed,  and  is  conclusive  upon  them  in  a  subse- 
quent suit  against  them  by  the  same  plaintiff.''  It  is 
competent  evidence  of  the  plaintiff's  atatua  as  a  creditor 
of  tho  company  and  of  tho  amount  due  him.'  A  release 
by  a  creditor  of  a  stockholder's  liability  for  debt,  by  an 
instrument  under  seal,  discharges  tho  corporation  and  tho 
other  stockholders  to  the  same  extent  as  the  one  to  whom 
the  release  is  executed  is  discharged.  Thus  if  the  rclcas« 
be  of  tho  releasee's  proportion  of  the  indebtedness  of  the 
corporation,  the  corporation  and  other  stockholders  are 
only  released  pro  tanto.* 

Illustrations. — The  assignees  of  an  insolvent  corporation 
which  had  surrendered  its  charter  obtained  a  decree  directing 
tho  payment  of  the  assets  in  their  hands,  and  tbey  acted  a&- 
cordingly.  One  of  the  creditors,  who  had  been  paid  tho  share 
awarded  him  by  the  decree,  filed  a  bill  against  certain  stock- 
holders of  the  corporation  for  unpaid  subscription  of  stock, 
claiming  that  the  assignees  had  not  collected  said  debts. 
Held,  that  he  had  no  cause  of  action:  Branch  v.  Knapp,  61  Ga. 
614.  Under  a  charter  providing  that  "until  thirty  thousand 
dollars  of  the  capital  stock  have  been  paid  in,  every  stockholder 
shall  be  held  individually  liable  for  the  debts  of  the  company," 
held,  that  the  stockholders  were  liable  to  be  sued  as  partners, 
and  not  as  guarantors.  But  the  remedy  of  a  creditor  who  was 
also  a  stockholder  was  in  equity,  and  not  at  law:  Perkins  v. 
Sanders,  56  Miss.  733.  Under  a  provision  in  an  act  of  incorpo- 
ration, "that  the  private  property  of  the  individual  stockholders 
shall  be  liable  for  the  debts,  contracts,  and  liabilities  of  the  cor- 
poration," held,  that  the  responsibility  on  the  individual  stock- 
holders is  a  secondary  one,  and  that  when  the  debts  against 
the  corporation  became  extinct  by  the  expiration  of  its  charter, 
the  liabilitity  of  the  individual  stockholders  became  extinct 
also:  Malloy  v.  Mallett,  6  Jones  Eq.  345.  A  promissory  note 
signed  with  the  name  of  a  corporation  by  its  treasurer,  and  in- 
dorsed with  its  name  by  its  directors,  was  delivered  to  a  person, 
under  an  agreement  between  him  and  the  corporation,  "that 

'  Thompson  v.  Meiaser,  108  111.  359.        »  Stephens  v.  Fox,  83  N.  Y.  313. 
'  MUIiken  v.   Wbitehouae,  49  Me.        *  Prince  v.  Lynch,  38  CaL  528;  99 
527.  Am.  Deo.  427. 


837 


BTOCKHOLDEBS. 


400 


thoro  Bhould  be  no  personal  liability  on  thu  note."  lie  after- 
wardH  recovered  judgment  against  the  corporation  in  an  action 
at  law  upon  the  note.  IfcU,  on  a  bill  in  equity  against  tho 
Btockholuers  of  the  corporation,  to  enforce  jjayuient  of  tho  judg- 
ment, that  it  was  meant  that  there  should  bo  no  statutory  lia- 
bility on  the  part  of  the  stockholders;  and  that  this  agreement 
was  admissible  in  defense,  and  was  not  merged  in  tho  judgment: 
Brown  v.  Eastern  Slate  Co.,  134  Mass.  590. 

§  499.  Personal  Liability  for  Wages  of  Employees, 
Laborers,  etc. —  By  statute  in  some  states,  stockholders  aro 
personally  liable  for  wages  due  certain  persons  who  have 
been  employed  by  the  defunct  corporation,  as,  for  example, 
laborers,  servants,  etc.  In  an  action  on  a  stockholders' 
liability,  under  the  New  York  laws,  for  debts  due  labor- 
ers, the  complaint  must  show  that  the  debt  was  to  have 
been  paid  within  one  year  from  the  time  it  was  con- 
tracted.' A  provision  that  "all  members,"  etc.,  "shall  bo 
personally  liable  for  all  debts  contracted  by  the  company 
for  manual  labor  performed  for  the  company,"  does  not 
render  a  stockholder  liable  for  debts  of  the  company 
contracted  before  he  became  a  member.*  It  is  no  ground 
of  defense  to  one  of  the  defendants  that  bo,  the  stock- 
holder, has  paid  some  of  the  operatives  other  sums  duo 
them,  and  has  a  claim  for  contribution  upon  the  other 
defendants.'  A  traveling  salesman  is  not  a  "laborer,"* 
nor  a  secretary  and  book-keeper,*  nor  an  assistant  chief 
engineer  of  a  railroad,"  nor  a  contractor  to  prepare  tlio 
road-bed  of  a  railroad.^  A  stockholder  is  not  liable  as 
for  a  labor  debt  for  money  due  under  a  contract  with  tho 
corporation,  whereby  the  contractor  is  to  carry  on  certain 
quarrying  operations  at  his  own  expense  and  for  a  period 
of  years,  in  a  quarry  owned  by  the  corporation,  and  de- 
liver rock  to  the  corporation  at  certain  rates.*    Under  the 


>  Doan  ».  Mace,  19  Hun,  391. 
■■'  lleoder  v.  Maranda,  CG  Ind.  485. 
^  Burniip  V.  Haskins  Steam  Engine 
Co.,  127  Mass.  586. 
*  Jones  V.  Avery,  50  Mich.  326. 


»  Viele  V.  Wells,  9  Abb.  N.  C.  277. 
®  Brockway  v.  Inncs,  39  Mich.  47. 
'  Peck  V.  Miller,  39  Mich.  594. 
^  Taylor  v.    Manwariug,   48  Mich. 
171. 


§409 


CORPORATIONS. 


838 


phrase  "laborer,  servant,  operative,  or  apprentice,"  the 
following  have  been  held  not  to  fall,  viz.:  a  book-keeper 
and  general  manager;'  one  employed  to  fill  the  place  of 
a  mining  superintendent  during  his  absence.''  Under 
a  i^tutute  which  gives  servants  and  employees  of  certain 
corporations  a  claim  for  wages  against  individual  stock- 
holders, in  addition  to  the  liability  of  the  corporation,  an 
employee  does  not,  by  taking  a  note  of  the  corporation 
foi'  .such  wages,  and  attempting  to  collect  from  the  corpo- 
rate assets,  waive  his  rights  against  the  individual  stock- 
holders. Nor  can  the  stockholder,  after  the  liability  to 
the  employee  is  incurred,  avoid  it,  as  a  personal  claim, 
by  a  transfer  of  his  stock.' 

Illustrations.  —  A  mercantile  firm  delivered  goods  to  the 
laborers  of  a  mining  corporation  upon  orders  drcWn  in  this 
form:  "Due  A  for  labor  from  the  M.  &  P.  Rolling  Mill  Co., 
•Y  ,  in  goods,  at  the  store  of  C.  E.,  treasurer,  by  G.";  and 

on  delivery  of  goods  to  the  amount  so  called  for,  the  firm 
stamped  each  order  "  Paid."  It  was  apparently  understood 
that  the  firm  should  receive  and  honor  the  orders  of  the  corpo- 
ration, and  that  the  latter  should  settle  with  it  every  montli, 
and  pay  the  amount  of  the  orders  taken  by  it.  The  firm  be- 
came insolvent,  and  had  among  its  assets  a  large  number  of 
these  orders,  on  which  suits  were  brought  as  for  labor  debts, 
and  for  the  use  of  the  persons  to  whom  the  orders  were  drawn, 
against  one  of  the  stockholders  of  the  corporation.  Held,  that 
the  actions  would  not  lie;  and  that  the  use  of  the  words  "for 
labor,"  in  the  orders,  was  simply  to  indicate  th^  nature  of  the 
service  for  which  they  were  given,  and  not  to  keep  them  alive 
as  against  stockholders:  Beecher  v.  Dacey,  45  Mich.  92.  A  was 
given  a  situation  at  a  monthly  salary  of  one  thousand  dollars  a 
year,  by  a  manufacturing  corporation,  on  condition  of  his  ob- 
taining for  the  corporation  a  loan  of  three  thousand  dollars.  A 
acted  as  foreman,  helped  to  manufacture  ston^,  kept  time  of 
the  hands,  solicited  orders,  and  did  whatever  told  to  do  by  the 
superintendent.  Held,  that  he  was  a  laborer  or  servant  within 
a  statute  making  members  of  manufacturing  corporations  per- 
sonally liable  for  the  wages  of  laborers  or  servants:  iShort  v.  Med- 
berry,  29  Hun,  39.    A  statute  provided  that  the  "stockholders  of 

'  Wakefield  v.  Fargo,  90  N.  Y.  and  see  Krauser  v.  Ruckel,  '7  Hun, 
213.  463. 

^  Deau  V.  De  Wolf,   16  Hun,  186;        » Jackson  v.  Meek,  Tenn.,  1888. 


839 


STOCKHOLDERS. 


§500 


certain  corporations  shall  only  be  liable  for  the  amount  of  the 
stock  subscribed  by  them  respectively,  provided,  that  sucli  stock- 
holders shall  be  individurJly  liable  for  all  debts  due  laborers, 
servants,  apprentices,  and  employees  for  services  rendered  such 
corporation."  Held,  that  a  corporation  aggregate  could  not  l)e 
the  "employee"  of  another  corporation:  Dukes  v.  Love,  97  Ind. 
341. 

§  500.  Rights  of  Bona  Fide  Holder  of  Shares  Apparently 
Paid  up. —  In  England,  and  in  several  of  the  courts  of  this 
country,  it  is  held  that  a  bona  fide  holder  for  value  of  shares 
which  purport  to  be  fully  paid  up  is  protected.*  On  the 
other  hand,  it  is  held  in  New  York  that  the  holder  of  stock 
which  is  not  in  fact  paid  up  is  liable  to  creditors  of  the 
corporation  for  the  unpaid  balance,  whether  a  purchaser 
for  value  and  without  notice,  or  not.^  Whore  he  has  been 
made  the  victim  of  fraud,  he  has  his  recourse  against  his 
veudor.^  Where  it  is  claimed  that  the  holder  of  nomi- 
nally paid-up  stock,  purchased  in  the  course  of  business, 
took  it  with  notice  that  it  was  not  paid  up,  the  burden  of 
proving  notice  is  upon  the  plaintiff.^  A  secret  agreement 
entered  into  between  the  directors  of  a  railroad  corpora- 
tion and  a  subscriber  for  shares  in  its  capital  stock,  that 
he  may,  within  a  specified  time,  reduce  the  number  of 
shares  thus  subscribed  for,  the  subscription  being  held 
out  as  bono  Ide  for  the  full  amount,  in  order  to  induce 
others  to  subscribe,  is  void  as  a  fraud  on  the  other  sub- 


>  Steacy  ?•.  R.  R.  Co.,  5  Dill.  .348; 
Sanger  v.  Upton,  91  U.  S.  CO;  Brant 
t'.  Elilen,  55)  Md.  1;  Keystone  Briilge 
Co.  i\  McCluney,  8  Mo.  App.  VM.  In 
Biirkinshaw  i\  NicoUs,  L.  R.  3  App. 
Cas.  1017,  the  chancellor  said:  "It 
would  paralyze  the  whole  of  the  deal- 
ings witii  shares  in  i)ublic  companies, 
if  a  share  being  dealt  with  in  the  or- 
dinary course  of  l)U3iness,  dealt  with 
in  the  market  with  the  representation 
upon  it  by  the  company  that  the  whole 
amount  of  tlie  share  was  paid,  the  per- 
son who  took  it  was  to  be  obliged  to 
disregard  the  assertion  of  the  company, 
aud  before  he  could  obtain  a  title  must 


go  and  satisfy  himself  that  tlie  asser- 
tion was  true,  and  that  the  nionuy  had 
beon  actually  paid;  ....  even  if  such 
a  person  were  minded  to  make  the  in- 
vestigation, he  would  1)0  ali.sohitcly 
without  the  means  of  making  it, —  it 
would  l)e  i-npossible  for  him  to  oljtain 
accurate  information  as  to  whether  this 
state  of  things  was  true  or  not." 

'^  Boynton  i\  Andrews,  (53  N.  Y.  93; 
but  see  Holbrook  ?'.  New  .Jersey  Zinu 
Co.,  57  N.  Y.  616. 

3  Tasker  v.  Wallace,  6  Daly,  304. 

*  Burkiushaw  v,  Nicolls,  L.  R.  3 
App.  Cas.  1017. 


§§  501,  502 


CORPORATIONS. 


840 


scribers;  and  the  original  subscription  may  be  enforced, 
for  its  full  amount,  between  the  corporation  and  the  sub- 
scriber.* Where  a  stockholder  of  a  manufacturing  cor- 
poration, whose  stock  has  not  been  fully  paid  in,  in  good 
faith  makes  an  absolute  and  valid  transfer  of  his  stock  to 
another,  he  is  not  liable  for  calls  made  after  the  trausfer.- 

Illustrations. — A  transferred  to  B,  for  an  old  debt,  sliares 
of  bank  stock  on  which  no  payment  had  been  made,  although 
B  supposed  the  shares  to  have  been  paid  up.  Afterwards  A 
paid  forty  per  cent  upon  the  shares  as  calls  were  made,  and  Ji 
received  dividends.  The  bank  became  insolvent,  and  a  receiver 
was  appointed,  who  sued  B  to  recover  the  balance  of  A's  sub- 
scription. Held,  that  the  action  could  not  be  maintained :  Wint- 
ringham  v.  Rosenthal,  25  Hun,  580. 

§  501.  Rights  of  Creditors — To  Interfere  in  Manage- 
ment of  Corporation. — Creditors  have  no  right  to  inter- 
fere in  the  management  of  a  corporation,  or  the  transfer 
of  its  assets,  unless  it  be  actually  insolvent  or  in  danger  of 
insolvency.' 

§  502.  To  Prevent  Dissolution  or  Alteration  in  Charter. 
— Creditors  have  no  power  to  prevent  a  dissolution  of  a 
corporation, ■*  or  an  alteration  in  its  charter.^ 


*  White  Mountains  R.  R.  Co.  v. 
Eastman,  34  N.  H.  124;  Downie  v. 
White,  12  Wis.  17G. 

^Billings  V.  Robinson,  94  N.  Y. 
415. 

» Mills  V.  R.  R.  Co.,  L.  R.  5  Ch.  G21. 


*  Mummaw.  Potomac  Co.,  8  Pet.  28G; 
Smith  V.  Oancil  Co.,  14  Pet.  45;  Curran 
V.  State,  15  How.  310;  Mobile  etc. 
R.  R.  Co.  V.  State,  ?9  Ala.  573. 

''  Pennsylvania  College  Cases,  13 
Wall.  218. 


841 


DISSOLUTION. 


§503 


§503. 

§504, 
§505. 
§506. 
§507. 
§508. 


CHAPTER  XXVIII. 

DISSOLUTION  OF  CORPORATIONS. 

Dissolution  of  corporation —By  expiration  of  time  or  happening  of 

contingency. 
By  surrender  of  charter. 
Other  cases. 

By  forfeiture  at  suit  of  state  for  non-usor  or  misuser  of  franchise. 
Effect  of  dissolution. 
Revivor  of  corporation. 


§  503.  Dissolution  of  Corporation  —  By  Expiration  of 
Time  or  Happening  of  Contingency.  —  A  corporation 
chartered  to  exist  until  a  certain  date  ceases  upon  the 
expiration  of  that  time.'  So  a  corporation  which  is  to 
exist  until  a  certain  contingency  happens  will  expire 
upon  the  happening  of  that  event.  But  there  must  first 
be  a  judicial  determination  of  the  fact.^  If  a  franchise  is 
granted  by  the  legislature  to  construct  a  street  railroad 
within  a  certain  time,  with  a  condition  that  if  the  pro- 
visions of  the  act  are  not  complied  with  the  franchise 
shall  be  forfeited,  a  failure  to  lay  the  track  within  the 
time  limited  works  a  forfeiture  of  the  right  to  lay  the 
same  without  a  judgment  at  the  suit  of  the  state  declaring 
a  forfeiture,  and  the  legislature  may  confer  the  franchise 
upon  any  other  company  or  person.'  Where,  for  every 
practical  purpose,  a  manufacturing  corporation  may  be 
deemed  to  have  been  dissolved  and  its  purpose  abandoned 
before  a  given  year,  it  need  not  file  any  report  for  that 
year.* 

'People  V.  ^Iker.  17  N.  Y.  502;  hull.  25  Mich.  99;  12  Am.  Ren.  233: 

La  Grange  etc    R    R    Co.  t;.  Ramey,  Ornisby  v.   Vermont  Mining  Co.,  05 

l  Ai^'^^-.*^'  ?^°''  "■  ^^^''^'  3  Sniedes  Barb.  360;  Moseby  v.  Burrow,  52  Tex 

&M.  791;  Bank  r.  Trimble,  6  B.Mon.  390.  rov,  o^iex. 

^]--n      ,  ,        c,.          m        .     ^  *  Oakland  R.  R.  Co.  v.  R.  R.  Co.,  45 

Tirl  ifr  ^-r'L  k^^  1^*°?'*  ^°-    ''•  ^^^-  3«5:  13  Am.  Ren.  181.     But  see 

Brooklyn^  78  N.  Y.  524;  La  Grange  contra,  Day  v.  R.  R^Co.,  107  N    Y 

etc.  R.  R.   Co.  V.  Rainev,  7  Coldw.  129,                                    .     "«  ^^.   x. 

432;  Flint  etc.  R.  B.  Clo.  v.  Wood-  *  Bruce  v.  Piatt,  80  N.  Y.  379. 


§ 


504 


CORPORATIONS. 


842 


Illustrations.  —  The  charter  of  a  private  corporation  in- 
vested it  with  "perpetual  Buccession."  Held,  to  mean  that  it 
was  invested  with  the  right  to  exist  forever:  Fairchild  v. 
Masonic  Hall  Assoc,  71  Mo.  526;  contra,  Scanlan  v.  Cranshaiv, 
5  Mo.  App.  337.  A  corporation  is  chartered  to  construct  a  canal, 
to  be  completed  within  a  given  time.  The  failure  to  finish  the 
work  within  that  time  does  not  dissolve  it:  Mcfntire  v.  Zanes- 
ville  Co.,  9  Ohio,  203;  34  Am.  Dec.  435.  In  an  action  to  recover 
tolls  by  a  corporation  chartered  to  erect  a  bridge,  and  to  take 
tolls  thereon  for  twenty  years,  held,  that  although  the  forfeiture 
of  a  corporate  franchise  could  only  be  taken  advantage  of  by 
the  state,  the  defendant  might  show  that  the  twenty  years  had 
expired,  and  thereby  defeat  the  action:  Grand  Rapids  Bridge 
Co.  V.  Prange,  35  Mich.  400;  24  Am.  Rep.  585.  The  corporation 
act  of  Oregon  declares  that  if  any  corporation  shall  neglect  and 
cease  to  carry  on  its  business  for  any  period  of  six  months,  its 
corporate  powers  shall  cease.  Held,  that  such  neglect  did  not 
terminate  the  existence  of  the  corporation  as  by  lapse  of  time, 
but  that  it  was  a  cause  of  forfeiture  of  the  corporate  privileges, 
of  which  no  one  but  the  state  could  complain  or  take  advantage: 
Wallamet  Falls  etc.  v.  Kittridge,  5  Saw.  44. 


§  504.  By  Surrender  of  Charter. — A  corporation  be- 
comes dissolved  by  surrendering  its  charter  to  the  state,^ 
provided  the  state  accepts  the  surrender;'^  for  in  order 
to  make  a  surrender  of  a  corporate  charter  effectual,  it  is 
necessary  that  it  be  accepted  by  the  government,  and  that 
a  record  thereof  be  made.*  It  does  not  require  a  unani- 
mous vote  to  surrender  the  franchises  of  a  corporation;  it 
may  be  done  by  a  majority.*  A  great  distinction  exists 
between  public  and  private  corporations.  Railroad, 
canal,  turnpike,  charitable,  religious,  and  other  corpo- 
rations established  for  objects  quasi  public  cannot  sur- 


'  Morawetz  on  Corporations,  sec. 
637;4Sleo  v.  Bloom,  19  Johns.  456;  10 
Am.  Dec.  273;  McMahan  v.  Morrison, 
10  lud.  172;  79  Am.  Dec.  418. 

-'  EufieM  Toll  Bridge  Co.  v.  R.  R.  Co., 
7  Conn.  45;  Revere  v.  Boston  Copper 
Co.,  15  Pick.  351;  Town  v.  Bank  of 
River  Raisin,  2  Doug.  (Mich.)  530, 
538;  La  Grange  etc.  R.  R.  Co.  v. 
Rainey,  7  Cold.  420;  Wilson  v.  Prop, 
etc.,  9  R.  I.  590;  Harris  v.  Mus- 
kingum Mfg.  Co.,  4  Blackf.  208;  Ward 


V.  Sea.  Ins.  Co.,  7  Paige,  294;  Boston 
Glass  Co.  V.  Langdon,  24  Pick,  49; 
Norris  v.  Mayor  etc.  of  Wmithville,  I 
Swan,  104;  Curien  v.  Santini,  10  La. 
Ann.  27. 

*  Norris  v.  Mayor  etc.  of  Smithville, 
1  Swan,  104. 

*  Wilson  V.  Proprietors  of  Central 
Bridge,  9  R.  I.  590;  TreadwuU  v.  Salis- 
bury Mfg.  Co.,  7  Gray,  ;W3;  00  Am. 
Dec.  490;  Zabriakie  v.  R.  R.  Co.,  18 
N.  J.  Eq.  193. 


843 


DISSOLUTION. 


§  504 


of  Siuithville, 


render  or  dispose  of  their  franchises  without  the  consent 
of  the  state. ^  On  the  other  hand,  mere  private  corpora- 
tion, or  a  trading  corporation  wliich  is  formed  solely  for 
the  pecuniary  benefit  of  its  share-holders,  may  wind  up 
its  business  by  the  sale  of  its  assets,  whenever  the  major- 
ity, in  the  exercise  of  sound  discretion,  deem  this  course 
to  be  expedient.''  And  this  may  be  done  by  a  majority 
of  the  stockholders,  even  against  the  wishes  of  a  minority.^ 
But  the  sale  must  be  made  with  the  bona  fide  object  of 
winding  up  the  corporation.'*  The  minority  are  entitled 
to  an  immediate  distribution  of  the  proceeds  of  the  sale,® 
and  they  may  elect  in  what  form  they  will  receive  their 
proportion  of  assets, —  whether  they  will  take  the  specific 
property  into  which  the  corporate  assets  have  been  trans- 
ferred, or  iii..iot  upon  cash  in  lieu  of  the  same.^     The 


*  Treailwell  v.  Manufacturing  Co.,  7 
Grav,  .SIKJ;  CO  Am.  Dec.  490;  Johnson 
V.  II.  R.  Co.,  3  De  Gex,  M.  &  G.  914; 
Shrewsbury  etc.  R.  R.  Co.  r.  R.  R. 
Co.,  6  H.  L.  Cas.  113;  Macgregor  v. 
R.  R.  Co.,  18  Q.  B.  018;  Thomas  v. 
R.  R.  Co.,  101  U.  S.  71,  83;  York  & 
Md.  R.  R.  Co.  V.  Winans,  17  How.  30, 
39;  Black  v.  Delaware  etc.  Canal  Co., 
22  N.  J.  Eq.  130,399;  Commonwealth 
V.  Smith,  10  Allen,  448,  455;  Lauman 
V.  R.  R.  Co.,  30  Pa.  St.  42;  72  Am. 
Dec.  685;  Troy  etc.  R.  R.  Co.  v.  Kerr, 
17  Barb.  58 1,  001;  American  Union 
Tel.  Co.  V.  R.  R.  Co.,  1  McCrary,  188; 
Richardson  i'.  Sibley,  11  Allen,  66; 
Lyon  V.  Jerome,  26  Wend.  485. 

'  Mercliants'  etc.  Line  v.  Waganer, 
71  Ala.  581;  Tread  well  i\  Salisbury 
Mfg.  Co.,  7  Gray,  393;  66  Am.  Dec, 
490;  Wilfton  v.  Proprs  of  Central 
Bridge,  9  R.  I.  590;  McCurdy  v. 
Myers,  44  Pa.  St.  535;  Curran  v. 
State  of  Arkansas,  15  How.  304, 
310;  Ward  v.  Soc.  of  Attys,  1  Coll. 
370;  Bank  of  Switzerland  v.  Bank  of 
Turkey,  5  L.  T.,  N.  S.,  649;  Rid- 
die  V.  Prop,  of  Locks  etc.,  7  Mass. 
185;  Hampshire  v.  Franklin,  16  Mass. 
86;  Savage  v.  Walshe,  26  Ala.  619; 
Mumma  v.  Potomac  Co.,  8  Pet.  681; 
Penobscot  Boom  Co.  v.  Lamson,  16 
Me.  224;  Enfield  Toll  Bridge  Co.  v. 
Couu.  etc.  Riv.  Co.,  7  Coun.  29;  Com- 


monwealth V.  Slifer,  53  Pa.  St.  71; 
Roveres  v.  Copper  Co.,  15  Pick.  ^'A; 
Lauman  v.  R.  R.  Co.,  30  Pa.  St.  42; 
72  Am.  Dec.  085;  Hancock  ?;.  Ilol- 
brook,  4  Woods,  52;  Black  v.  Dela- 
ware etc.  Canal  Co.,  22  N.  J.  Eq.  414, 
415. 

3  Black  V.  Del.  etc.  Canal  Co.,  22  N. 
J.  Eq.  1.30,  the  court  saying:  "  Bocom- 
ing  incorporated  for  a  specific  object, 
without  any  specified  time  for  the  con- 
tinuance of  the  business,  is  no  contract 
to  continue  it  forever  any  more  than 
articles  of  partnership  without  stipu- 
lations as  to  time.  There  is  no  reason 
why  it  should  be  construed  into  such 
a  contract;  such  is  not  implied  in  the 
charter,  and  a  doctrine  that  all  the 
share-holders  but  one  may  be  com- 
pelled to  continue  a  Imsiness  which 
they  find  undesiral<le,  and  wi.sh  to 
abandon,  is  so  unreasonable  and  un- 
just that  it  will  not  be  held  to  arise 
by  implication,  unless  that  implication 
is  a  necessary  one. " 

*  Morawetz  on  Corporations,  see. 
212. 

■^  McVicker  v.  Ross,  55  Barb.  247; 
Frothingham  v.  B.irncy,  G  Hun,  306; 
Taylor  u.  Earle,  8  Hun,  1. 

« Lauman  v.  R.  R.  Co.,  30  Pa.  St. 
42;  72  Am.  Dec.^C85;  N.  O.  etc.  R.  R. 
Co.  V.  Harris,  27  Miss.  517;  Black  v. 
Del.  &  Rar.  Canal  Co,,  22  N.  J.  Eq. 


§505 


CORPORATIONS. 


minority  cannot  be  compelled  to  take  an  annuity  instead 
of  their  proportion  of  assets,  or  the  proceeds  from  the  sale 
of  the  same.^  Nor  are  they  obliged  to  take  stock  in  an- 
other company,  unless  that  stock  has  a  fixed  money  value, 
and  is  easily  convertible  into  cash;  but  the  dissentients 
cannot  prevent  the  exchange  of  assets  for  stock,  provided 
those  who  favor  this  transaction  make  provision  for  pay- 
ment of  cash  to  those  who  prefer  it.*  And  it  is  the  duty 
of  the  majority  to  wind  up  the  corporation,  by  the  sale  of 
its  assets,  upon  such  terms  as  shall  be  most  advantageous.'' 
A  surrender  of  a  charter  by  a  corporation  may  be  pre- 
samed  from  a  neglect  for  a  long  time  to  choose  corpora- 
tors, and  to  exercise  the  corporate  franchises.* 


?;-'  'H 

1^ 

■  f^*^ 

■»  ■  V  ■ 

'4 

A 

i^v 

Ui- 

^^^Sm 

iJf:, 

^"■^■1.:  ii 

§  505.  Other  Oases. — A  corporation  does  not  become 
dissolved  merely  by  neglecting  to  appoint  agents,  or  to 
carry  on  its  business.^  Neither  does  insolvency  work  a 
dissolution."  Neglect  by  a  corporation  to  hold  meetings 
for  ten  years  is  not,  in  itself,  ground  for  a  dissolution;^ 
nor  omitting  to  elect  officers;*  nor  does  a  sale  of  its  prop- 
erty and  cessation  of  active  business."  A  corporation 
created  by  the  legislature  for  the  purposes  of  local  munici- 


130;  McCiirdy  v.  Myers,  44  Pa.  St. 
535;  Frothingham  v.  Barney,  6  Hun, 
3(3G;  Middlesex  R.  R.  Co.  v.  R.  R. 
Co.,  115  Mass.  351. 

'  Morawetz  on  Corporations,  sec. 
213. 

■^  Clearwater  v.  Meredith,  I  Wall. 
25;  Ex  parte  Bagshaw,  L.  R.  4  £(£. 
341;  MoCurdy  v.  Myers,  44  Pa.  St. 
.'iSS;  State  «•.  Bailey,  16  Ind.  51; 
Hodges  i\  New  England  Screw  Co.,  1 
R.  I.  347;  Treadwell  v.  Salisbury  Mfg. 
Co.,  7  Gray,  393;  GO  Am.  Dec.  490. 

i*  Cramer  v.  Bird,  L.  R.  6  Eq.  143; 
In  rs  Suburbau  Hotel  Co.,  L.  R.  2Ch. 
737,  750;  Pratt  v.  Jewett,  9  Gray,  34; 
S:dcm  Mill  Corp.  v.  Ropes,  6  Pick. 
23;  Lafoud  v.  Deems,  81  N.  Y.  507; 
Denike  v.  N.  Y.  etc.  Lime  Co.,  80  N. 
Y.  59!);  Bliven  v.  Peru  Steel  Co.,  CO 
How.  Pr.  280;  De  Witt  v.  HastinKS,  69 
N.  Y.  518. 


*  State  V.  Vincennes  Universitv,  5 
Ind.  77;  State  v.  Bull,  16  Conn.  179. 

*  Morawetz  on  Corporations,  sec. 
635;  Lehigh  Bridge  Co.  v.  Leliigh  Cnal 
Co.,  4  Rawle,  9;  26  Am.  Dec.  11); 
St.  Louis  etc.  Ass.  v.  Augustin,  2  Mo. 
App.  123.  The  old  oflScers  hold  over: 
St.  Louis  etc.  Ass.  v.  Augustin,  2  Mo. 
App.  123. 

"Coburn  v.  Papier  Mache  Co.,  10 
Gray,  245;  Dewey  v.  St.  Albans  Trust 
Co.,  56  Vt.  476;  48  Am.  Rep.  803; 
Nimmons  v.  Tappan,  2  Sweenj',  052; 
Moran  v.  Lydecker,  27  Hun,  582. 

'  State  V.  Barron,  58  N.  H.  370. 

*  Boston  Glass  Co.  v.  Langdon,  24 
Pick.  49;  35  Am.  Dec.  294;  Cahill  v. 
Kalamazoo  Ins.  Co.,  2  Doug.  (Mich.) 
124;  43  Am.  Dec.  456. 

*  Kansas  City  Hotel  Co.  v.  Sauer, 
65  Mo.  279;  Reicliwald  v.  Com.  Hotel 
Co.,  106  111.  439. 


845 


DISSOLUTION. 


506 


pal  government  cannot,  without  a  provision  to  that  eflfect, 
be  dissolved  by  the  mere  failure  to  elect  officers.  The 
inhabitants  of  the  designated  locality  are  the  corporators, 
and  the  officers  are  their  mere  servants  or  agents.*  In  a 
Pennsylvania  case  it  is  said  that  a  corporation  is  not  neces- 
sarily dissolved  by  insolvency,  assignment  for  the  benefit 
of  creditors,  or  writ  of  sequestration.  If  it  keeps  up  its 
organization,  it  still  exists,  and  its  franchises  and  powers 
not  capable  of  assignment  must  be  exercised  by  it  in  sub- 
serviency to  its  legal  and  equitable  obligations.^  The  fact 
that  a  manufacturing  corporation  has  temporarily  leased 
its  property  to  some  person  to  continue  and  carry  on  its 
business  does  not  give  a  portion  of  its  stockholders  a 
standing  in  a  court  of  equity  to  ask  for  a  dissolution  of 
the  corporation.'  A  private  corporation  does  not  become 
dormant,  or  forfeit  its  franchises,  because  a  single  indi- 
vidual becomes,  by  purchase  of  the  stock,  sole  owner  of 
the  corporate  property  and  franchises.  And  if  such  sole 
owner  continues  the  business  under  the  corporate  name, 
without  notice  to  the  public,  he  may  be  sued  as  such  co»- 
poration.*  The  use  of  an  abbreviation  of  its  corporate 
name  by  a  corporation  is  not  a  usurpation,  and  will  not 
support  a  proceeding  by  quo  warranto  to  oust  it  from  the 
enjoyment  of  its  franchise.'  A  court  of  equity  has  no 
jurisdiction  to  restrain  a  navigation  company  from  collect- 
ing tolls  on  the  streams  to  which  its  charter  refers,  on  the 
ground  that  it  had  failed  to  improve  the  streams  as  its 
charter  prescribed,  or  to  keep  them  in  order.**  But  it  has 
been  held  that  where  a  manufacturing  company  ceases  to 
do  business,  having  expended  all  its  resources  and  become 
bankrupt,  this  works  a  dissolution.'     So  it  may  be  dis- 


^  Welch  V.  Steamer  Genevieve,  1 
Dill.  136. 

'  Germantown  R.  R.  Co.  v.  Fitter, 
60  Pa.  St.  124;  100  Am.  Dec.  546. 

*  Denike  v.  New  York  and  Rosen- 
dale  Lime  and  Cement  Co.,  80  N.  Y. 
599. 


*  Newton  etc.  Co.  v.  White,  42  Ga. 
148. 

»  People  V.  Bogart,  45  Cal.  73. 

•  Pixley  V.  Roanoke  Nav.  Co.,  75 
Va.  320. 

'  Brigga  v.  Fenniman,  8  Cow.  387; 
18  Am.  Dec.  455. 


506 


CORPORATIONS. 


846 


solved  by  the  death  of  all  its  members.*  The  sale  by  a 
railroad  corporation  of  its  road,  although  the  corporation 
still  retains  important  franchises  pertaining  to  its  land 
grants,  is  ground  for  the  forfeiture  of  its  charter.- 

Illustuations.  —  The  trustees  of  a  mutual  benefit  association 
illegally  voted  themselves  back  pay,  and  issued  unauthorized 
certificates  of  membership.  Held,  not  suflicient  ground  for 
ousting  the  association  of  its  franchise:  State  v.  People's  Mvt. 
Benefit  Assoc,  42  Ohio  St.  579.  A  corporation,  formed  under 
the  act  relative  to  corporations  for  manufacturing  purposes,  had 
become  utterly  insolvent,  and  had  ceased  to  manufacture,  or  to 
act  as  a  corporation  in  any  respect.  Held,  that  the  cor})oration 
was  dissolved  so  far  as  to  give  to  the  creditors  of  the  corporation 
a  remedy  against  the  stockholders,  under  the  statute:  Penniman 
V.  Briggs,  Hopk.  300.  But  see  Penniman  v.  Briggs,  8  Cow.  387; 
18  Am.  Dec.  455.  A  stockholder  in  a  corporation  brought  suit 
to  obtain  a  judgment  dissolving  it,  on  the  statutory  ground  that 
it  had  suspended  its  business  for  a  year.  After  it  had  begun 
business  its  patents  were  attacked  by  a  rival  com])any,  and 
pending  the  litigation,  an  agreement  was  made  for  a  division  of 
profits  when  the  litigation  should  be  terminated,  and  the  two 
companies  were  consolidated  by  agreement.  The  organization 
was  kept  up,  royalties  were  received,  licenses  issued,  and  suits 
prosecuted  and  dafended.  Held,  that  grounds  for  a  dissolution 
were  not  shown,  and  that  if  the  arrangement  for  consolidation, 
etc.,  was  unauthorized,  the  action  should  be  brought  by  the 
attorney-general,  and  not  by  the  stockholder:  Kelseyw  Pfaudler 
Process  Fermentation  Co.,  45  Hun,  10;  19  Abb.  N.  C.  427. 

§  506.  Dissolution  by  Forfeiture  for  Misuser  or  Non- 
user  of  Franchises.  —  Misuser  or  non-user  of  its  franchises 
may  dissolve  the  corporation  by  a  judgment  of  forfeiture 
at  the  suit  of  the  state.*     For  non-user  or  misuser,  courts 


*  McTrtire  ?'.  ZanesvilleCo.,  9  Ohio, 
20:^:  34  Am.  Dec.  436. 

■•<  State  V.  R.  R.  Co.,  36  Mian.  246. 

*  Terrett  t\  Taylor,  9  Cranch,  51; 
People  V.  Turnpike  Co.,  23  Wead. 
193;  35  Am.  Doc.  551;  Atty.-Gea. 
V.  R.  R.  Co.,  0  Irecl.  456;  People 
V.  Utica  Ins.  Co,,  15  Johns.  .358;  Slee 
V,  Bloom,  19  Johns.  456;  10  Am.  Dec. 
273;  State  Bank  v.  State,  1  Blackf. 
267;  12  Am.  Dec.  234;  John  v.  Farm- 
ers' etc  Bank,  2  Blackf.  367;  20  Am. 


Dec.  119;  Boston  Glas.s  Co.  r.  Lang- 
don,  24  Pick.  49;  35  Am.  Dec.  202; 
State  V.  Real  Estate  Bank,  5  Ark.  595; 
41  Am.  Dec.  109;  Arthur  v.  Commer- 
cial etc.  Bank,  9  Smedes  &  M.  394;  4S 
Am.  Dec.  719;  State  v.  Commercial 
Bank,  13  Smedes  &  M.  5()9;  53  Am. 
Dec.  106;  Paschallw.  Whitsett,  11  Ala. 
472;  Mumma  v.  Potomac  Co.,  8  Pet. 
281 ;  Com.  v.  Blue  Hill  Tp.  Co.,  5  Mass. 
423;  Com.  D.Union  etc.  Ins.  Co.,  5  Mass. 
230;  Folger  v.  Columbian  Ins.  Co.,  99 


847 


DISSOLUTION. 


§  506 


lire,  or  to 


cannot  judicially  declare  forfeited  the  charters  of  public 
corporations.'  A  corporation's  franchises  continue  in 
full  force  until  a  forfeiture  is  claimed  by  the  state  grant- 
ing them.-  The  mere  judgment  of  forfeiture  does  not,  of 
itself,  work  a  dissolution  of  the  corporation.  There  must 
first  be  an  execution  for  the  seizure  of  the  franchises,  be- 
fore the  penalties  of  forfeiture  take  place.'  The  attorney- 
general  may  not  be  compelled  by  inandanMS  to  institute  a 
suit  for  the  forfeiture  of  the  charter  of  a  corporation.^  A 
claim  of  the  forfeiture  of  the  franchise  cannot  bo  raised 
collaterally,  but  only  in  a  direct  proceeding  instituted  for 
the  purpose.^  An  information  in  equity,  by  the  attorney- 
general,  cannot  be  maintained  against  a  private  trading 
corporation,  where  the  acts  complained  of  are  not  shown 
to  have  injured  or  endangered  any  rights  of  the  public, 
or  of  any  individual  or  other  corporation,  and  where  the 
only  objection  to  them  is,  that  they  are  not  authorized 
by  its  act  of  incorporation,  and  are,  therefore,  against 
public  policy."  The  "reasonable  cause  to  decree  a  dissolu- 
tion," witiiin  the  Massachusetts  statutes,  imports  more 
than  a  mere  vague  apprehension  of  some  future  mischief. 
So  where  one  telegraph  company  had  made  a  fraudulent 
lease  of  its  line  to  another,  but  after  the  filing  of  the  peti- 
tion for  dissolution  the  lease  was  canceled  by  vote  of  the 
directors  of  both  companies,  it  was  held  that  no  ground 


Mass.  207;  90  Am.  Dec.  747;  Board  of 
Education  r.  liakewell,  122  111.  339. 
Rupcutoil  ami  willful  acts  of  misuser 
or  non-user  by  a  corporation,  which 
are  of  the  essyaco  of  the  contract  be- 
tween it  anil  the  state,  constitute  a 
just  ground  df  forfeiture  of  the  fran- 
chise: St.ite  r.  Council  Bluffs  and  Ne- 
bratjka  Ferry  Co. ,  11  Neb.  35i.  Equity 
has  not  jurisdiction  to  declare  corpo- 
rate franchise.-)  forfeited:  Society  v. 
Morris  Canal  Co.,  1  N.  J.  Eq.  157;  21 
Am.  Deo.  41;  Attv.-Gen.  v.  Stevens, 
1  N.  J.  Eq.  309;  22  Am.  Dec.  526. 

'  Welch  V.  Str.  Genevieve,  1  Dill. 
130. 

'  Moore  v.  Schoppert,  22W.Va.  282. 


'  Nevitt  V.  Bank  of  Port  Gibson,  14 
Miss.  513.  The  fact  that  a  corpora- 
tion has,  by  non-performance  of  a  con- 
dition of  its  charter,  forfeited  its  cor- 
porate rights  and  powers,  may  be 
asserted  by  any  one  whoac  land  or 
property  is  sought  to  be  appropriated, 
in  answer  to  the  application  therefor: 
In  re  Brooklyn  etc.  R.  R.  Co.,  72  N. 
Y.  245. 

*  State  V.  Attorney -General,  30  La. 
Ann,  pt.  2,  954. 

■^  Toledo  etc.  R.  R.  Co.  v.  Johnson, 
49  Mich.  148. 

"  Attorney-General  v.  Tudor  Ice  Co., 
104  Mass.  239;  6  Am.  Rep.  227. 


506 


CORPORATIONS. 


848 


for  a  decree  of  dissolution  remained.*  It  is  not  every 
excess  of  power,  nor  every  omission  of  duty,  thut  pro- 
duces  the  effect  of  forfeiting  a  charter.  The  public  must 
have  an  interest  in  the  act  done;  or  omitted  to  be  done. 
If  it  is  confined  to  the  corporation,  and  in  no  wise  affects 
the  community,  it  should  not  ^  d  considered  as  of  those 
conditions  upon  which  the  grant  is  made.  In  order  to  a 
forfeiture,  there  must  bo  something  wrong  done,  arising 
from  willful  abuse  or  improper  neglect;  there  must  be  a 
plain  abuse  of  power,  by  which  the  corporation  fails  to 
fulfill  the  design  and  purpose  of  its  organization.  The 
acts  of  misuser  or  non-user  must  be  touching  matters 
which  are  of  the  essence  of  the  contract  between  the 
sovereign  and  the  corporation."  Not  every  failure  of  a 
corporation  to  perform  a  duty  imposed  by  its  charter 
will  work  a  forfeiture  thereof.  It  must  be  something 
more  than  accidental  negligence,  or  excess  of  power,  o? 
mere  mistake  in  the  mode  of  exercising  an  acknowledged 
power;  and  though  a  single  act  of  willful  non-feasance  may 
be  a  ground  of  forfeiture,  a  specific  act  of  non-feasance, 
not  committed  willfully,  and  not  producing  or  intending 
to  produce  mischievous  consequences  to  any  one,  and  not 
being  contrary  to  particular  requisitions  of  the  charter, 
will  not  be.'  Where  a  charter  provides  that  "  if  the  cor- 
poration shall  at  any  time  misuse  or  abuse"  its  fran- 
chises, the  legislature  may  revoke  the  grant,  the  power  of 
revocation  is  thereby  made  conditional  upon  the  fact  of 
some  misuse  or  abuse,  and  this  fact  must  be  proved 
upon  some  inquiry,  giving  the  corporation  an  oppor- 
tunity  to  be  heard  in  defense,  before  the  charter  can  be 
revoked.*  Where  a  corporation  has  abused  its  corporate 
powers,  but  not  in  any  particular  as  to  which  it  is  de- 
clared by  statute,  the  act  shall  operate  as  a  forfeiture  of 


-  In  re  Franklin  Tel.  Co.,  119  Mass. 
447. 

^Harris  v.  R.  R.  Co.,  51  Miss. 
602. 


'  State  V.  Pawtuxet  Tump.  Co.,  8 
R.  I.  182. 

*  Baltimore  v.  R.  R.  Co.,  1  Abb. 
C.  C.  9. 


848 


849 


DISSOLUTION. 


50G 


ot  every 
hut  pro- 
file niuat 
bo  done, 
se  affects 
of  those 
rder  to  a 
3,  arising 
lust  be  a 
L  fails  to 
30.     The 
:  matters 
iveen  the 
lure  of  a 
3  charter 
Dmething 
power,  OT 
owledged 
ance  may 
feasance, 
ntending 
,  and  not 
I  charter, 
the  cor- 
its  fran- 
power  of 
le  fact  of 
e  proved 
n  oppor- 
jr  can  be 
;orporate 
it  is  de- 
feiture  of 

imp.  Co.,  8 
o.,  1  Abb. 


its  charter;  the  court  is  vested  with  a  discretion  to  deter- 
mine whether  the  corporation  shall  be  ousted  of  its  fran- 
chise to  be  a  corporation,  or  of  the  exercise  of  the  powers 
illegally  assumed.*  Failure  of  the  corporators  to  organize 
under  the  charter  is  not  such  a  non-user  as  will  warrant 
an  action  of  quo  warranto  to  vacate  the  charter."  A  salo 
and  conveyance  by  an  incorporated  turnpike  company 
of  a  portion  of  its  road  to  a  municipal  corporation,  and 
neglect  thereafter  to  repair  that  portion,  is  a  willful,  de- 
liberate act,  violative  of  its  plain  duty,  which  warrants  a 
judicial  decree  of  forfeiture  of  its  charter.'  Proceedings 
may  be  had  for  the  dissolution  of  a  corporation  neglect- 
ing for  a  year  to  pay  its  debts,  and  may  be  initiated  by  a 
stockholder,  where  the  corporation  is  organized  under 
the  general  manufacturing  laws.*  The  question  whether 
a  franchise  has  been  abandoned  is  one  of  intention;  and 
such  intention,  to  constitute  an  abandonment,  must  be 
clearly  indicated  by  facts  or  circumstances.  Non-user, 
even  for  twenty  years,  although  a  fact  which  may  bo  used 
in  determining  the  question,  is  not  per  se  conclusive  evi- 
dence of  abandonment.*  The  legislature  may  waive  a 
forfeiture.*  A  waiver  will  take  place  where  the  legislature 
declares  that  the  corporation  shall  continue,  or  where  it 
authorizes  the  defunct  corporation  to  perform  corporate 
acts.^  The  forfeiture  is  not  waived  by  the  appointment 
by  the  governor  of  the  state  of  a  state  director  on  the 
board.* 

Illustrations. — A  corporation  organized  for  the  promotion 
of  education,  after  carrying  out  the  purjwses  of  its  charter  for  a 
time,  transferred  its  property  and  remained  inactive  for  nine- 


^  State  V,  OberUn  Building  and  Loan 
Assoc,  35  Ohio  St.  258. 

'  State  V.  Simonton,  78  N.  C.  57. 

'  State  V.  Pawtuxet  Tump.  Co.,  8 
R.  I.  182;  8  R.  I.  521. 

*  Kittredge  v.  Kellogg  Bridge  Co., 
8  Abb.  N.  C.  168. 

^  Raritan   Water    Power    Co.     v. 
Veghte,  21  N.  J.  Eq.  463. 
Vol.  L- 64 


8  Milford  V.  Brush,  10  Ohio,  111;  36 
Am.  Dec.  78. 

">  State  V.  Bank  of  Charleston,  2 
McMull.  439;  39  Am.  Dec.  135;  State 
V.  Turnpike,  15  N.  H.  102;  41  Am.  Dec. 
690;  State  v.  R.  R.,  20  Ark.  495;  Poo- 
pie  V.  Manhattan  Co.,  9  Wend.  351. 

*  People  V.  Phoenix  Bank,  24  Wend. 
431;  35  Am.  Dec.  634. 


§507 


CORPORATIONS. 


850 


teen  years.  ITrld,  that  quo  warrnntn  for  a  dissolution  would  lie, 
and  this,  notwithstanding  the  pendency  of  a  suit  to  recover 
some  of  the  hin<l  formerly  owned  by  it,  but  sold  nineteen  years 
before:  State  v.  Plphcr,  26  Kan.  127.  An  incorporated  turnpike 
company  in  good  faith  attempted  to  consolidate  with  another 
one.  Twelve  years  afterwards  the  consolidation  was  declared 
void.  Tiic  company  then  resumed  possession  of  its  property, 
and  for  a  year  continued  to  exercise  its  franchises.  Held,  that 
it  should  not  bo  deemed  to  have  forfeited  them:  State  v.  Craw- 
fordsville  and  Shannondale  Turnpike  Co.,  102  Ind.  283.  The 
charter  of  a  turnpike  corporation  provided  that  at  the  end  of 
every  six  years  after  the  '^etting  up  of  any  toll-gata,  an  account 
of  the  expenditures  and  profits  of  the  road  should  bo  laid  before 
the  legislature,  "under  forfeiture  of  the  privileges  of  the  act  in 
future."  Toll-gates  were  erected  in  the  year  1806.  No  account 
was  laid  before  the  legislature  until  the  year  1830,  but  in  that 
year,  and  in  the  years  1836  and  1842,  accounts  were  submitted, 
which  were  received  by  the  legislature  as  "  sufficient  and  satis- 
factory," and  in  the  year  1833  an  act  was  passed  authorizing 
the  corporation  to  change  the  route  of  the  road  in  certain  places. 
Held,  that  such  acts  amounted  to  a  waiver  of  the  forfeiture: 
State  V.  Fourth  N.  H.  Turnpike,  15  N.  H.  162. 

§  507.  Effect  of  Dissolution.  — At  common  law,  the 
effect  of  a  dissolution  of  a  corporation  was,  that  the  real 
estate  reverted  to  the  grantor  and  his  heirs,  its  goods  and 
chattels  went  to  the  crown,  and  the  debts  due  to  and  from 
it  became  extinguished.'  But  this  harsh  rule  is  now  ob- 
solete, and  the  courts  of  equity,  on  the  dissolution  of  a 
corporation,  will  take  charge  of  its  assets,  and  apply  them 
first  to  the  paymenf,  of  creditors,  and  then  to  distribution 
among   the  share-holders.^    The  forfeiture  of  a  charter 


*  state  Bank  v.  State,  1  Blackf.  267; 
12  Am.  Deo.  2;M;  Fox  v.  Horah,  1 
Ired.  Eq.  3oS;  3G  Am.  Dec.  48;  Coul- 
ter V.  Robertson,  24  Miss.  278;  57 
Am.  Dec.  1G8.  In  Maine,  upon  the 
dissolution  of  a  mutual  insurance  com- 
pany, its  personal  property,  after  pay- 
ment of  legal  liabilities,  vests  in  the 
state:  Titcomb  v.  Kcnnebunk  Mut.  F. 
Ins.  Co.,  79  Me.  315. 

''  Bacon  v.  Robertson,  18  How.  480; 
Curran  v.  State,  15  How.  312;  Lum  v. 
Robertson,  6  Wall.  277;  City  Ins.  Co., 
V.  Com.  Bank,  68  111.  348;  Muscatine 


V.  Funk,  18  Iowa,  469;  TInkham  v. 
Borst,  31  Barb.  407;  Hastings  v.  Drew, 
50  How.  Pr.  254;  Crease  v.  Babcock, 
23  Pick.  334;  34  Am.  Dec.  61;  Folger 
V.  Ins.  Co.,  99  Mass.  267;  96  Am.  Dec, 
747.  The  rule  of  the  common  law, 
that  real  estate  held  by  a  corporation 
at  the  time  of  its  dissolution  reverts 
to  the  grantor,  does  not  prevail  in  this 
state  in  respect  to  stock  corporationa. 
Where  lands  are  conveyed  absolutely 
to  a  corporation  having;  stockholders, 
no  reversion  or  possibility  of  a  reverter 
remains  in  the  grantor:  Heath  v.  Bar* 


851 


DISSOLUTION. 


§507 


(latcH  from  tlio  commission  of  the  act  which  onuses  the 
foiToitnrc,  but  the  corporation  continues  in  oxisteneo  de 
fdcto  mitil  judgment  of  forfeiture  is  pronounced.'  Tho 
dissohition  d"  a  corporation  changes  the  character  of  tho 
pro[)erty  of  its  stockholders;  it  destroys  their  stock,  and 
substitutes  the  thing  which  their  stock  represented;  that 
is,  a  legal  interest  in  the  corporate  property.*     In  a  very 


mnro,  HO  N.  V.  302.  In  Uacon  v. 
Ilol)(!rt.-;()ii,  .iiipni,  tlio  court  said:  "Tho 
cQlctj  (if  u  ilis-iolutioii  of  a curporation 
arouuiiilly(lo:ierilio(ltol)othori'Ver3i(Hi 
of  tliu  luul-i  to  tlioso  who  liacl  grantod 
th():ii;  tliccxtiiigui.-ihinuntof  thudubtH, 
cither  tf>  or  from  tlio  corporated  body, 
so  tliat  tluy  nro  not  a  chargo  nor  a 
lioncfit  to  t!io  ineinbcr3.  Tho  in- 
Btancod  wliich  support  tho  dictum  iu 
reforoMco  to  tlio  l.ind.s  consist  of  tho 
atatute.i  and  judgments  which  foUowed 
tli'j  8upprc.ssio:i  of  tho  inilibiry  and 
rcliKiours  ordcrj  of  kniyhts,  and  whoso 
laTidd  rctiirnod  to  thoso  who  had 
granted  them,  and  did  not  fall  to  tho 
ki.ig  .".J  a!i  cjchcat;  or  of  cases  of  dis- 
Boliitio-.i  of  monasteries  and  other  ec- 
clasiavtical  foundations,  upon  tho  death 
of  all  their  members;  or  of  donations 
to  public  bodioij,  such  as  a  mayor  anu 
commonalty.  But  such  cases  afford 
no  analogy  to  that  before  us.  The 
acquisitions  of  real  ])roperty  by  a  trad- 
ing corporation  aro  commonly  made 
upon  a  bargain  and  sale  for  a  full  con- 
sideration, and  without  conditions  in 
the  deed;  and  no  conditions  aro  im- 
plied i:i  law  in  reference  to  such  con- 
veyances. Tho  vendor  has  no  interest 
in  tho  appropriation  of  the  proyierty 
to  any  spocitic  object;  nor  any  rever- 
sion, where  tho  succession  fails.  If 
tho  statement  of  the  consequences  of 
a  dissolution  upon  tho  debts  and  cred- 
its of  the  corporation  is  literally  taken, 
there  can  be  no  objection  to  it.  The 
members  cannot  recover,  nor  be 
charged  with  them,  in  their  natural 
capacities,  in  a  couiu  of  law.  But 
tlii3  doos  not  solve  the  difficulty.  The 
question  is,  Has  the  bona  Jide  and  just 
creditor  of  a  corporation  dissolved  un- 
der a  judicial  sentence,  for  a  breach 
in  its  charter,  any  claim  upon  the 
corporate  property  for  tho  satisfaction 
of  his  debt,  apart  from  the  reservation 
in  the  act  of  the  legislature  which  di- 


rectoil  tho  prosecution?  Can  the  lands 
bo  resumed  in  disregard  of  their  rights 
by  vendors,  who  have  received  a  full 
payment  of  tiieir  price,  and  execute  I 
an  absolute  conveyance?  Can  tho 
careless,  improvident,  or  faithless 
debtor  plead  tho  extinction  of  hia 
debt,  or  of  tho  creditor's  ulaim,  and 
thus  receive  protection  in  his  deliu- 
quency?  Tho  creditor  is  bliiueless,  — 
he  has  not  participated  in  the  corpo- 
rate mismanagement,  nor  ]irocured  tho 
judicial  sentence;  ho  has  trusted  upon 
visiljlo  property  acquired  by  the  cor- 
poration, in  virtue  of  its  legislative 
sanction.  How  can  the  vemlor.i  of  tho 
land  or  tho  delinquent  debtors  resist 
tho  might  of  his  equity?  But  if  the 
claims  of  tho  creditor  aro  irresiatible, 
those  of  tho  stockholder  aro  not  in- 
ferior, a*,  least  against  tho  partie:j  who 
claim  to  hold  tho  corporate  property. 
Tho  money,  evidences  of  debt,  lands, 
and  personalty  acquired  by  the  cor- 
poration were  purchased  with  tho 
capital  they  lawfiiUy  contributed  to  a 
legitimate  enterprise,  conducted  un- 
der tho  legislative  authority.  The 
enterprise  has  failed,  under  circum- 
stances, it  may  well  be,  which  entitle 
tho  state  to  withdraw  its  special  sup- 
port and  encouragement;  but  tho  state 
does  not  affirm  that  any  cause  for  the 
confiscation  of  tho  property,  or  for 
the  infliction  of  a  heavier  penalty,  has 
arisen.  It  is  a  case,  therefore,  in 
which  courts  of  chancery,  upon  their 
well-settled  principles,  would  aid  tho 
parties  to  realize  the  property  belong- 
ing to  the  corporation,  and  compel  its 
application  to  tho  satisfaction  of  the 
demands  which  legitimately  rest  upon 
it." 

'  State  V.  Bank  of  Charleston,  2  Mc- 
Mull.  439;  39  Am.  Dec.  135. 

»  Lauman  r.  R.  R.  Co.,  30  Pa.  St. 
42;  72  Am.  Dec.  685. 


507 


CORPORATIONS. 


852 


recent  case  in  New  York,  it  is  held  that  the  dissolution  of 
a  corporation  neither  destroys  its  property  nor  annuls  its 
contracts;  they  stand  in  the  same  position  as  those  of  u 
natural  person  on  his  death.  The  reservation  in  a  char- 
ter of  a  right  to  repeal  it,  allows  the  state  to  destroy  its 
corporate  life,  and  prevent  it  f^om  continuing  its  corpo- 
rate business;  but  personal  and  real  property  acquired 
by  it  during  its  lawful  existence,  rights  of  contract,  or 
choses  in  action  so  acquired,  and  which  do  not  in  their 
general  nature  depend  upon  the  powers  conferred  by  the 
charter,  are  not  destroyed  by  such  repeal.  A  franchise  to 
construct  and  maintain  a  street-railway  survives  the  dis- 
solution of  the  corporation  grantee,  resulting  from  the 
repeal  of  its  charter  enacted  pursuant  to  a  right  of  repeal 
reserved  by  the  legislature.  Upon  the  repeal  of  an  act  of 
incorporation,  all  the  property  and  rights  of  the  corpora- 
tion become  vested  in  the  directors  then  in  office,  or  in 
such  persons  as  by  law  have  the  management  of  the  busi- 
ness of  the  corporation,  in  trust  for  the  stockholders  and 
creditors,  unless  the  repealing  law  provides  for  the  ap- 
pointment of  other  persons  than  the  officers  of  the  corpo- 
ration as  trustees.* 

After  dissolution  the  corporation  cannot  sue.''  It  can- 
not be  made  a  party  to  a  suit  by  the  receiver,'  and  no  legal 
judgment  can  be  rendered  ageinst  it.*    If  the  corporation 


1  People  V.  O'Brien,  111  N.  Y.  1;  7 
Am.  St.  Rep.  684. 

^  Bank  v.  Wilson,  19  La.  Ann.  1; 
Miami  Ex.  Co.  v.  Gano,  13  Ohio,  269. 

»  Carey  v.  Giles,  10  Ga.  9.  After 
the  charter  of  a  corporation  is  declared 
forfeited,  it  can  do  no  act  by  which 
rights  can  be  acquired,  nor  can  it 
maintain  a  suit  to  enforce  those  ac- 
quired during  the  continuance  of  the 
charter,  unless  its  power  and  capacity 
for  that  purpose  is  continued  by  stat- 
ute after  its  existence  as  a  corporation 
is  endetl:  Saltmarsh  v.  Planters'  and 
Merchants'  Bank,  17  Ala.  761;  S.  P., 
Greeley  i'.  Smith,  3  Story,  657.  Be- 
fore the  expiration  of  the  charter  of  a 


corporation,  the  legislature  ina}  pro- 
vide that,  after  it  has  expired,  actions 
may,  within  a  limited  time,  bo  com- 
menced in  Its  name  for  the  beiietit  of 
the  stockholders;  and  the  power  to 
commence  actions  within  tl  xt  time 
gives  the  power  to  prosecute  tliem  to 
tinal  judgment:  Franklin  Bank  v. 
Cooper,  36  Me.  179. 

« Merrill  v.  Suffolk  Bank,  31  Me. 
57;  50  Am.  Dec.  649;  Folger  v.  Iiis. 
Co.,  99  Mass.  276;  Bonaffe  v.  Fowler, 

7  Paige,  676;  Farmers'  Bank  v.  Little, 

8  Watts  &  S.  207;  Dobaon  v.  Simon- 
ton,  86  N.  C.  492.  The  proper  rem- 
edy against  an  insolvent  corporation, 
when  its  assets  are  of  such  a  nature 


Ka 


852 

solution  of 
annuls  its 
tlioso  of  ;i 
in  a  char- 
destroy  its 
its  corpo- 
'■  acquired 
ontract,  or 
t  in  their 
•ed  by  the 
anchise  to 
es  the  dis- 
from  the 
t  of  repeal 
f  an  act  of 
le  corpora- 
ffice,  or  in 
f  the  busi- 
olders  and 
or  the  ap- 
the  corpo- 

)?  It  can- 
id  no  legal 
orporation 

ture  tna;  pro- 
cpired,  actions 
time,  be  coin- 
the  benetit  of 
the  power  to 
liin  tl  it  time 
ecute  them  to 
klin    Bank    v. 

Bank,  31   Me. 

Folger  V.  lus. 
iffe  V.  Fowler, 
Bank?;.  Little, 
)son  V.  Siuiou- 
0  jjroper  rem- 
it corporation, 
such  a  nature 


853 


DISSOLUTION. 


§507 


expires  before  judgment,  no  execution  can  be  issued  in 
its  name;^  nor  will  a  writ  of  error  lie.''  Where  the  char- 
ter expires  by  lapse  of  time  during  the  pendenc}'  of  an 
appeal  in  a  suit  against  the  corporation,  the  appeal  abates.'^ 
A  corporation  cannot  dissolve  itself  by  mere  corporate  act 
or  vote  of  a  majority  of  its  members,  so  as  to  escape  its 
responsibilities  or  liabilities.'*  No  repeal  of  the  charter 
of  a  corporation  can  take  away  or  impair  the  remedy  of 
a  creditor  against  it  for  previously  incurred  liability.®  A 
lease  to  a  corporation  is  not  terminated  by  the  dissolution  of 
the  corporation,  and  a  receiver  will  be  required  to  pay  rent 
duo  under  the  lease.®  A  stockholder  of  a  defunct  corpora- 
tion has  such  an  interest  as  entitles  him  to  defend  a  suit 
brought  to  foreclose  a  mortgage  alleged  to  have  been  exe- 
cuted by  the  corporation  when  alive.'  On  the  dissolution 
of  a  corporation,  its  stockholders  may  authorize  the  sale 
of  its  property,  and  prescribe  the  manner  in  which  such 
sale  shall  be  made.* 

Illustrations. — A  volunteer  fire  company  was  chartered  by 
the  legislature,  and  its  officers  were  commissioned  by  the  gov- 
ernor. It  had  no  stock  or  subbcription,  and  could  acquire  no 
property  except  by  donation.  The  only  compensation  of  its 
members  was  relief  from  militia  and  jury  duty.  Held,  that  the 
heirs  of  a  deceased  member  had  no  interest  in  its  property 
on  its  dissolution:  Mason  v.  Atlanta  Fire  Co.,  70  Ga.  604;  48 
Am.  Rep.  585.  In  an  act  of  incorporation  it  was  provided  that 
the  same  should  be  void  unless  a  certain  sum  of  money  was 
paid  in  as  part  of  the  capital  stock  of  the  corporation  within  two 
years  from  its  passage.  Held,  that  after  five  years  had  elapsed 
from  the  expiration  of  that  period,  it  was  too  late  to  institute 


that  they  cannot  be  levied  upon  and 
Bold  under  execution,  is  a  bill  in  equity 
to  marshal  and  distribute  its  assets: 
Irons  V.  Manufacturers'  Nat.  Bank,  6 
Biss.  301. 

'  May  V.  State  Bank,  2  Rob.  (Va.) 
5"    40  Am.  Dec.  726. 

■'  Renick  v.  Bank,  13  Ohio,  298;  42 
Am.  Dec.  203. 

'  Rider  v.  Nelson  Factory,  7  Leigh, 
154;  30  Am.  Dec.  495. 

*  Portland  Dry  Dock  etc.  Co.  v. 


Portland,  12  B.  Men.  77;  Polar  Star 
Lodges.  Polar  Star  Lodge,  IGLa.  Ann. 
53;  Ourien  v.  Santini,  16  La.  Ann.  27; 
Revere  v.  Boston  Copper  Co.,  15  Pick. 
351;  Town  v.  Bank  of  River  Raisin,  2 
Doug.  530. 

6  Blake  v.  R.  R.  Co.,  39  N.  H.  4.35. 

8  People  V.  National  Trust  Co.,  82 
N.  Y.  283. 

'  Chouteau  v.  Allen,  TO  Mo.  290. 

*  Moore  v.  Willamette  Transp.  etc. 
Co.,  7  Or.  359. 


508 


CORPORATIONS. 


854 


■a 


v« 


proceedings  to  obtain  a  forfeiture  on  account  of  omission  to 
comply  with  such  provision.  The  court  will  lay  down  no  uni- 
versal rule  in  such  cases,  but  will  decide  whether  the  delay  has 
been  unreasonable  or  not  from  the  circumstances  of  each  case: 
People  V.  Oakland  County  Bank,  1  Doug.  282.  A  Missouri  corpo- 
ration having  real  estate  in  Illinois  was  sued  in  the  latter  state, 
and  the  real  estate  attached.  Afterwards  the  corporation  was 
dissolved,  and  its  affairs  put  into  the  hands  of  a  receiver  in 
Missouri,  Held,  that  the  suit  would  not  thereby  be  defeated, 
especially  as  the  decree  dissolving  the  corporation  provided 
that  suits  might  be  brought  and  defended  in  the  name  of  the 
corporation:  Life  Ass'n  of  America  v.  Fassett,  102  111.  315.  A 
corporation  went  into  liquidation,  and  transferred  all  its  prop- 
erty to  another  corporation.  A  was  injured  afterwards  by  a 
vessel  thus  transferred,  and  his  administrator  sued  the  old  cor- 
poration and  recovered  judgment.  Held,  that  the  judgment 
could  not  be  enforced  in  equity  against  the  property  of  the 
new  corporation:  Gray  v.  National  S.  8.  Co.,  115  U.  S.  116.  An 
insurance  company  is  dissolved  by  decree  of  court.  Held,  that 
all  contracts  of  insurance  are  thereby  terminated:  Carr  v. 
Union  Mut.  Ins.  Co.,  28  Mo.  App.  215.  A  ferry  is  maintained 
as  an  incident  to  a  chartered  turnpike  to  facilitate  travel  over 
it.  Held,  that  the  forfeiture  of  the  turnpike  franchise  forfeits 
the  piivilege  of  maintaining  the  ferry:  Darnell  v.  State,  48  Ark. 
821. 


§  508.    Revivor  of  Corporation. — A  corporation  whose 
charter  has  expired  may  be  revived  by  the  legislature.' 

Lincoln  etc.  Bank  v.  Richardson,  1  Greenl.  79;  10  Am.  Dec  34. 


854 


mission  to 
wn  no  uni- 
(  delay  has 
each  case: 
ouri  corpo- 
atter  state, 
ration  was 
receiver  in 
;  defeated, 

I  provided 
jme  of  the 
11.  315.     A 

II  its  prop- 
ards  by  a 
he  old  cor- 

judgment 
rty  of  the 
.  116.  An 
Held,  that 
:  Carr  v. 
laintained 
;ravel  over 
se  forfeits 
le,  48  Ark. 


INDEX. 


on  whose 
lature.' 

.c.  34. 


,1 


INDEX. 


[This  brief  Index  will,  it  is  hoped,  he  found  suflBdent  for  Immediate  use.    A  com- 
prehensive index  to  the  entire  work  will  be  made  on  its  completion.] 

Agency.  See  also  Attorneys  at  Law;  Auctioneers;  Brokers;  Corpo- 
rations; Delegation  of  Authority;  Dissolution  of  Agency; 
Joint  Agents;  Joint  Principaus;  Ratification. 

agency  defined p.  1,  §  1 

different  classes  of  agents p.  2,  §  2 

Who  may  be  principala. 

all  persons  sui  juris p.  4,  §  3 

married  woman  may p.  4,  §  4 

idiots  and  lunatics  may  not p.  4,  §  4 

nor  alien  enemies p.  5,  §  5 

nor  convicts ^ , . . « p.  5,  §  5 

Who  may  he  agents. 

all  persons p.  5,  §  6 

infants p.  5,  §  6 

married  women p.  5,  §  6 

husband  for  wife p.  5,  §  6 

father  for  son p.  6,  §  6 

son  for  father ,p.  6,  §  6 

corporation  for  individual p.  6,  §  6 

alien  enemy p.  6,  §  6 

persons  having  adverse  interests  cannot p.  6,  §  7 

double  agencies p.  7,  §  7 

nor  to  do  unlawful  acts p.  8,  §  8 

or  personal  acts p.  8,  §  8 

Appointment  of  agents. 

authority  essential  to  agency p.  9,  §  9 

interpreter  not  an  agent p.  9,  §  9 

may  be  conferred  by  parol p.  11,  §  10 

or  implied  from  acts p.  11,  §  11 

authority  not  provable  by  agent's  declarations p.  15,  §  12 

agent  to  execute  deed  must  be  appointed  by  deed p.  15,  §  13 

aliter  where  principal  is  present p.  17,  §  14 

authority  to  execute  writing  need  not  be  in  writing p.  18,  §  15 

nor  to  make  contract  for  sale  of  land p.  19,  §  16 


IV 


INDEX. 


Agency  (Continued). 
AMthority  of  agent. 

general  and  special  agency  defined  and  illustrated pp.  73-82,  §  56 

who  are  general  agents pp.  73-82,  ^  56 

who  are  special  agents pp.  73-82,  §  56 

as  tc  pprsons  without  notice  of  limitation  of  authority,  .pp.  75-82,  §  56 

autliority  of  agent  may  bf  implied pp.  82-8 1,  §  57 

but  is  restricted  to  character  in  which  it  is  given p.  84,  §  58 

general  agent  has  no  authority  to  do  acts  not  for  principal's 

benefit p.  84,  §  59 

construction  of  agent's  authority  when  in  writing p.  85,  §  GO 

general  words  restricted  by  context p.  85,  §  CO 

language  of  instrument  will  be  construed  strictly p.  85,  §  GO 

and  in  favor  of  innocent  parties p.  85,  §  60 

usages  of  trade  will  be  regarded p.  86,  §  60 

what  acts  are  or  are  not  within  particular  phrases p.  87,  §  Gl 

"accountable  " p.  88,  §  61 

"all  matters " p.  88,  §  61 

tend  to  business  " p.  88,  §61 

"  b  .n-ov/" p.  88,  §  61 

"business  and  financial  agent " p.  88,  §61 

"buy  and  sell  " p.  88,  §61 

"canvass  " p.  88,  §  61 

"  cash  " p.  89,  §  61 

"  cost " p.  89,  §  61 

"  cite  and  appear  " p.  89,  §  61 

"  claims  and  eflfects  " p.  89,  §  61 

"  collect " pp.  89,  90,  §  62 

"  deliver  " p.  91,  §  62 

"deposit " p.  91,  §  62 

"  draw,  indorse,  and  accept  bills  " p.  91,  §  62 

"execute". pp.  91,  92,  §62 

"  give  discharges  " p.  92,  §  62 

"hire" p.  92,  §62 

"  indorse  " p.  92,  §  62 

"  invest " p.  92,  §  63 

"  lands  " p.  93,  §  63 

"  lay  out " p.  93.  §  63 

"  loan  " p.  93,  §  63 

"  make  deeds  and  sales  " p.  93,  §  63 

"  manage  " p.  94,  §  63 

' '  mortgage  " p.  94,  §  63 

"  obtain  secnrities  " p.  94,  §  63 

"  place  " p.  94,  §  63 

"  procure  a  purchaser  ". p.  94,  §  63 

"  purchase  " p.  94,  §  64 

"  I'  'i«  and  care  for  " p.  95,  §  64 


.73-82 

§56 

.  73-82,  ^  56 

.  73-82, 

§56 

.  75-82 

§56 

.  82-St, 

§57 

■P 

84. 

§58 

J'a 

..p. 

84, 

§59 

•P 

85, 

§60 

..p. 

85, 

§60 

•  P- 

85, 

§60 

•P 

85, 

§60 

•P 

86, 

§60 

•P 

87, 

§61 

..p. 

88, 

§61 

,.p. 

88, 

§61 

..p. 

88. 

§61 

..p. 

88, 

§61 

..p. 

88, 

§61 

..p. 

88, 

§61 

..p. 

88, 

§61 

..p. 

89, 

§61 

..p. 

89, 

§61 

•p. 

89, 

§61 

.p. 

89. 

§61 

89, 

90, 

§62 

.p. 

91, 

§62 

.p. 

91, 

§62 

..p. 

91, 

§62 

91, 

92, 

§62 

.p. 

92, 

§62 

.p. 

92,  §  62 

.p. 

92,  §62 

.p. 

92, 

§63 

.p. 

93, 

§63 

.p. 

93, 

§63 

.p. 

93,  §  63 

.p. 

93, 

§63 

.p. 

94, 

§63 

.p. 

94,  §  63 

.p. 

94, 

§63 

P- 

94, 

§63 

.p. 

94,  §  63 

.p. 

94, 

§64 

.p. 

95, 

§64 

INDEX.  V 

Agency  (Continued). 

"receive checks" p.  96.  §  64 

"  '"''^^-'ase  " p.  9,;^  li  ^4 

"sell " pp.  9G_0().  §  (J-, 

"  sell  and  convey  " p.  99,  §  (),"> 

"  sell  at  retail  " p   [yj^  ^  ,55 

"  8«"le  " p.  lOoi  §  6(i 

"ship  " ^ p,  jOO,  S  66 

"  sign  name  " p.  joi,  §  06 

"  solicit " p.  ,01,  g  G6 

"  subscribe  " p.  joo,  g  (;(i 

sue    p.  100,  §  66 

"  take  care  of  " p.  100,  §  m 

"  transact  " p.  101,  g  06 

Implied  power  qf  agent p    102,  §  67 

advertising p.  102,'  §  67 

admissions p   j  02  §  07 

arbitrate p.  iq-^  g  q- 

assign p.  103,  §  67 

auction p.  ]o;{,  §  07 

board  at  hotel p   103^  §  (57 

I'orrow p.  J03]  §  07 

cancel p.  103,  §  07 

compromise p.  103,  §  07 

collect p.  104,  §  07 

confess  judgment p.  104,  §  07 

employing  agents p.  104,  §  OS 

employing  counsel p.  lo.^,  §  08 

exchange  or  barter p.  io5,  g  08 

•deliver p.  joa^  §  oS 

foreclose  mortgages p.  105,  §  os 

give  credit p.  ]05,'  §  09 

guaranty , p.  ]05,  §  09 

hiring  horses p.  105,  §  09 

indorsing p.  iqg,  §  09 

lease p.  2O6,  §  69 

legacy p.  jo6,  §  69 

license p.  100,  §  69 

loan p.  100,  §  09 

making  accommodation  notes p.  106,  §  70 

making  deeds pp.  106,  107,  §  70 

negotiable  paper pp.  107,  108,  §  70 

mortgage p.  iqs,  §  70 

pledge p.  109.  §  70 

purchase p.  109,  §  70 

receive  payment pp.  110-11.3,  §  71 

renting  store p.  1 13,  §  72 


vi 


INDEX. 


Agency  (Continued). 

rescind  contract,, p.  113,  §  72 

sell pp.113.  114,  §::} 

settle p.  11-t,  §  73 

suretyship p.  114,  §  73 

tender p.  114,  S  73 

transfer p.  1 14,  §  73 

voluntary  conveyance p.  114,  §  73 

waiver pp.  114,  115,  8  74 

warranty pp.  115,  1  l(i,  §  74 

powers  of  agents  of  carriers p.  1 IG,  §  75 

agents  of  railroads pp.  117,  118,  §  70 

agent  must  execute  contract  in  principal's  name p.  157,  ^  9!) 

rule  as  to  instruments  under  seal pp.  157-1  GO,  §  100 

rule  as  to  instruments  not  under  seal pp.  161-165,  §§  101,  102 

the  rule  ot  descriptio  persouse pp.  165- 168,  §  193 

Duties  qf  agent  to  principal. 

to  act  as  agent ,-.  .pp.  120,  121,  §  73 

where  service  is  gratutious pp.  120,  121,  §  78 

to  perform  duties  in  person p.  121,  §  79 

to  give  notice  to  principal pp.  121,  122,  §  80 

to  obey  orders  and  instructions  of  principal pp.  122-126,  §  81 

to  act  in  good  faith  and  in  principal's  interest pp.  126,  127,  §  82 

to  act  with  skill  and  diligence pp.  127,  128,  §  83 

liability  of  agent  for  faults  of  deputies p.  129,  §  84 

profits  made  by  agent  belonging  to  principal ^^^ji^..^^..  »»,.^^  .p.  129,  1.30 
Liabilities  qf  agent  to  principal. 

agent  not  liable  for  losses  in  business _ ..,..,....  .p.  130,  §  86 

liability  of  agent  for  loss  of  money  deposited  by  him p.  131,  §  87 

liability  of  agent  for  remittances  made  him p.  131,  §  88 

agent  must  keep  accounts  and  account  for  money pp.  132,  133,  §  89 

agent  cannot  dispute  principal's  title pp.  133,  134,  §  90 

agent  must  not  mix  his  property  with  principal's j).  1.34,  §  91 

agent  must  not  make  profits pp.  135-137,  §  92 

agent  cannot  purchase  principal's  property pp.  137-141,  §  93 

or  sell  his  own  property  to  principal pp.  137-141,  §  93 

agent  cannot  be  agent  for  two  opposite  parties pp.  141-143,  §  94 

Liabilities  of  principal  to  agent. 

agent  entitled  to  compensation  for  services pp.  144-150,  §  95 

when  agent  not  entitled  to  compensation pp.  151,  152,  §  96 

agent  entitled  to  reimbursement  from  principal pp.  152-156,  §  97 

when  agent  not  entitled  to  reimbursement .p.  153,  §  98 

Liability  of  agent  and  principal  to  third  persons. 
when  principal  bound  by  instrument  executed  by 

agent pp.  157-168,  §§  99-103 

when  agent  not  bound pp.  161-168,  §§  101-103 

when  agent  personally  bound,  descriptio  personae p.  165,  §  103 


INDEX. 


VU 


■  p.  113,  §72 

113,  114,  §73 
..p-  114,  §73 
..p.  114,  §73 
..p-  114,  S73 
..p.  114,  §73 

•  P-  114,  §73 

114,  115,  §74 

115,  110,  §74 
..p.  116,  §75 
117,  118,  §7« 

.p.  157,  §9!) 
57-lCO,  §  100 
5,  §§  101,  102 
C5-168,  §  193 

120,  121,  g  78 

120,  121,  §  78 
.p.  121,  §  79 

121,  122,  §  80 
122-I2G,  §  81 
126,  127,  §  82 
.27,  128,  §  83 
.p.  129,  §  84 
..p.  129,  130 

.p.  130,  §  86 
.p.  131,  §  87 

•  p.  131,  §  88 

32,  133,  §  89 

33,  134,  §  90 
.p.  134,  §91 
35-137,  §  92 
137-141,  §  93 
[37-141,  §  93 
.41-143,  §  94 

44-150,  §  95 
51,  152,  §  96 
.52-156,  §  97 
.p.  153,  §  98 


18,  §§  99-108 
;,  §§  101-103 
p.  165,  §  103 


p.  171,  i;  100 

pp.  172-176,  !<107 
pp.  176-179,  s  108 
p.  179,  ji  109 


Agency  (Continued). 

agent  acting  within  authority  binds  principal  and  not  hi.n- 

,    ^''" ■.••; pp.  168-170,  §  104;  p.  190,  §  113 

rule  where  principal  is  in  a  foreign  country p.  17,)  j^  ij-, 

rule  wliere  principal  is  irrespouaiblo 

rule  where  principal  is  not  disclosed ' " 

agent  may  bind  himself  personally 

as  by  paying  over  money  after  notice 

liability  of  agent  acting  without  or  beyond  authority,  .pp.  ISO- 1. S3  ^HIO 
agents  not  personally  liable  for  torts p    1 84*  y  ]  1 1 

exceptions,  when  agent  liable p  1 S ','  >■<  1 1  •> 

liaMity  of  principal  for  torts  of  agent ■.■.■.■.■.■.■.■.■.■.pp."  lOllrA  ^  lu 

JjiabiMu  of  third  i>ersons  to  principals  and  wjmts. 
principal  may  enforce  contract  made  by  agent  with  third 

.,  .   r^'T ; PP-  194-197,  U  115,  116 

third  parties  may  plead  fraud  or  misrepresentation . .  p   1  •)7  8  1 1 7 

°''  T"'' p'los.'sns 

rule  aa  to  contracts  under  seal ,,  j,j,,  g  j  ,j, 

rule  where  exclusive  credit  has  been  given  to  agent . . '. . . .  p   1 99  §  1  -'O 
principal  may  recover  money  wrongfully  paid  by  agent.,  pp.  199  20o'§  l-"l 

principal  may  sue  for  torts  to  property  in  agent's  hands p  "oo'  §  !"•' 

agent  cannot  sue  on  contract  made  by  him  as  agent p  "OO  §  1"3 

exceptions,  when  agent  may  sue pp.  ooi_oo4'  g  joj 

agents  right  to  buo  controlkble  by  priacipaL '       '  "  u  '"o4 '  «  I-'^S 

Alien  Enemies.  p. -.U4,  9  1.0 

aa  principals 

as  agents 

Arrest. 


•  p.  R,  §5 
.p.  6.  §6 


exemption  of  attorney  from dd  2"7  "oo  «  ,  00 

A8aes8m9^t8.    See  Coepobahons.  -' ,  — o,  g  10a 

Apprenticps. 

who  are  apprentices 43^  „  ^^ 

\^°  "^^y  I^^;^^ ■.■■.■.  ".p:  434.' §S5 

who  may  take p  43^  g  230 

contract  of  apprenticeship pp.  434^  435  5,  033  2:5.3 

assignment  of  contract '40-   ^  030 

duties  of  master  to  apprentice ...pp.  435,  436'  §  "•J4 

right  of  master  to  discharge  apprentice p'.  436^  §  235 

right  of  master  to  earnings  of  apprentice ]p.  430'  §  "no 

right  of  parents  and  guardians ....'..^.  437]  §  237 

liabilities  of  parent  and  guardian p  437'  h  233 

what  is  faithful  service .' ." ."  i*/. ■;;.'■. ppV 437,"  438,'  §  239 

what  will  excuse  faithful  service ^^ ..,.._.  .p.  437,  438,  §  239 

Attorneys  at  Law.  .  a     ./ 

attorney  defined p.  205,  §  126 

admission  or  license  to  practice  essential pp.  206-208,  §  127 

nature  of  the  office  of  attorney , pp.  293^  §  128 


V311 


INDEX. 


Attorneys  at  Law  (Oontinueri). 

power  of  court  to  disbar  attorneys pp.  209-211,  §  129 

what  are  good  grounds  for  disbarment pp.  212-215,  §  130 

what  aro  not  good  grounds  for  disbarment pp.  215-219,  §  131 

Busponsion  from  practice pp.  219-221,  §  132 

previous  conviction  not  necessary p.  221,  §  133 

practice  in  disbarment  proceedings pp.  222-225,  §  134 

evidence pp.  222-225,  §  134 

appeal p.  225,  §  134 

mandamus  lies  to  restore  disbarred  attorney p.  225,  §  136 

attorney  may  bo  readmitted ►.pp.  225,  220,  §  137 

PrivUeijea  and  exemptions  of  uttorneya. 

attorney  exempt  from  arrest  in  civil  suits,  when pp.  227,  228,  §  138 

privUegc  of  suing p.  228,  §  139 

exemption  from  civil  duties,  juror,  etc p.  229,  §  140 

liability  of  attorney  for  words  spoken  in  judicial  pro- 
ceedings  pp.  228-231,  §  141 

attorney  must  defend  destitute  person  without  fee p.  231,  §  142 

attorney  cannot  act  in  diverse  capacities pp.  231-233,  §  143 

or  on  both  sides  of  case pp.  233-235,  §  143 

attorney  prohibited  from  purchasing  demand  in  suit p,  235,  §  145 

privileged  communications  between  attorney  and  client,  pp.  23G,  237,  §  146 

extent  of  privilege p.  240,  §  146 

attorney  cannot  be  compelled  to  testify  in  court  as  to 

convorsations  with  client pp.  240-243,  §  146 

exceptions,  when  privilege  does  not  attach pp.  243-250,  §  147 

attorney  cannot  become  surety  for  client p.  250,  §  148 

right  of  attorney  to  be  witness  in  cause p.  251,  §  149 

Liability  of  attorney  to  third  persons pp.  252,  253,  §  150 

for  acting  in  name  of  party  without  authority p.  253,  §  151 

liability  to  third  persons  on  implied  contracts p.  253,  §  152 

liability  of  attorney  for  costs  and  fees pp.  254-256,  §  153 

liability  of  attorney  for  trespass pp.  250-258,  §  154 

liability  of  attorney  for  malicious  prosecutioiu-. pp.  258,  259,  §  155 

Authority  and  powers  qf  attorney. 

attorney's  authority  is  evidenced  by  his  reftainer pp.  260-263,  §  156 

attorney's  authority  to  appear  is  presHmed .p.  263,  §  157 

but  court  may  order  authority  to  be  produced pp.  264-266,  §  158 

appearance  for  several,  effect  of p.  266,  §  159 

appearance  by  attorney  binds  party,  though  unauthor- 
ized  pp.  267,  268,  §  160 

attorney  cannot  delegate  hia  authority pp.  268-270,  §  161 

law  partnerships pp.  270-272,  §  161 

law  clerks p.  272,  §  162 

authority  of  attorney,  how  terminated p.  272,  §  163 

by  dissolution  of  partnership pp.  272,  273,  §  164 

by  act  of  parties ^ pp.  273-276,  §165 


09-211, 
12-215, 
15-219, 
19-221, 
.p.  221, 
22-225, 

p.  225, 
.p.  225, 
25,  220, 


§129 
§130 
§131 
§132 
§133 
§134 
§134 
§134 
§136 
§137 


27,  228,  §  138 
.p.  228,  §139 
.p.  229,  §140 

128-231,  §  141 
.p.  231,  §  142 
131-233,  §  143 
:33-235,  §  143 
,p,  235,  §145 
3G,  237,  §  146 
.p.  240,  §  146 


140-243, 
143-250, 
.p.  250, 
.p.  251, 
52,  253, 
.p.  253, 
.p.  253, 
54-256, 
56-258, 
58,  259, 


§146 

§147 
§148 
§149 
§150 
§151 
§152 
§  153 
§  154 
§155 


60-263,  §  156 
.p.  263,  §  157 
64-266,  §  158 
p.  266,  §159 

57,  268,  §  160 
168-270,  §  161 
70-272,  §  161 
•  p.  272,  §  162 
p.  272,  §  163 
J2,  273,  §  164 
73-276,  §  165 


INDEX.  ix 

Attorneys  at  Law  (Contimi«d). 

by  termination  of  suit _ pp.  276,277,  §  166 

^y'^''"^^^ p.  277.  S  167 

byothercauaes p.  277,  §  108 

implied  power  of  attoraeys pp.  278,  279  §  169 

'''^^^^^oaa p.'28o!§170 

^f'^'*^'*^ p.  280.  §170 

altering  securities p.  280  §  170 

^PPf^-: pp.  280.  28i;  §  170 

arbitration p.  281,  §  170 

*"°^* p.  282,  §  180 

assignment p.  282,  §  170 

attachment p.  282.  §  170 

compromise pp.  282-285,  §  171 

continuance p.  285,  §  171 

"°°*''*'^* p.  285,  §171 

^!«*=*"^T ■ p.  285,  §171 

discontmuance p  235  8  1-1 

employing  counsel p  286*  §  171 

'""''•;••  •;■••, p.  286;  §171 

executing  bonds n,  286  §  171 

^''^^"tio'^ .!...!!!!  !!!!!p!  286!  §171 

e^^^'^^ty p.  286,  §171 

judgment pp.  286,  287,  §  172 

P'^y™^"* pp.  287-289,  §  172 

P™*^®^^ p.  290,  §173 

V^r^^a.ae p.  290,  §  173 

'^^^^^ p.  290,  §  173 

^®"  •  •  • p.  290,  §  1 73 

^^^'°^ p.  291,  §  1 73 

*"®  •  • p.  291,  §  173 

supplementary  proceedings p.  291,  §  173 

waiver  and  release pp.  291   292  §  1 13 

extent  of  authority  of  attorney  as  to  time pp.  293,  294,'  §  174 

ratification  of  unauthorized  acts  of  attorney pp.  294,  295,  S  175 

Liability  0/ attorney  to  client. 

dealings  between  attorney  and  client p.  296,  8  176 

attorney  must  render  accounts;  mixing  money .  .,}  297,  298,  §  177 

attorney  must  notify  client  of  collection  of  money p.  298,  §  178 

a,ttQrney  must  pay  over  money  collected pp.  298-300,  §  179 

liability  of  attorney  for  negligence;  degree  of  skill  re- 
quired of  him pp.  301-303,  §  180 

negligence  a  question  of  fact p.  303,  §  181 

liability  for  mistakes  of  law pp.  303,  304,'  §  182 

liability  for  mistakes  in  drawing  papers;  pleadings p.  305,  §  183 

liability  for  mistakes  in  prosecution  of  suit pp.  306-308,  §  184 

liability  for  mistakes  in  giving  advice pp.  308,  309,  §  185 


INDEX. 


Attorneys  at  Law  (Continued). 

attorney  must  follow  instruction  of  client pp.  309,  310,  §  187 

liability  of  attorney  for  miatakea  or  frauds  of  agents  or 

associates pp.  310,  311,  §  188 

liability  of  attorney  for  acting  without  authority n.  311,  §  189 

liability  of  attorney  for  acting  in  excess  of  authority. .  pi  312,  §  100 

attorney  not  liable  as  to  matters  outside  his  profession p.  31'2,  §  191 

remedy  as  against  attorney;  proceedings  are  not  affected. . .  .p.  312,  §  192 

summary  jurisdiction  of  court  over  attorneys p.  Siri,  §  193 

when  it  will  and  will  not  be  exercised p.  314,  §  194 

for  what  acts  it  will  and  will  not  be  exercised pp.  315-318,  §  195 

Liability  qf  client  to  attorney. 

attorney  or  counsel  may  sue  for  services pp.  319-322,  §  106 

contract  to  pay  for  services  implied pp.  322-;}24,  §  197 

bow  amount  of  compensation  is  determined pp.  324-328,  §  198 

Talue  of  services  may  bo  shown  by  experts p.  327,  §  198 

what  compensation  allowed  where  no  express  ccmtract.pp.  329-331,  §  109 

attorney  may  deduct  fees  from  funds  in  his  hands p.  331,  §  200 

compensation  out  of  fund  in  court p.  332,  §  201 

retainer  must  be  proved pp.  333-338,  §  202 

and  that  services  were  rendered pp.    "^S,  339,  §  203 

services  in  appellate  courts p  \  340,  §  204 

when  attorney  cannot  recover  compensation ][  -343,  §  205 

attorney  may  make  special  contract  for  compensa* 

tion pp.  343-349,  §§  206,  207 

when  such  contracts  not  sustainable p.  349,  §  208 

<3fFect  of  interruption  of  service  on  contract pp.  350,  351,  §  209 

by  withdrawal  from  case p.  351,  §  210 

by  dismissal  from  case pp.  351-355,  §  211 

Auctioneers. 

sales  at  auction,  nature  and  effect  of pp.  356-359,  §  212 

Who  are  auctioneers;  license pp.  359,  360,  §  213 

duties  of  auctioneers pp.  360,  361,  §  214 

powers  of  auctioneers pp.  361,  362,  §  215 

auctioneer  as  agent  to  sign  contract  of  sale  under  stat- 
ute of  frauds pp.  363-368,  §  216 

powers  not  possessed  by  auctioneer pp.  368,  369,  §  217 

liabilities  of  auctioneers pp.  369-373,  §  218 

rights  and  liabilities  of  bidders jm.  3''»-378,  §  219 

fictitious  bids,  agreement  not  to  compete pp.  378-386^  §  220 

compensation  of  auctioneer;  right  to  fe0s  and  commis- 
sions  pp.  386-388,  §  221 

Authority  of  Agent.    See  Agency. 
Bankruptcy. 

of  principal,  effect  of  on  agent's  authority p.  66,  §  48 

of  agent,  effect  of  on  authority p.  66,  §  49 

effect  of  on  contract  of  hiring p.  494,  §  284 


W,  310,  §  187 

10,  311.  §188 
T>.  311,  §  189 
312,  §  190 
.p.  311.',  §  191 
.p.  31'.',  §  19'2 
.p.  313,  §  193 
.p.  314,  §  194 
(15-318,  §  195 

119-322,  §  196 

122-324,  §  197 

124-328,  §  108 

.p.  327,  §  108 

S29-331,  §  199 

.p.  331,  §200 

.p,  332,  §201 

333-338,  §  202 

•^8,  339,  §  203 

\  340,  §  204 

543,  §  205 

9,  §§  206,  207 
.p.  349,  §  208 
150,  351,  §  209 
.p.  351,  §  210 
m-355,  §  211 

356-359,  §212 

159,  360,  §  213 

160,  361,  §  214 

161,  362,  §  215 

163-368,  §  216 
168,  369,  §  217 
J69-373,  §  218 
r3-378,  §  219 
J78-386;  §  220 

36-388,  §  221 


...p.  66,  §48 
...p.  66,  §49 
.p.  494,  §  284 


INDEX.  S^^ 

BroJcers. 

duflneil;  different  classes  of pp.  380-993,  §  222 

bill  brokors pp.  390-393,  §  222 

inavirunco  brokers pp.  390-393,  §  222 

merchandiso  brokers pp.  390-393,  §  222 

pawnbrokers pp.  390-393,  S  222 

roal-esUto  brokers pp.  390-393,  S  222 

•hip-brokers pp.  390-393,  §  222 

stock-brokers pp.  390-393,  §  222 

authority  of  brokors  in  ■;  noral pp.  393,  .394,  §  223 

Wliat  authority  not  iiiii.lii  d  to  brokors pp.  394-.390,  §  22.') 

duties  and  liabilitio:i  of  brok  ts pp.  390,  ,397,  §  2'_'0 

broker's  compcosatioa;  right  to  fees  and  commiaaioos.  .pp.  397-414,  §  227 
Citizenship. 

of  corporations pp.  019,  020,  §  350 

Combinations. 

among  workmen,  legality  of p.  499,  §  290 

Construction  of  Instrument.    See  Agency. 
Convicts. 

as  principals p.  5,  §  5 

Corporations.    See  also  Foreign  Corporations. 

corporations  defined p.  397,  §  332 

corporations,  sole  and  aggregate p.  598,  §  332 

corporations,  public  and  private pp.  598,  599,  §  332 

quasi  public  corporations p.  598,  §  332 

what  are  franchises p,  641,  §  042 

Formation  of  corporation.  ,    f 

corporation  is  created  by  state ; p.  599,  §  333 

power  to  create  corporation  is  inherent  in  state p.  599,  §  333 

limitation  in  constitution  on  legislative  power  to  create p.  600,  §  333 

power  of  Congress  to  charter  corporations pp.  600,  001,  §  334 

power  to  charter  a  corporation  cannot  be  delegated p.  601,  §  335 

exceptions,  mere  ministerial  duties p.  601,  §  335 

form  of  grant  of  corporate  franchise pp.  601,  002,  §  .336 

Btate  may  ratify  unauthorized  corporation pp.  602,  003,  §  337 

franchise  must  be  accepted  by  corporators pp.  603,  004,  §  338 

acceptance  may  be  express  or  implied pp.  604,  605,  §  339 

incorporation  under  general  laws pp.  606-609,  §  340 

procedure pp.  600-609,  §  340 

conditions  precedent  to  grant — performance,  when  necessary .  p.  609,  §  341 

corporations  by  prescription p.  610,  §  342 

who  may  be  corporators p.  610,  §  343 

proof  of  incorporation,  how  made pp.  610-012,  §  344 

performance  of  conditions  precedent,  how  made p.  0!2,  §  34 

proof  of  existence  of  corporation p.  638,  §  372 

grants  of  special  privileges  of  corporation  strictly  construed.. p.  641,  §375 

the  corporation  name pp.  676,  677,  §  404 

the  corporation  seal pp.  677-679,  §405 


adi 


INDEX. 


Corporations  (Continued). 
Powers  qf  corporations. 
are  those  conferred  by  chartep-ornecessary  to  carry  out 

ita  objects pp.  623,  624,  638-641,  §§  352,  373,  374 

acts  or  contracts  of  corporations  in  violation  of  rules  of  law 

invalid p.  624,  §  353 

statutes p.  624,  §  354 

provisions  of  charter p.  625,  §  355 

probihitions  in  statute  —  when  are  prohibition  acts  void p.  625,  §  356 

charter — when  are  prohibition  acts  void p.  626,  §  357 

not  void pp.  664-667,  §§  357,  358 

acts  of  majority  of  corporators  bind  corporation p.  627,  §  SCO 

but  not  where  act  is  unauthorized  by  charter pp.  627,  628,  §  361 

ultra  vires  contract  may  be  avoided  if  unexecuted p.  629,  §  362 

but  not  as  to  persons  without  notice p.  629,  §  362 

transfer  of  property  valid  though  ultra  vires p.  630,  §  363 

and  so  as  to  executed  contracts pp.  630-633,  §  363 

where  contract  is  not  enforceable  because  ultra  vires  bene- 
fits received  recoverable p.  632,  §  364 

corporation  is  liable  for  torts pp.  633-635,  §  367 

even  where  committed  in  ultra  vires  transact' '<n p.  635,  §  3GS 

vali  Jity  of  acts  of'de  facto  corporation pp.  635,  636,  §  369 

fraud  in  obtaining  charter  no  defense  in  collateral  proceeding,  p.  636,  §  370 
misuser  or  non-user  of  charter  no  defense  in  collateral  proceed- 
ing  1>.  636,  §  370 

but  corporation  must  be  in  existence  either   de  jure    or  de 

facto pp.  637,  738,  §  371 

Implied  powers  qf  corporation. 

to  act  as  agent ..-, p.  6,  §  6 

to  transfer  franchises , .  p.  642,  §  377 

to  consolidate pp.  642-045,  §  378 

to  purchase  and  hold  property pp.  645-647,  §  379 

to  transfer  and  dispose  of  property pp.  647,  648,  §  38 

to  hold  property  in  trust pp.  648,  649,  §  .381 

to  take  by  devise p.  649,  §  382 

to  borrow  money  and  make  debts p.  649,  §  383 

to  mortgage  property pp.  650,  651,  §  384 

to  issue  negotiable  paper pp.  651-653,  §  385 

to  sue  and  be  sued p.  653,  §  3S6 

other  acts pp.  654,  655,  §  387 

to  expel  members pp.  655-C58,  §  388 

remedies  for  wrongful  expulsion  —  mandamus p.  658,  §  389 

to  do  business  in  foreign  state p.  659,  §  390 

to  employ  surplus  money  in  property p.  659,  §  391 

to  alter  its  business .   p.  660,  §  392 

to  issue  preferred  stock pp.  661-666,  §  393 

rights  of  preferred  stockhola  Jta pp.  664-666,  S  394 


§§  352,  373,  374 

iw 

..p. 

624,  §  353 

..p. 

624,  §  354 

..p. 

625,  §  355 

...p. 

625,  §  356 

..p. 

626,  §  357 

667,  { 

§§  357,  358 

..p. 

627,  §3C0 

627, 

628,  §  361 

...p. 

629,  §  362 

..p. 

629,  §  362 

. .  .p. 

630,  §  363 

630-633,  §  363 

le- 

...p. 

632,  §  364 

633-635,  §  367 

...p. 

635,  §  368 

635, 

636,  §  369 

ng.p. 

636,  §  370 

:eed- 

...  p. 

636,  §  370 

637, 

738,  §  371 

..p.  6,  §6 

..  p. 

642,  §  377 

642-645,  §  378 

645-647,  §  379 

).  64 

r,  648,  §  38 

648 

,  649,  §381 

...p. 

649,  §  382 

..p. 

649,  §  383 

650 

,  651,  §  38* 

651-653,  §  385 

..p. 

653,  §  386 

654 

655,  §  387 

655-058,  §  388 

..p. 

658,  §  389 

...p 

.  659,  §390 

..p. 

059,  §  391 

■  P 

660,  §  392 

661-666,  §  393 

664-666,  S  394 

IND£3^, 


Coiportrtions  (Continued), 

to  alter  charter , ^ p.  667,  §  395 

-what  are  not  alterations  in  charter pp.  668,  669,  §  396 

grant  ot  additional  franchise p.  669,  §  396 

discharge  of  obligations  to  state p.  669,  §  396 

effect  of  alteration  on  liability  of  stockholdersL pp.  669,  670,  §  397 

to  engage  in  different  kinds  of  business pp.  670-672,  §  398 

to  wind  up  business p.  672,  §  399 

to  enter  into  partnership p.  673,  §  400 

to  deal  in  shares  of  other  corporations .p.  673,  §  401 

to  alter  amount  of  capital  stock pp.  674,  675,  §  402 

to  purchase  its  own  shares pp.  674,  675,  §  402 

to  give  away  its  property p.  675,  §  403 

Officers  and  agents,  powers  and  liabilitiea  of p.  680,  §  406 

promoters,  powers  of,  liability  of  corporation  for  acts  of p.  681,  §  407 

board  of  directors,  powers  of pp.  682-684,  §  408 

but  directors  cannot  make  radical  changes pp.  685,  686,  §  409 

or  wind  up  corporation p.  686,  §  410 

directors  are  trustees  for  corporation pp.  687-692,  §  411 

must  not  have  conflicting  interests p.  692,  §  412 

liitbilities  of  director  for  fraud pp.  694-696,  §  41Mi 

for  neglect pp.  696-698,  §  4'.4 

for  mistakes  in  good  faith." pp.  698,  699,  §  415 

directors  must  act  as  a  board pp.  699,  700,  §  416 

majority  of  directors  govern p.  700,  §  416 

directors'  meetings p.  701,  §  417 

power  of  directors  to  dejpgate  authority  to  employ  agents.,  p.  702,  §  418 

president,  powers  and  liabilittes  of pp.  705-710,  §  420 

secretary  and  treasurer,  powers  and  liabilities  of pp.  703-705,  §  419 

removal  of  officers  of  corporations pp.  710-713,  §  421 

acts  of  agents  within  their  authority  bind  corpoiatioa. p.  714,  §  422 

otherwise  when  beyond  the  corporate  powers p.  715,  §  423 

or  are  not  in  form  required  by  charter jp.  716,  §  424 

knowledge  by  third  person  of  limitation  in  power  of  general 

agent  not  presumed p.  716,  §  425 

knorrrledge  by  third  persons  of  provisions  of  charter  pre- 
sumed  p.  717,  §  426 

but  not  of  by-laws  or  regulations p.  718,  §  427 

liability  of  corporation  for  fraudulent  representation  of  agent.. p.  718,  §  428 

ratification  by  corporation  of  act  of  agent. pp.  719,  §§  429,  430 

ratification  implied  from  conduct p.  719,  §  431 

what  acts  cannot  be  ratified  by  stockholders. .  .pp.  720,  723.  §§  432,  434 

implied  ratification  by  stockholders pp.  720-722,  §  433 

StoclJiolders,  rights  and  lidbilities  of. 
contact  of  membership  in  corporation,  how  created. .  .pp.  725-729,  §  735 
slatutory  method  of  becoming  stockholder  must  be  fol- 
lowed  pp.  729,  730,  §  430 


XIV 


INDEX. 


Corporations  (Continued). 

stockholder  not  bonnd  on  sabscription  until  corporatioi^ 

is  legally  authorized pp.  730-732,  §  437 

exceptions,  when  contract  cannot  be  avoided p.  732,  §  4.38 

subscriber  not  bound  until  all  shares  are  taken pp.  732-734,  §  439 

liability  in  promise  to  form  corporation  and  take  shares,  pp.  734,  735,  §  440 

mutual  assent  necessary  to  contract  of  subp'^ription pp.  73.5-737,  §  441 

when  preliminary  deposit  a  condition  preceaent pp.  737,  738,  §  442 

contract  of  subscription,  how  proved p.  738,  §  443 

liability  of  subscriber  to  pay  for  his  shares pp.  738-740,  §  444 

but  capital  agreed  must  have  been  subscribed p.  74U,  §  445 

other  conditions  precedent p.  741,  §  446 

assessment  and  calls,  who  may  make p.  741,  §  447 

notice  of  time  and  place  of  payment pp.  742,  743,  §  448 

liability  of  subscriber  after  abandonment  of  enterprise p.  744,  §  449 

subscriptions  on  conditions  precedent pp.  744-748,  §  450 

when  subscriber  is  bound  unconditionally pp.  748-751,  §  451 

subscriptions  obtained  by  fraud,  when  voidable pp.  751-753,  §  452 

when  not  veidable pp.  753-755,  §  453 

effect  of  laches  of  subscriber p.  756,  §  454 

subscriber  cannot  rescind  contract  of  sabscription pp.  756-758,  §  455 

as  for  violation  of  charter p.  758,  §  456 

forfeiture  of  shares  for  non-payment  of  assessments. . .  .pp.  759-762,  §  457 
transfer  and  assignment  of  shares,  right  to  stockholder  to. . .  .p.  762,  §  458 

rhcn  stockholder  liable  notwithstanding  transfer p.  763,  §  459 

effect  of  transfer  of  shares p.  764,  §460 

transfer  must  be  made  according  to  forms  prescribed 

by  charter pp.  76&-767,  §  461 

equitable  assignments  of  shares,  effect  of pp.  767-769,  §  4G2 

assignment  by  indorsement  of  certificate pp.  769,  770,  §  463 

rights  of  purchaser pp.  770,  771,  §  464 

lien  of  corporation  on  shares pp.  771-774,  §  465 

refusal  of  corporation  to  allow  transfer-of  shares,  reme- 
dies   pp.  774-766,  §  467 

liability  of   corporation   for  permitting  unauthorized, 

transfers pp.  776-779,  §  4G8 

status  of  shares  as  property pp.  779,  780,  §  468 

profits,  what  are p.  780,  §  469 

dividends  and  interest  payable  only  out  of p.  780,  §  470 

discretion  of  directors  in  distributing  profits pp.  780,  781,  §  471 

stock  dividends p.  781,  §  472 

new  stock,  right  of  old  stockholder  to p.  782,  §  473 

payment  of  dividends pp.  782-786,  §  474 

right  of  stockholder  to  examine  books  of  corporation. .  .pp.  787-789,  §  475 

other  rights  of  stockholders ^.^p.  788,  §  475 

stockholders'  meetings,  notice  of  time.and  place-essen- 
tial  ^ pp^  790,  791,  §476 


INDEX. 


XV 


p.  730-732,  §437 
....p.  732,  §438 
•p.  732-734,  §  439 
p.  734,  735,  §  440 
)p.  735-737,  §  441 
p.  737,  738,  §  442 

p.  738,  §443 

)p.  738-740,  §  444 

...  .p.  740,  §  445 
p.  741,  §446 

...  .p.  741,  §  447 
p.  742,  743,  §  448 

p.  744,  §  449 

pp.  744-748,  §  450 
pp.  748-751,  §  451 
pp.  751-753,  §  452 
pp.  753-756,  §  453 

p.  756,  §  454 

pp.  756-758,  §  455 

p.  758,  §456 

pp.  759^762,  §  457 
bo....p.  762,  §458 
.  .p.  763,  §  459 
..p.  764,  §460 

pp.  765-767,  §  461 
pp.  767-769,  §  462 
)p.  769,  770,  §463 
)p.  770,  771,  §  464 
pp.  771-774,  §  465 

pp.  774r-766,  §  467 

)p.  776-779,  §  408 
>p.  779,  780,  §  468 
,..p.  780,  §469 
...p.  780,  §470 
)p.  780,  781,  §  471 
...p.  781,  §472 
...p.  782,  §473 
)p.  782-786,  §  474 
)p.  787-789,  §  475 
...p.  788,  §475 

)p.790,791,  §476 


Corporations  (Contimied). 

who  may  call pp.  791,  792,  §477 

general  and  special  meetinga pp.  792.  793,  §  478 

adjourned  meetings p.  793,  §  479 

who  have  right  to  vote.. pp.  793-799,  §  480 

election  of  officers. pp.  799-803,  §  481 

power  of  majority  to  make  by-laws pp.  803,  804,  §  482 

what  by-laws  are  valid pp.  805,  806,  §  483 

what  by-laws  are  not  valid pp.  806,  807,  §  484 

stockholders  cannot  sue  for  injuries  to  corporation pp.  807-809,  §  485 

exception,  when  stockholders  may  sue pp.  810-815,  §  486 

court  will  not  interfere  with  discretion  of  directors  at 

suit  of  stockholders pp.  815,  816,  §  487 

stockholders'  bill,  who  must  be  complainants pp.  816,  817,  §  488 

who  must  be  defendants p.  817,  §  489 

stockholders  not  personally  liable  on  corporate  con- 
tracts  pp.  817,  818,  §  490 

for  debts  of  corporation pp.  818,  819,  §  491 

capital  stock  a  trust  fund  for  creditors^n.- pp.  819,  820,  §  492 

shares  must  be  paid  up  in  money pp.  820-823,  §  493 

property  caiinot  be  taken  ia  lieu  of  money,  when pp.  823,  824,  §  494 

right  of  creditors  of  corporations  to  unpaid  a8ae88menta.pp.  824-827,  §  495 

liability  of  stockholders  to  creditors  by  statute pp.  827-830,  §  496 

construction  of  statutes  as  to  personal  liability pp.  831-834,  §  497 

nature  of  the  statutory  liability pp.  836-837,  §  498 

personal  liability  forwages  of  employees,  laborers/etc.  .pp.  837-839,  §  499 

rightsof  bona  fide  holder  of  shares  apparently  paid  up.  pp.  839,  840,  §  600 

•   right  of  creditors  to  interfere  in  management  of  corporation,  p.  840,  §  601 

to  prevent  dissolotion  or  alteration  in  charter p.  840,  §  602 

dissolution  of  corporation,  by  expiration  of  time. pp.  841,  842,  §  603 

by  happening  of  contingency ^. pp.  841,  842,  §  503 

by  surrender  of  charter ...._..  .pp.  842-844,  §  604 

in  other  cases ^. pp.  844-846,  §  505 

by  forfeiture  for  misuser  or  non-user pp.  846-850,  §  506 

effect  of  dissolution  of  corporation pp.  850-.854,  §  507 

revivor  of  corporatioa. .*, .« p.  854,  $508 

OostS. 

liability  of  a  btorney  f  or f  p.  251-256,  §  163 

Death. 

effect  of  on  contraict  of  hiring p.  496,  §  287 

of  principal,  effect  of  on  agent's  authority pp.  63-66,  §  46 

of  agent,  effect  of  on  agent's  authority « pp.  65,  66,  §  47 

effect  of  on  authority  of  attorney »p,  3S7,  §  167 

Delegation  of  Authority.    See  also  ArroRitBT  ax  Law. 

an  original  authority  may  be  delegated^ p.  25,  §  25 

exception,  illegal  acts p.  25,  §  25 

exception,  personal  acta p.  25,  §  25 


XVl 


INDEX. 


Delegation  of  Authority  (Continaed). 

a  delegated  authority  cannot  be  delegated pp.  26-28,  §§  26,  27 

exceptions pp.  28-30,  §  28 

Odrectors.    See  Corfosaxzons. 
DiMolution. 

of  corporation pp.  841-854,  §§  503-607 

IMMolution  of  Agency. 

modes  of  dissolving  relation  of  principal  and  agent p.  55,  §  42 

by  performance  of  object pp.  66,  57,  §  43 

by  lapse  of  time pp.  56,  67,  §  43 

by  act  of  principal pp.  57-62,  §  44 

principal  may  revoke  agent's  authority  at  any  time. .  .pp.  57,  58,  §  44 

except  when  power  is  coupled  with  interest pp.  59,  60,  §  44 

or  is  founded  on  a  consideration pp.  59,  60,  §  44 

by  act  of  agent p.  62,  §  45 

by  death  of  principal pp.  63-65,  §46 

by  death  of  agent pp.  65,  66,  §  47 

by  bankruptcy  of  principal p.  66,  §  48 

by  bankruptcy  of  agent p.  66,  §  49 

by  marriage  of  principal pp.  66,  67,  §  50 

by  marriage  of  agent p.  66,  §  50 

by  insanity  of  principal p.  67,  §  51 

by  insanity  of  agent p.  67,  §  52 

by  destruction  of  the  aubjeet^matter  of  the  agency p.  67,  §  53 

by  war p.  68,  §  54 

from  what  tiro.e  revocation  of  agenfa  authority  takes  effect. pp.  68-71,  §  55 
Dividends.    See  Cobporations. 
Tacton. 

factors  defbed p.  414,  S  227 

del  credere  agents  defined p.  416,  §  227 

implied  authority  of  factors p.  420,  §  228 

what  authority  not  implied  to  factor pp.  421,  422,  §  229 

duties  and  liabilities  of  factors pp.  422-432,  §  230 

Fellow-eenrants.    See  Master  and  Servant. 
Foreign  Corporations. 

grant  of  franchise  cannot  eiktend  beyond  limits  of  state 

granting  it.......  ...^.. . pp.  612-614,  §346 

corporation  is  by  comity  permitted  to  do  business  in  for* 

reign  state pp.  614-616,  §  347 

but  subject  to  local  laws pp.  616,  617,  §  348 

citizenship  of  corporations  within  federal  laws p.  618,  §  349 

foreign  corporations  may  be  sued pp.  619,  620,  §  350 

service  of  process  on  foreign  corporationa  .  ..i  i  •«•».» » p.  620,  §  351 

General  Agent.    SeeAaEMor. 
Guardian.    See  ArpREimoES. 
Infanta. 

as  principals , 1 1 . .  i  •  i  ■  f  1 1  > . . . . .  .p>  4,  §  3 

aa  agents , p.  5,  §  6 


J-28,  §§  2G,  27 
ip.  28-30.  §  28 


)54,  §§  503-507 

. . .  .p.  55,  §  42 
)p.  56.  57,  §  43 
)p.  56.  57,  §  43 
pp.  57-62,  §  44 
pp.  57,  58,  §  44 
pp.  59,  60,  §  44 
pp.  59,  60,  §  44 
....p.  62,  §45 
pp.  63-65,  §  46 
pp.  65,  66,  §  47 
,  ....p.  66,  §48 

p.  66,  §  49 

pp.  66,  67,  §  50 

p.  66,  §50 

p.  67,  §  51 

p.  67,  §62 

p.  67,  §53 

...p.  68,  §54 
,pp.  68-71,  §  66 


.p.  414,  8  227 
..p.  416,  §227 

,p.  420,  §  228 
421,  422,  §  229 
422-432,  §  230 


612-614,  §  346 

614-616,  §  347 
616,  617,  §  348 
..p.  618,  §349 
619,  620,  §  350 
..p.  620,  §351 


p.  4,  §3 

....p.  5,  §6 


INDEX. 


XVll 


Iziaanity. 

of  principal,  effect  of. p,  67,  §  51 

of  agent,  effect  of p.  67,  §  52 

Joint  Principals. 

are  not  agents  for  each  other I).  20,  §  18 

except  when  they  are  partners p.  20,  §  19 

or  part  owners p.  21,  §  19 

rights  of  joint  principals p.  21,  §  20 

liabilities  of  joint  principals p.  21 ,  §  20 

Joint  Agents. 

authority  given  to  two  agents  mnst  be  exercised  by  both.  .pp.  21,  22,  §  21 

one  cannot  delegate  his  power  to  the  other p.  22,  §  21 

where  partnership  is  an  agent,   one   partner  cannot  act  after 

death  of  the  other p.  22,  §  21 

by  usage  two  joint  agents  may  act p.  22,  §  21 

and  where  power  is  coupled  with  interest p.  22,  §  21 

or  when  joint  power  is  given  by  separate  instmments p.  23,  §  21 

or  where  agency  is  for  public  purpose p.  24,  §  22 

liability  of  joint  agents. p.  24,  §  23 

Juror. 

attorney  exempt  from  duties  of p.  229,  §  140 

Legacy. 

services  rendered  in  expectation  of p.  444,  §  247 

Lien. 

of  corporation  on  shares  of  stock pp.  771-774,  §  465 

Lonatics. 

as  principals p.  4,  §  4 

Master  and  Servant.    See  also  Apprentices. 

who  are  servants p.  433,  §231 

contract  of  service  need  not  be  in  writing p.  440,  §  240 

implied  promise  to  pay  for  services pp.  440,  441,  §  241 

right  of  intruder  to  recover  for  services pp.  441,  442,  §  242 

right  to  recover  for  services  rendered  through  fraud  or  duress .  p.  442,  §  243 

right  to  recover  for  illegal  or  immoral  services p.  443,  §  244 

promise  to  pay  implied  from  request p.  444,  §  245 

exception,  request  without  benefit p.  444,  §  246 

services  rendered  in  expectation  of  legacy p.  444,  §  2-47 

presumption  that  services  are  rendered  for  hire p.  445,  §  248 

exception,  near  relatives pp.  445-447,  §  249 

entire  contract  for  services,   compensation  not  recover* 

able  until  work  completed pp.  447,  448,  §  250 

contract  abandoned,  no  recovery  for  part pp.  448,  449,  §  251 

exception,  where  quantum  meruit  recoverable pp.  450-454,  §  252 

hours  of  labor p.  452,  §  253 

extra  hours,  when  compensation  recoverable  for p.  453,  §  234 

work  on  Sunday,  compensation p.  454,  §  255 

right  to  order  servant  to  different  eo^ployment pp.  454,  455,  §  256 


xvni 


INDEX. 


Master  and  etorvant  (Conthraed). 

increased  duties,  extra  compensation pp.  455-458,  §  257 

servant  cannot  be  compelled  to  make  up  lost  time p.  458,  g  259 

personal  contract  cannot  be  assigned p.  458,  §  258 

general  hiring  is  prima  facie  for  what  term- pp.  459-462,  §  260 

continuance  in  service  after  expiration  of  term p.  462,  §  261 

regulations  of  master  binding  on  servant pp.  462,  463,  §  262 

duty  of  servant  to  keep  master's  secrets p.  463,  §  263 

duty  of  master  to  provide  work p.  464,  §  264 

board  of  servant p.  464,  §  266 

measure  of  compensation  of  servant,    right  of  servant 

to  wages '. pp.  465-470,  §  266 

master  may  recoup  damages .pp.  470,  471,  §  267 

right  of  master  to  earnings  of  servants p.  471,  §  268 

right  to  discharge  servant  by  contract pp.  472,  473,  §  269 

by  law p.  474,  §  270 

what  are  good  grounds  for  dismissal pp.  475-478,  §  271 

involuntary  breaches  by  servant p.  479,  §  272 

discharged  servant  must  leave  peaceably p.  480,  §  273 

servant  iriay  recover  wages  to  time  of  dismissal p.  480,  §  274 

servant  occupying  master's  house  not  a  tenant p.  481,  §  275 

remedies  of  servant  for  wrongful  discharge pp.  482-486,  §  276 

servant  bound  to  seek  ccher  employment pp.  486-489,  §  277 

waiver  by  servant  of  wrongful  discharge p.  489,  §  278 

waiver  by  master  of   breach  or  forfeiture p.  490,  §  279 

what  will  justify  servant  in  abandoning  service p.  491,  §  280 

dissolution  of  contract  of  service  by  expiration  of  term  or 

consent p.  492,  %  281 

when  contract  may  be  dissolved  by  either  party p.  493,  §  282 

by  dissolution  of  partnership p.  494,  §  283 

by  bankruptcy  of  master p.  494,  §  284 

by  abandonment  by  servant p.  495,  §  285 

by  dismissal  by  master p.  479,  g  286 

by  death  or  disability p.  496,  §  287 

right  of  master  to  sue  for  injury  to  servant pp.  496,  497,  §  288 

for  enticing  servant  from  service pp.  497,  499,  §  289 

combinations  among  workmen ^^,.. p.  499,  §  290 

LiabilUiea  qf  master  and  servant  to  third  persons. 

master  liable  for  torts  of  servant .pp.  502-507,  §  291 

willful  and  malicious  acts  of  servant pp.  507-509,  §  292 

trespasses  of  servant pp.  509-511,  §  293 

who  are  "  servants,"  for  whose  acts  master  is  liable. . .  .pp.  511-515,  §  294 
master  not  liable  for  acts  of  independent  contractor. . .  .pp.  515-521,  S  295 
exceptions,  where  work  is  a  nuisance  or  dangerous 

per  se pp.  521-523,  §  296 

where  duty  is  imposed  by  contract p.  523,  §  297 

where  duty  is  imposed  by  law pp.  524,  525^  }  298 


INDEX. 


XIX 


155-458, 
.p.  458, 
.p.  458, 
459-462, 
.p.  462, 
162,  463, 
.p.  463, 
.p.  464, 
.p.  464, 

465-470, 
t70,  471, 
p.  471, 
72,  473, 
.p.  474, 
t75^78, 
.p.  479, 
.p.  480, 
.p.  480, 
.p.  481, 
182^86, 
186^89, 
.p.  489, 
.p.  490, 
.p.  491, 

.p.  492, 
.p.  493, 
.p.  494, 
.p.  494, 
.p.  495, 
.p.  479, 
.p.  496, 
96,497, 
97,  499, 
.p.  499, 


§257 
§259 
§258 
§260 
§261 
§262 
§263 
§264 
§266 

§266 
§267 
§268 
§269 
§270 
§271 
§272 
§273 
§274 
§275 
§276 
§277 
§278 
§279 
§280 

§2S1 
§282 
§283 
§284 
§285 
§286 
§287 
§288 
§289 
§290 


02-507,  §  291 
07-509,  §  292 
09-511,  §  293 
11-515,  §294 
15-521,  §  295 

21-523.  §  296 
p.  523,  §  297 
14,526^1298 


Master  and  Servant  (Continued). 

where  employer  directs  work pp.  626-527,  §  299 

other  cases  where  mauter  is  liable p.  527,  §  300 

liability  of  servant  to  third  person pp.  592,  593,  §  329 

Liability  cf  master  to  servant. 

master  not  generally  liable  for  injury  to  servant pp.  628-631,  §  301 

exceptions,  defective  machinery,  buildings,  or  appli- 

^'^ces pp,  53i_635^  g  303 

latent  defects  or  dangers pp.  535-538.  §  303 

duty  of  railroads  to  servants  employed pp.  538-540,  §  304 

knowledge  by  master  of  defect  necessary pp.  540-542,  §  305 

direct  negligence  of  master p.  542,  §  306 

concurrent  negligence  of  master  and  fellow-servant p.  543,  §  307 

unsuitable  or  incompetent  fellow-servants pp.  544-547,  §  308 

where  servant  an  infant pp.  547-549,  §  309 

liability  of  master  to  servant  by  statute pp.  549-554,  §  310 

■ervant  waives  danger  by  remaining  in    service  after 

°o*i°e pp.  554_658,  §  311 

except  where  master  has  promised  to  remedy  defect,  .pp.  558-560,  §  312 
contributory  negligence  of  servant,  failing  to    notify 

master  of  defect p.  560,  §  313 

going  into    dangerous    situation   by    command   of 

™'^8*«r pp.  561-564,  §  314 

other  cases  of  contributory  negligence pp.  564-568,  §  315 

what  not  contributory  negligence  in  servant p.  568,  §  319 

the  doctrine  of  "  comparative  negligence  " pp.  568,  569,  §  317 

contracts  between  master  and  servant  as  to  injuries  . .  .pp.  569,  670,  §  318 
who  are  "fellow-servants,"  common  employment  the 

*«"* pp.  570-677,  §  319 

who  are  not  "  fellow-servants  " pp.  577-579,  §  320 

superior  servant  a  vice-principal,  not  a  fellow-servant. pp.  580-585,  §  321 
servant  having  charge  of  construction  or  repair  of  machinery 

used  by  other  servants p.  533,  §  322 

servants  of  different  masters pp.  684-586,  §  323 

when  relation  of  master  and  servant  does  not  subsist p.  686,  §  324 

where  servant  is  on  bis  own  business pp.  586,  587,  §  324 

Volunteer   assisting   servant   becomes   a    "fellow-ser- 

.   ^*°*  " pp.  588,  589,  §  325 

evidence  of  incompetence  of  fellow-servant pp.  589,  590,  §  326 

evidence  of    negligence  in  machinery  and  ap- 
pliances  pp.  690-592,  g§  327,  328 

liability  of  servant  for  damages  to  master  through  his  neglect. p.  593,  §  330 

liability  of  servant  to  fellow-servant p.  594,  §  331 

Kistake. 

liability  of  attorney  for pp.  303-309,  §§  182-185 

Kalicious  Proseuution. 

UabiUtyof  attorney  for pp.  268,  269,  §  155 


P5P 


XX 


INDEX. 


i    1 


I 


Kaadamua. 

lies  to  restore  disbarred  attorney p.  235,  §  136 

Marriage. 

of  principal,  effect  of pp.  66,  67,  §  60 

of  agent,  effect  of p.  66^  |  60 

Married  Women. 

maybe  principals p.  4,  §  4 

may  be  agents p.  5,  §  6 

Negligence.    See  Aoenot;  Attobnets  at  Law;  Master  ^andSesvakt. 

Notice. 

of  limitation  in  powers  of  agent pp.  75-62,  §  66 

Officers.    See  Cobfobattons. 

Parent  and  Child.    See  Affbentices. 

Partnership. 

partners  are  agents  for  each  other p.  20,  §  19 

effect  of  death  of  one  partner  on  agency  t>f  partnership p.  22,  9  21 

dissolution  of,  effect  of  on  authority  of  attorney pp.^272,  273,  §  164 

effect  of  dissolution  of,  on  contract  of  hiring p.  494,  §  283 

Pauper. 

Attorney  obliged  to  defend  gratuitousl]^. . . . ,. p.  231,  §  143 

Preferred  Stock.    See  CSobfobatioms. 

Prescription. 

corporations  by p.  610,  S  342 

Privileged  OoTnmwniffations     See  AiroBmr  avd  Cuxnt. 

Property. 

status  of  shares  as pp.  779,  780,  iiHi 

Bailroads.    See  Masteb  asd  Sebvakt. 

Batiflcation. 

of  unauthorized  sots  of  agent  by  principal, pp.  31-35,  §  29 

must  not  divest  vested  rights pp.  35,  36,  §  30 

act  ratified  must  not  be  illegal  or  void pp.  36,  37,  §  31 

act  must  have  been  done  on  behalf  of  principal p.  37,  §  32 

principal  must  be  in  existence p.  38,  §  33 

ratification  must  be  made  knowing  all  the  facts pp.  38-40,  §  34 

ratification  once  made  is  irrevocable p.  40,  §  35 

ratification  absolves  agent  and  estops  principal pp.  40, 41,  §  36 

effect  of  ratification  upon  subagent p.  41,  §  37 

ratification  must  be  entire pp.  41,  42,  §  38 

what  acts  of  agent  cannot  be  ratified ' p.  43,  §  39 

form  of  ratification pp.  43,  44,  §  40 

implied  ratification  by  acts  and  conduct pp.  44-54,  §  41 

of  unauthorized  acts  of  attorney  at  law. pp.  294,  295,  §  175 

Revivor. 

of  corporation p^854,  §  508 

Bevocation  of  Authority.    See  Diasoumos  or  Aoenct. 

Slander  and  Libel. 

liability  of  attorney  for  words  spoken  in  judicial  proceed- 
ings   pp.  22&-23I,  §  141 


[>.  225,  §  136 

66,  67,  §  50 
..p.  66^8  50 

....p.  4,  §4 
....p.5,§6 
Servant. 

75-82,  §  66 


.p.  20,  §19 

.p.  22,  §21 

I,  273,  §  164 

>.  494,  §283 


TNDE2C.  xxi 

Special  Agent.    See  AoEVcr. 
Stookholden.    See  Corporationb. 
Surety. 

attorney  aa,  for  client « .  .^  .^ p.  250,  §  148 

Torts. 

liability  of  corporation  for^ „ _pp.  633-635,  §  367 

liability  of  agent  for p.  194^  §  m 

liability  of  principal  for. ^ pp.  191-193,  §  1 14 

Treepaaa. 

liability  of  attorney  for pp.  256-258,  §  154 

War. 

eflFect  of  on  agent's  authority p.  68,  §  54 

WitneM. 

attorney  as p.  251,  §  149 


>.  231,  §  142 


I.  610,  S  342 


',  780,  §  408 


31-35,  §  29 

35,  36,  §  30 

36,  37,  §  31 
.p.  37,  §32 
.p.  38,  §  33 
38-40,  §34 
.p.  40,  §35 
40, 41,  §  36 
•  p.  41,  §  37 
41,  42,  §  38 
p.  43,  §39 
43,  44,  §  40 
44-54,  §  41 
r,  295.  §  175 

.854,1508 


-231,  8  141 


